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Prospects for Russian-Ukrainian Military-Technical Cooperation
Sergei KANDAUROV
Senior Researcher
Russian Institute for Strategic Studies
The current situation in Russian-Ukrainian military technical cooperation (MTC) is quite complex and contradictory. On one hand, the two countries exchange services related to arms products and participate in military-industrial cooperation on various arms systems. On the other hand, they are rivals on weapons markets in other countries and compete for contracts for the delivery of military hardware to the Middle East, Tropical and North Africa and South Asia.
The Russian-Ukrainian MTC largely depends on the political decision of the Ukrainian government on whether to develop closer relations with Russia, or the West. Lately Ukrainian foreign policy has been changing towards rapprochement with the West. On May 23, 2002, the Ukrainian leadership chose to pursue NATO membership. As a result, the future of the Ukrainian defense industry, as well as the current state and the prospects of Russian-Ukrainian military-technical relations are seen in a somewhat different light.
Cooperation in the framework of the CIS
In its MTC with CIS countries, including Ukraine, Russia certain national interests. We believe that the most important among them are:
1. Retaining these states as markets for the delivery of new Russian armaments and military hardware, for upgrades for military hardware of Russian design,
2. Using the defense industry potential in CIS countries for repairing Russian military hardware and purchasing various spares and assembly parts,
3. Developing and intensifying production and scientific-technological cooperation with CIS defense enterprises and on that foundation improving Russia's ability to compete on the weaponry markets of other countries,
4. Preventing the leakage of crucial information and new technologies from the Russian defense sector in the process of MTC with CIS countries,
5. Promoting economic and military-economic integration within the CIS,
6. Involving the scientific potential of the CIS into the joint development of fifth- and sixth-generations military hardware,
7. Using MTC to strengthen Russia's political presence in CIS countries and influencing their foreign policy orientations.
In MTC with Ukraine, interests 1-4 currently seem most significant and practical. As for objectives 5-7, these are closely tied in with political and economic integration within the framework of the Commonwealth. Back in the mid-1990s, when the prospects of such integration seemed promising, one could speak of deepening military-industrial cooperation primarily between Russia, Ukraine, Belarus and Kazakhstan and developing a joint program of armaments. However, recent developments Ukraine's dissociation from military-political integration (with Moldova, Georgia, Azerbaijan and Uzbekistan following its example); the withdrawal of several countries (Uzbekistan, Georgia and Azerbaijan) from the Collective Security Treaty; difficulties in the formation of a free-trade zone in the Commonwealth have all significantly complicated the development of a single military-technical space within the CIS.
The transformation of the Collective Security Treaty into the Organization of the Collective Security Treaty (OCST) in May 2002 was aimed at halting the aforementioned tendency and improving conditions for military-economic integration within the CIS. It was assumed that all member-countries of the organization would pursue a single coordinated military-political and military-technical policy. In particular, for instance, that they would standardize the development, production and upgrading of armaments and military hardware and sell them to each other at domestic, not international prices.1
However, Ukraine, which is Russia's primary partner in the development and production of new military hardware and has the second-biggest defense industry capability in the CIS after Russia, was left out of the Organization. And, in our opinion, this jeopardizes the progress complex and large-scale cooperation projects necessary for the development of high technologies in the framework of the OSCT. We can also assume that, having found itself outside the new military-political union, Ukraine will seek to establish stronger military-economic ties with other third countries, including Poland, the Czech Republic, Azerbaijan, Uzbekistan and Turkey.
Observers note one more aspect of the formation of the organization: for Russia, the formation of a common military-technical space with these countries does not resolve the question on which the prospects of developing new armaments, like the fifth-generation fighter-jet depends, on the problem of obtaining foreign funding.
Although not a member of the Collective Security Treaty, in the 1990s, Ukraine participated in the work of institutions coordinating military and military-technical cooperation in the CIS. For example, Kiev maintained military-technical contacts with Russia in air defense systems, where the CIS countries achieved the best results in producing the Joint Air Defense System. Recently Ukraine and Russia the desire to jointly perform maintenance on S-200 (SA-5) and S-300 (SA-10) medium-range surface-to-air missiles.2 In addition, Kiev showed interest in jointly classifying comparable defense products manufactured in Russia and Ukraine.
