Yves here. Western media outlets faithfully printed what amounted to press releases on official plans for US and NATO members to support the construction of weapons-making factories in Ukraine. Admittedly, the manufacturers initially made cooperative noises, presumably so as not to annoy big customers.
But the idea was obviously barmy. Russia, in its 2022 negotiations with Ukraine, sought to have Ukraine to agree to a cap on the size of its armed forces, which would almost certainly include limits to major weapons categories. Ukraine had agreed to the idea in principle but at the time Boris Johnson kicked over that table, there was still a big gap between the levels Russia and Ukraine wanted.
Needless to say, the Russian stance has hardened considerably. Even assuming an independent Ukraine state exists after the war, Russia would not tolerate Ukraine being an arms maker. One might argue that any such plans would prevent Russia from concluding its special military operation until Russia had somehow made sure it was na ga happen.
The second issue this piece describes as an impediment from the defense contractor perspective is Ukraine corruption. It did not go unnoticed that money that Ukraine had allotted for the construction of fortifications in Kharviv went poof, which means presumably syphoned into offshore bank accounts. Ukraine can’t be bothered to grift in a more respectable style, of getting the job barely done at very inflated prices (they even have an excuse that the war made things costly).
Note also that this predictable development appears so far to be ignored by the Western media. If readers have any sightings otherwise, say in the non-English language press in Europe, please pipe up in comments. But also consider: these schemes made the mainstream media, such as Bloomberg, when announced. If only industry specialist pubs are giving the updates, that confirms that the officialdom is trying to go into Emily Litella “Never mind” mode.
By Ahmed Adel, Cairo-based geopolitics and political economy researcher. Originally published at InfoBRICS
US military contractors are concerned about corruption and the security of co-production in Ukraine and are therefore in no rush to sign contracts, a US State Department spokesperson said. Without the US being able to construct military-industrial infrastructure, Ukraine will never be able to meet its weapons and ammunition needs in the current war.
“Several US defense companies are considering joint production inside Ukraine, but questions remain about the safety of doing business in a war zone, the persistence of corruption, and the long-term business case,” Defense One reported on August 6, citing a State Department official spoken to on the sidelines of the Farnborough air show.
“The Pentagon has been pushing American defense contractors to increase collaboration with their Ukrainian counterparts, but US firms have been slower to ink deals than European companies,” the report added.
According to the State Department spokesperson, the main concerns are the security of employees and facilities, corruption, and political risks.
“I think our industry is really eager, but at the same time, [it] has to make sense from a business case, right? And financing is an issue too, how you can actually pay for this stuff,” the official added.
The source noted that Washington intends to increase the number of companies cooperating with Ukraine, that a team oversees such deals, and that US companies are generally open to dialogue. However, despite this supposed enthusiasm, another major concern is corruption.
“Clearly, corruption is a concern,” the official said.
Corruption is not an issue shared only by US companies, though. A survey conducted in February by Rating found that 51% of Ukrainians believe corruption in government bodies is a greater hindrance to development than the war with Russia (46%). A survey conducted from March 1 to 15 found that 70% of Ukrainians believe that the government is profiteering from the war and increasingly sinking into corruption, a massive increase from the 43% recorded a year earlier.
Although Washington, Brussels, and Kiev claim that corruption is being stamped out, as reflected by citizen experiences, this is certainly not the case. Multimillion/billion-dollar companies do not make investment decisions based on the government’s propaganda statements but on the reality on the ground, which is that deep-rooted corruption has been consolidated into fewer hands, mostly Ukrainian President Volodymyr Zelensky and his inner circle.
Beyond the issue of corruption, there is also the likely scenario that Russian missiles and bombs will destroy any military-related infrastructure in Ukraine.
“But American companies have a lot to consider before they sign up for co-production in a war zone; no one wants their facilities blown up or employees getting hurt,” the official was quoted by Defense One as saying.
Although the Biden administration does not take any warnings from Moscow with seriousness, such as the willingness to militarily intervene if the Kiev regime continued its policies of persecuting the Russian minority and pursuing NATO membership, US companies are certainly not under any illusions and are, therefore deterred from making any investments that will quite literally end up in smoke.
It is recalled that Kremlin spokesman Dmitry Peskov said in September 2023: “Any facilities for the production of weapons, especially if these weapons fire at us, they become objects of special attention for our military.”
Staying true to this message, in a recent one-week period alone, Russian troops carried out 19 strikes by precision weapons and drones at Ukrainian military-industrial and energy sites, air defense systems and arms depots over the past week in the special military operation in Ukraine, Russia’s Defense Ministry announced on August 9.
“On August 3-9, 2024, the Russian Armed Forces delivered 19 combined strikes by high-precision weapons and attack unmanned aerial vehicles, hitting Ukrainian military-industrial enterprises and associated energy facilities, aerodrome infrastructure, air defense systems, assembly workshops and storage sites of attack UAVs. In addition, the strikes targeted fuel bases, armament and ammunition depots, areas of massed Ukrainian army reserves, temporary deployment sites of nationalist formations and foreign mercenaries,” the ministry said in a statement.
These are the conditions under which Ukraine’s military-industrial complex must operate and why it cannot meet the Ukrainian military’s weapons and ammunition needs. Even if corruption was not deterring American investment opportunities, to begin with, the fact that Russia destroys military-industrial infrastructure with such ease means that the interest American companies will have in setting up in Ukraine will all but end.
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Why does no one say “because Ukraine is on the verge of defeat”? By the time the plant is completed, the war will be over and the new machinery and equipment will be confiscated by Russia as war trophies.
