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Controlled weapon exports can bring billions to economy, Ukraine’s defense association claims

The National Association of Defense Industry Enterprises of Ukraine (NAUDI) suggests that opening up exports could significantly boost tax revenues and support the growth of the defense sector. Discussions have highlighted the need for such a strategy to address funding shortfalls and expand production capabilities while navigating the complexities of wartime export permissions.

byOlena Mukhina

01/09/2024

2 minute read

Ukrainian crew of the US-supplied M2 Bradley IFV, which took part in the liberation of Robotyne, Zaporizhzhia Oblast. Credit: Ukrinform

Controlled weapon exports can bring billions to economy, Ukraine’s defense association claims

The National Association of Ukrainian Defense Industries (NAUDI) announced that opening up the export of military products could be a strategic move to boost the country’s economy.

NAUDI representatives say that military product exports could bring the state up to $2 billion in additional tax revenues over a year and a half.

“Currently, the issue of scaling up production may be rivaled only by the issue of its financing,” said Dmytro Natalukh, Chairman of the Parliament’s Committee on Economic Development, at a recent meeting of the association.

Ukraine’s defense industry can produce equipment worth $20 billion per year, while Ukraine’s budget can only afford to purchase weapons and ammunition for $6 billion.

“Due to a funding shortfall, defense industry enterprises may face bankruptcy, as all operating funds are invested in developing new technologies and expanding production,” the NAUDI representative revealed.

Opening up exports could be a strategic step toward strengthening the country’s economy and advancing the defense industry. At the same time, additional taxes would be collected on weapons and ammunition for the Ukrainian armed forces.

“Today, Ukrainian manufacturers do not have a direct legal ban on exporting their products, but in the context of active warfare, the issue of export permits for weapons becomes particularly complex and important,” said Oleksandr Marikovskyy, Chairman of the Subcommittee on Regional Cooperation and Trade of the Committee.

In July 2024, Marina Bezrukova, Director of the Defense Procurement Agency of the Ministry of Defense, stated that Ukrainian companies should be able to export a portion of the weapons they produce. According to Militarnyi, a working group was established on 12 August to develop a mechanism for exporting military equipment from domestic factories.

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