Business news from Ukraine

Ukraine may export military goods and services worth several billion dollars as early as 2026 after allowing the export of such products during the war, and is considering introducing a tax on these exports, Reuters reports, citing Deputy Secretary of the National Security and Defense Council (NSDC) of Ukraine David Aloian.

“When asked about this year’s export potential, Aloyan (Deputy Secretary of the NSDC David Aloyan – IF-U) replied: ”Taking into account finished products, spare parts, components, and services that can be provided, this amounts to several billion dollars.” Overall, he said, the potential is “significantly higher” than pre-war exports,” Reuters reported on Friday.

According to Aloyan, in February, the state commission responsible for issuing relevant licenses during wartime approved most of the 40 applications from defense sector manufacturers to export material assets and services.

It is noted that Ukraine stopped exporting weapons after Russia’s invasion in February 2022 and relies heavily on weapons supplies from partners to defend itself against Russian troops. At the same time, Kyiv has invested resources in developing its defense industry, particularly drones and missiles. Leveraging its vast combat experience, Ukraine has experienced a boom in defense technology in recent years.

However, Aloian, who is a member of the commission that authorizes exports, did not exaggerate the significance of the immediate export boom: Ukraine’s own military needs must come first, as Russian troops advance in the east of the country and airstrikes hit towns and villages far from the front line.

According to Aloian, Ukraine’s partners have expressed interest in acquiring its advanced defense technologies. He named Germany, the United Kingdom, the United States, the countries of Northern Europe, three Middle Eastern countries, and at least one Asian country among those most eager to do so. “One of the Middle Eastern countries, which has a long history of arms trade with Ukraine, is exploring opportunities in the field of drones and heavy equipment,” Aloyan said, declining to name the country.

According to Aloyan, priority will be given to exports to countries that are Kyiv’s biggest supporters in the war. Ukraine also seeks to prioritize joint ventures and other forms of cooperation with other countries to attract financial resources, create new supply chains for weapons to the front lines, and gain access to new technologies. “This is more important than simply exporting ready-to-use products,” Aloyan added.

“Ukraine is also considering the possibility of introducing export duties for defense manufacturers,” he said. Although a final decision has not yet been made, he believes that this measure would justify the state’s decision to resume exports, as Kyiv could use the revenue for its own underfunded military needs.

“None of the applications approved by the commission involve the export of ready-to-use weapons,” Aloyan said, “and most are aimed at reimporting weapons to Ukraine for use on the front lines. But some of them are related to equipment for the Ukrainian-American FrankenSAM program, which develops anti-aircraft missile systems by combining Soviet systems belonging to Ukraine with Western missiles.”