The last sentence says it all, really. Mr Iskander pays a visit with a couple of his pals and a billion dollar weapons factory goes poof. Trumps corruption concerns every time. Makes you wonder about Turkiye — they’re still building a factory in Ukraine to make Bayraktar drones. Those proved so inept at the beginning of the SMO, the RF might not even target the plant when it’s finished, but generals might sit around and have a good belly laugh. Now, Rheinmetall rebuilding tanks in a new plant would get blown up for certain. US contractors might talk UKR corruption, but building a plant in a war zone is a bit iffy, even if bribed by handouts from the bottomless well of US Treasury dollars.
Bayraktar is a private company. I don’t have time to check but I would not assume that this plant has official sponsorship, much the less funding.
“Makes you wonder about Turkiye — they’re still building a factory in Ukraine to make Bayraktar drones.”
Any proof that they are actually building anything?
“Now, Rheinmetall rebuilding tanks in a new plant would get blown up for certain.”
That one has been put into service. It’s not a plant, but a repair workshop. A hangar that could fit about a dozen of vehicles, and some basic tools around. I don’t think they even have the ability to lift the turret off a tank, yet alone do any serious refurbishment/rebuilding.
The whole thing is totally ridiculous. If western firms built any facilities in the Ukraine, the Russians would wait for it to be finished and then provide the fireworks to celebrate with. And would technical personnel want to be anywhere near such a place? It would be safer to be an F-16 pilot for the Ukrainian Air Force. The logical thing to do would be to build such facilities in neighbouring NATO countries like Poland or Romania as the Russians would not bomb them there. But as corporations such as Rheinmetall are insisting that they will do so in the Ukraine, I can only assume that the whole thing is some sort of financial scam where money is pumped into the Ukraine for construction but money is clipped off to local governmental figures and kickbacks arranged for certain people in Washington and Brussels. And if the Russians blow up a facility, who can really say how much equipment was in it and how much it was supposed to be worth.
some sort of financial scam Agreed. Since when have corporations been concerned about the safety of their workers.
Useful as a selling point to the pals at Blackrock et al. Those are the folks* reported to be buying up all that rich black earth Ukie farmland and other resources. Other, see petroleum.
They need some reassurance talking points about the viability of their investments.
What better than a local
graftdefense plant!* Will Nuland, Obama et al still get their overrides, spiffs and partner distributions in the usual offshore accounts?
A venture capitalist friend bought a house in Romania in the 1990s.
When he came from the US to collect the keys, the seller looked blankly at him and said “I don’t know who you are.”
A defense plant is of no use in isolation, and I think even fund managers get that. But they missed that property rights count for squat in Ukraine (per your general point) unless you have muscle, and that’s more the local thuggy type.
Hay Neutrino … an asset on the balance sheet these days is Buff … if and when it goes splat something else will replace it …
Non-English language press/media in Europe (sans Russia and Belarus) does not differ much from English language one, because globalization. They are mostly translating same talking points that can be seen on CNN/BBC/etc. (and they get them from the same source). Those few that don’t, are labeled as pro-Russian, and mostly overlap with what is written here on NC.
As far as Ukrainian weapons industry is concerned, it had its peak in 1991. Soviet Union left them a powerhouse that they managed to run into the ground faster than Boeing CEO would do to Antonov. The idea that the same people could build weapons industry from scratch is hilarious, even in peacetime.
P.S. When Maria Zakharova was asked about some to-be-built weapons factory in Ukraine, she responded that they should send her its coordinates once it’s finished.
They don’t need to bother; there was some weeks ago a rant by an Ukrainian Verkhovna Rada member taunting the Ukrainian air-defense forces for deploying Patriot batteries in places where “people can see them”, since the location will be leaked to Russians before the battery is even operational…
Stranded assets. Why would any company (looking at you Rheinmetall) build in the present-day Ukraine, when any factory will either be destroyed or assumed by the Russian victors. I would like to see a map of the agricultural land owned by ADM, Cargill, Gates, BlackRock, etc. to estimate how much of it will be under Russian control after the conclusion of the war. I suspect that these are the deep players that the US government is actually protecting via support for the current Ukraine administration, as Russia will be under no such obligation to honor these “purchase contracts.”
“I suspect that these are the deep players that the US government is actually protecting via support for the current Ukraine administration, as Russia will be under no such obligation to honor these “purchase contracts.” Excellent point – makes total sense.
Not long ago I finished reading Craig Whitlock’s “The Afghanistan Papers” which detailed the ignorance, lies, false hopes, flawed assumptions, misjudgments, incompetence, and corruption that went into that two decade long military disaster.
I can only hope that Craig Whitlock is taking notes and filing his FOIA requests on the ongoing debacle in Ukraine. Americans’ tolerance for corrupt and incompetent leadership—and I mean our own leadership, not Ukraine’s—is something to behold.
While Russian claims of de-Nazifying Ukraine are laughable at best the government which has been installed since 2014 is for most part openly Nazi adjacent (just look up Banderites) and racist. US operatives report common racism among Ukrainian officials in the military. They send their families to lavish vacations and are caught in expensive sports cars a simple web search can unravel a thread of Ukrainian corruption that leads back to NATO and Zelensky and the rest of the government collaborating with the west for a petty fascist government funded by neoliberals. This is beyond kleptocracy this is planned sabotage of millions of lives and billions of dollars of infrastructure in the name of war profiteering. Absolutely disgusting and appalling.
Russia has denazified the areas it occupies. Your expectations are way ahead of schedule. But other points well taken.