Russian-Ukrainian bilateral ties
The development of Russian-Ukrainian bilateral MTC has been more dynamic than multilateral contacts within the Commonwealth as a whole, which is fairly logical. From the very first attempts to form a common military-technical space within the CIS, Ukrainian officials have been declaring that Ukraine is ready for cooperation, but only on a bilateral basis. And it is no secret that Russia is the most likely MTC partner for Ukraine among CIS countries. On the other hand, the Russian defense industry also really needs the output and services of Ukrainian defense companies. Thus, for many years the development of bilateral MTC has had a very practical basis for that are unaffected by changing political considerations.
An intergovernmental agreement signed in May 1993 opened the door to large-scale Russian-Ukrainian MTC. For many years, the cooperation consisted mainly of cooperation in production between Russian and Ukrainian arms manufacturers. There were also attempts to carry out major joint projects, like the An-70 transport plane and aerospace projects.
The turning point in bilateral cooperation came in 2001, when, on January 18, the Defense Ministries of the two countries signed a plan on bilateral MTC. Then, at a summit in Dnipropetrovsk on February 11-12, 2001 new concrete agreements on MTC were reached that gave an additional inducement to such cooperation.
We should note that the meeting in Dnipropetrovsk covered an even broader range of issues: the expansion and deepening of cooperation in the aerospace sector, manufacturing, high technology and power engineering.3 Even after just one year we can say that there has been unequivocal progress in these spheres of cooperation. In our opinion, over the past few years, the greatest progress was made in aerospace cooperation. As for MTC proper, the following key directions can be singled out:
mutual deliveries of military-use products, repairs, maintenance services and military hardware upgrading,
military-industrial cooperation at the contractor and subcontractor levels,
joint projects to develop new arms and dual-use equipment.
Mutual deliveries, repairs
Ukraine receives a wide range of services repairs and upgrades of its military hardware, primarily air defense (AD) systems and fighters jets from the Russian Defense Ministry. In turn, Ukrainian defense plants repair Russian weaponry.
State intermediary Rosoboronexport delivers new Russian military hardware to Ukraine. In particular, Ukraine receives special communication equipment, parts and tools for armored vehicles, AD systems, aircraft, small arms and ammunition. At one point Rosvoorouzhenie and Ukrainian arms exporter Ukrspetsexport considered a joint project to upgrade former Soviet arms and weaponry, and convert arms and military hardware.4
Military industrial cooperation
This sphere of bilateral cooperation has traditionally been fairly advanced. Mutual deliveries of weapons-production components are made under the November 1993 Agreement on production, scientific-technological cooperation in the defense industry. Additionally, over 30 intergovernmental and ministerial agreements on MTC have been signed. At present some 50 Ukrainian defense enterprises deliver components to Russia through a simplified system without licenses from the State Export Control Service. In the late 1990s Russia's share in Ukraine's total defense turnover constituted up to 70%.5
According to Russian sources, in 2000, 31 Russian companies from the Agency for Conventional Armaments exported military products to Ukraine and 17 imported weaponry; in 1999 the numbers were 19 and 22 respectively. In Ukraine there were 89 export and 17 import enterprises in 2000, and 101 and 20 respectively in 1999.6
Russia delivers components and parts for tanks, armored vehicles, missiles, guided tank projectiles and measuring equipment to Ukrainian defense companies. It imports electronic and radio components and devices, computer chips, imaging devices, metals and metal products, chemical reagents, blanks for optical instruments and night vision equipment.7 In our opinion, electronic components and computer chips have a special position because Russia is experiencing severe problems with them.
According to the information available, the two sides have generally managed to overcome customary economic barriers in the road to the successful development of international military-industrial cooperation, like customs duties and mediators. Rosters of enterprises involved in cooperation have been prepared, as well as lists of products made jointly and thus not liable to customs duties. This is especially important because during joint production one and the same item may cross the border several times.
