re: Latest Updates: Russia-Ukraine Conflict

The Kyiv Independent has an interesting article on the transformation of Ukroboronprom, the Ukrainian state defense production agency, into two state-owned corporations.

quote:

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Incomprehensible attempts to reform the state-run defense conglomerate date back to the earliest periods of Russia’s war in Ukraine in 2014.

UkrOboronProm was established in 2010 as a quasi-ministry exercising strict control of over 100 of Ukraine’s critical state-owned defense enterprises, including key manufacturers like the Antonov Company or the tank manufacturers and repairers in Kharkiv, Kyiv, or Zhytomyr, still largely the Soviet era legacy.

The corporation is widely criticized for endemic corruption, obsolete management, and poor performance in domestic and export markets. The company has been losing its role in the rapidly growing global arms sector.

In the annual rating of the world’s top 100 defense companies by Defense News, UkrOboronProm dropped from 68th in 2016 ($920 in total annual revenue) to 97th in 2021 (with $1.3 billion in total).

After years of bureaucratic ping-pong, the Ukrainian parliament, in July 2021, finally passed a long-overdue bill on the conglomerate’s shift to a stock company. The UkrOboronProm’s enterprises were to adopt corporate governance under the Organization for Economic Co-operation and Development (OECD) standards.

According to the plan, UkrOboronProm was to be restructured as two major holdings.

The first one, preliminarily named the Defense Systems of Ukraine, was to manage 65 enterprises divided into several industrial clusters specialized in aircraft repairs, armored vehicles, high-precision weapons, munitions, and radar and maritime systems.

The other holding was to specialize in aircraft and space components.

Besides, the new companies were also supposed to retain their affiliates managing foreign arms sales and bidding contracts.

Under the plan, the new UkrOboronProm’s reformed enterprises would be finally entitled to act independently and seek investments in production and research. Also, companies were supposed to be entitled to dispose of their surplus assets (such as non-used premises or land plots) and use the gained funds for their development only.

The decree, passed by the government in March, begins the implementation of this plan.

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A lot of the article is a lament that this wasn't done years ago.

quote:

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On March 21, the Ukrainian parliament endorsed the appointment of Oleksandr Kamyshyn, the former management board chairman of state railways monopoly Ukrzaliznytsia, as the new minister for strategic industries.

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As I said in a previous post on this topic, I consider Kamyshyn to be Ukraine's most able administrator, so I hope that he can get Ukraine's native defense industry producing more materiel to aid Ukrainian victory.