Ukraine to Send Arms Export Revenues to State Defense Fund

Ukrainian arms manufacturers will be able to export products and components under a new framework that channels a share of revenues into a state defense fund, Prime Minister Yulia Svyrydenko said on Wednesday.

Kyiv is seeking to raise funds for its growing arms industry. Ukraine announced in February that it was permitting wartime arms exports, but manufacturers have since complained of regulatory barriers as the government retained tight control and worked out a framework for deals.

The country also needs funding for its defense industry, which has expanded sharply since Russia’s 2022 invasion, to increase capacity and invest in research and development.

According to Svyrydenko, the scheme will levy 20% of proceeds from finished defense goods and 30% from components. Manufacturers will have to prove that they can fulfill Ukrainian defense orders and export contracts at the same time, while restrictions will apply to items on a list of critical goods.

“Every export contract must serve one strategic goal: strengthening Ukraine’s defence industrial base and delivering more weapons for our Armed Forces”, Svyrydenko wrote.

The system will operate during martial law under bilateral “drone deals” that Ukraine has already struck with some European and Middle Eastern states and is seeking to sign with others, including the US.

Svyrydenko said Ukrainian technologies will be “transferred without assigning intellectual property rights and will remain subject to controls on their use and re-export”.

She added that more than 50% of weapons used by Ukraine on the battlefield are domestically produced and that defense manufacturers “continue to expand production of drones, electronic warfare systems, ammunition, components and other critical defense technologies”.

(Reuters, Max)