The Russian Agency for Conventional Armaments recommends further expansion of military-industrial cooperation with Ukraine, and, in particular, the joint repairs and upgrades of key components of T-54/55/62/72, T-72M and T-72M1 tanks that countries like Algeria, Egypt, Libya, Syria, Yemen, Vietnam, Romania and India have in large quantities. According to Russian estimates, such operations could bring $5.5 billion annually until 2007-2010.
From its side, Ukraine suggests deepening industrial cooperation in upgrading armaments in the arsenals of the two countries, namely T-62/72/80 tanks and R-27 (AA-10) air-to-air missiles, installing Ukrainian engines on Russia's APC and T-90S tanks, and equipping Russian MiG-AT trainers with Ukrainian Motor-Sich engines.
Joint military hardware development projects
Unlike deliveries of ready-made products or joint production of armaments, this direction of cooperation currently holds a modest place in the general context of military-economic ties between the two countries. The consortium for the development of the An-70 military transport plane is usually offered as an example of mutually beneficial cooperation, however, the situation around the project is quite contradictory and ambiguous. It is of some importance that Sergei Ivanov, the Russian Security Council secretary at the time, said at a press conference in Kiev, in February 2001, after talks with his Ukrainian counterpart Yevhen Marchuk, that Russia does not rule out the possibility of joint production of new armaments and military hardware with Ukraine.
The signatories of concrete MTC agreements dated January 18, 2001, felt that the agreements promoted plans for developing weaponry other third countries. Thus, according to the Russian Agency for Conventional Armaments, the following military-purpose goods for world markets could be produced in cooperation:
optical instruments at the Russian Vologda Optical and Mechanical Plant, the Moscow Orion Scientific Production Association, the Ukrainian Arsenal and Kvarts production associations and Zaporizhzhya Titanium and Manganese Combine,
missile targeting systems at the Automation and Hydraulics Central Research Institute, the Krasnogorsky Factory JSC and Arsenal,
high-tech materials at the Kovrov Mechanical Plant, the Transport Machinery Central Research Institute, Yupiter JSC in Valdai, Photopribor in Cheboksary, Krasnogorsky Machine-Building Factory (Russia), the Powder Metallurgy Plant in Brovary, the Kharkiv Road Institute and the Zaporizhzhya Metallurgical Plant (Ukraine),
special instruments and devices - the Automation and Hydraulics Central Research Institute, JSC Tula Arms Plant (Russia), Kyiv Production Association, Izyum Instrument plant and the Optical and Mechanical Association in Chernovtsy (Ukraine).8
However, all the aforementioned projects are fairly modest in scale and auxiliary in nature. It is interesting that such proposals for joint projects are usually aimed at arms exports to third countries, while the prospects of purchasing military hardware for their own armed forces are discussed with greater caution. And this is probably not only because of the limited size of defense contracts in both countries, but also because of the insufficient degree of mutual trust and the need to achieve self-sufficiency in the sphere of armaments for national security reasons.
There are certain objective and subjective obstacles to the implementation of joint projects of developing new armaments. We find the following most relevant:
a) The problem of funding projects and choosing partners for cooperation Russia is known to suffer from an acute shortage of funds for high-priority scientific and technological programs. Government officials like Ilya Klebanov have to admit that government resources are insufficient and Russian private capital is reluctant to invest into high tech production.9
Neither can Ukraine be of much help in this respect. It lacks the necessary financial infrastructure, and this affects the operation of the Ukrainian military industrial complex. Similar problems arise in military-economic cooperation.
The joint project of developing the An-70 military-transport aircraft vividly illustrates related financial problems. Under the agreement, 75% of development costs should have been covered by the Russian defense budget and 25% by the Ukrainian budget. However, over the past few years the Russian Defense Ministry has been unable to provide necessary funding. At the same time, it failed to attract Russian commercial companies or foreign investors to the project. It is known that West European companies have started making their own A400M aircraft and China, the other potential partner, has assumed a waiting stance.10 The participants of the project - the Kiev-based AVIANT State Aviation Plant, the Antonov ANTK aircraft complex, the Omsk aircraft plant and others - are incapable of completing the project and launching serial production at their own expense. As a result, in April 2002, the Russian Air Force raised the question of dropping further development and the next procurement of the aircraft.11
The case of the An-70 project is quite indicative because it concerns a technically advanced product. In many ways, the An-70 is superior to all existing foreign analogs and there is demand for it in, both, the developer-countries, and abroad in the Czech Republic and China. Nevertheless, the present state of the economy and of the cooperation between the two key CIS countries does not allow for the implementation of a joint military industrial project of such complexity and cost.12 And as some observers correctly note, this undermines the very idea of advanced military-economic integration of the former Soviet Union.13
It is not accidental therefore that, in its military-industrial ties, Russia has been increasingly relying on other traditional MTC partners like instance, India. Joint projects planned and operational are quite numerous:
The BrahMos project for the development and manufacture of an anti-ship missile, which has entered the testing stage.
The prospective development and production of the Il-214/MTA multifunctional transport aircraft in India. It is of note that the aircraft is meant to replace transport aircraft of Ukrainian design - An-24, An-26 and An-32 in the Russian and Indian Air Forces.14
According to Ilya Klebanov, Russia and India will also develop a fifth-generation fighter plane. Concrete talks on the subject are expected to begin in 2002, after the Russian government officially names the Russian contractor for the project.15
In addition to these projects for developing new hardware, several joint production programs are implemented or planned:
A contract has been signed for the assembly of Su-30MKI multifunctional fighters under license in India.
A contract has been signed for the delivery and licensed production of T-90S tanks.
A large-scale upgrading of Indian T-72 tanks has been planned.
Cooperation may be in the production of Smerch MLRS at Indian industrial facilities may be organized in the future.
It is easy to see that the projects mentioned above cover almost all of the possible areas of joint Russian-Ukrainian arms programs military transport aircraft, tanks, missiles etc. In other words, India could actually occupy the place of Russia's partner in cooperation, Ukraine could claim earlier.
In many respects, India is an ideal partner for Russia in defense industry production. Relations with Delhi are free from the military-political risks inherent in such cooperation with China. The financial capabilities of Russia and India are comparable, as are their management cultures and bureaucratic procedures.
b) Different directions for developing advanced military hardware
Analysis shows that the military industrial potentials of Russia and Ukraine are developing differently, which naturally reduces the sphere of potential joint projects. For instance, Russia's current national priorities in weapons development are all based on high technology. They include16:
a fifth-generation fighter jet,
a new multipurpose submarine (faster and less detectable than the Gepard submarine already launched),
high precision weapons,
personal protection equipment,
communication, intelligence and surveillance systems.
It is clear that the Russian side does not name a new main battle tank, a military transport plane or anything else that could serve as a field for pooling efforts with Ukraine as a priority of R&D. Only the last of the listed items - communication, intelligence and surveillance systems - may be a direction for mutually-beneficial scientific research.
Russia is known to traditionally have certain difficulties in developing and manufacturing onboard radio electronic equipment comparable to the best Western models.17 Cooperation in this sphere with Ukraine could be beneficial for Russia. However, judging by everything, the situation is improving thanks to the efforts of Russian companies and without the involvement of foreign partners. Russian experts have drawn attention to the following facts:
In the summer of 2001, it was reported that the Irkutsk Aviation Industrial Association (IAIA) purchased controlling shares in the Russian Avionics JSC, which conducts R&D in upgrading fighters of the Su-27/30 family. This strengthened the innovation potential of the IAPO, which has good financial prospects thanks to contracts with India.
Contracts with China and India have also improved the position of IFIG Aerospace Equipment, which manufactures onboard equipment for Su-27s and MiG-29s.
In October 2001, it was announced that another onboard-equipment producer - the Technocomplex research and production center - was licensed.
Russia is making efforts to overcome the traditional backwardness of its defense industry in electronic components. Russian experts believe that, in the process of developing the fifth-generation fighter, Russia "will evidently have to agree to partially equip prototypes with foreign components." Reliable Russian assembly parts are expected to be developed by the start of serial production.18 It must be said that Russia has listed the manufacture of electronic components at a proper level, the development of radioelectronic security and the creation of automated systems among its crucial national security objectives.19 The preservation Russian intellectual property in these spheres receives special attention.
Another matter is that Russia is very concerned about the present state of its arms manufacturing facilities. The absence of large-scale Defense Ministry procurements and constant operation at partial capacity have resulted in the degradation and collapse of many facilities. According to State Duma experts, after 10 years the process has entered a qualitatively new stage, with many production cooperation chains fully deteriorating through forced idleness.20 Even though plants formally exist, their equipment is outdated and they have almost no professional personnel. In this context, cooperation with Ukrainian munitions plants could be quite beneficial for the Russian side.
c) Lack of mutual confidence
The acute rivalry on the international arms market between Ukraine and Russia and the dumping exercised by Ukrainian exporters in deliveries of comparable arms systems, to say nothing of unfair competition - all of this obstructs the establishment of a climate of confidence between the two countries and hinders mutually beneficial cooperation in the defense industry.
The decision of the Ukrainian government to pursue NATO membership, made at the session of the National Security Council chaired by President Leonid Kuchma on May 23, 2002, raises the issue of mutual trust to a different level. Russian experts had already feared that the establishment of close ties between Ukraine and Western countries and NATO could lead to the unauthorized transfer of military technologies and Russian defense industry innovations in particular, documentation on repairs and upgrading of key export models of Russian arms and military hardware to Kiev's new partners. Now there are new reasons for such concerns, and this leads us to believe that it is necessary to amend existing legislation on the continuation of MTC with Ukraine. An agreement on the protection of intellectual property rights and renunciation of the transfer of sensitive information to other countries is necessary.
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Analysis shows that Kiev is very pragmatic about MTC with Russia. Ukraine is interested in joint defense industry projects, especially when it cannot carry them out independently or with partners like Poland, the Czech Republic, Israel or France, or when the development of a closed production cycle in the nearest future is considered impossible. These kinds of projects include programs for developing and manufacturing certain types of aircraft, air defense systems, radio electronic security equipment and shipbuilding. The decision to pursue NATO membership only strengthens this tendency.
On the other hand, there are still some factors that compel the Ukrainian leadership towards rapprochement with Russia. In particular, these include: problems in implementing MTC with foreign countries, disillusionment in the prospects of MTC with Western countries, the grave situation in the Ukrainian defense industry and leftover dependence on Russia for upgrading and rearming troops, especially combat aviation and air defense.21 There are, however, indisputable achievements in cooperation with Russia, such as space and rocket technologies.
The further development of Russian-Ukrainian MTC will largely depend on the struggle between these two tendencies.
1 Kommersant, 15.05.2002, p. 2.
2 Ibid.
3 ITAR- TASS, 09.02.2001.
4 INFO-TASS database, Vega base, 30.03.1999.
5 INFO-TASS database, Vega base, 08.06.1999.
6 Report of the Russian Agency for Conventional Armaments, INFO-TASS database, Vega base, 30.01.2001.
7 Ibid.
8 ITAR-TASS, 14.02.2001.
9 Ekspert, No. 1-2, 14.01.2002, p. 46.
10 Nezavisimaya Gazeta, 24.04.2002, p. 5.
11 Ibid.
12 Some $3.5 billion has been spent on this.
13 The project seems to have certain military-political undertones: it would be preferable for the Russian Air Force to adopt a fully Russian-designed aircraft, especially there are at least two alternatives - Tu-330 and Il-76MF.
14 Vedomosti, 08.02.2002, p.1
15 Kommersant-Vlast, 04.12.2001, p. 60
16 Evaluations of the then Russian deputy prime minister Ilya Klebanov, see. Ekspert, No. 12, 14.01.2002, p. 46.
17 In this connection Russia is sometimes forced to equip its export models of military hardware with French or Israeli electronics.
18 The opinion of Chairman of the Military Scientific Committee of the Air Force S. Kolyadin, see Krasnaya Zvezda, 07.02.2002.
19 Krasnaya Zvezda, 24.01.2002, pp. 1-2.
20 The evaluation of I. Igoshin, member of the State Duma Budget Committee, see Nezavisimaya Gazeta, 02.02.2002, p. 2.
21 The transition of the Ukrainian Armed Forces to Western-made military hardware is an economic impossibly now and in the foreseeable future.
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