Robots, robots, robots … these are clearly the stars of the 14th Arms & Security show being held this week in Kiev, Ukraine. Ground or airborne, micro or mini, these ground robots or remotely piloted air systems (RPAS) are difficult to miss as there are so many of them on show despite the many obstacles specific to the Ukrainian market. Why? FOB has investigated.
When in 2014 the first battles began in eastern Ukraine against unidentified pro-Russian troops, it quickly became clear that the Ukrainian forces were sorely lacking in reconnaissance and artillery observation RPASs. Unable to legally import existing foreign systems, the Ukrainian defence industry responded to the urgent military requirements with unprecedented creativity. But the resulting profusion of RPASs hides a very painful reality that Ukrainian private companies prefer not to discuss too openly. In other words, “we‘re not complaining, but we nevertheless regret a government policy that openly favours public actors,” says Stanislav Punegov, project manager for CarboLine.
These private companies, although also motivated by patriotism, have a long, hard battle to wage if they want to have any hope of winning a state contract. The first hurdle is financial. With no state subsidies, the development of new RPASs relies not only on self-funding but on a generation of young engineers, computer scientists and other inventors who call themselves “volunteers”. This term is now as acceptable on a business card as “sales manager” or “project manager”. “For us, it also means that we can accomplish our patriotic duty without necessarily joining the army,” Andrey Povoroƶnyvk, electronic engineer for Infocom, is proud to say.
Once completed, every robot must then tackle the long – and slow – qualification process set up by the Ukrainian Ministry of Defence in the hope that, sometimes after years of waiting, they will get the precious document that might – possibly – enable their robot to be bought by the Ukrainian government. Nothing new in that, you might think, given that any new technology has to pass a battery of severe tests before being handed over to the military. The problem is that in order to draw the attention of the military and to “accelerate” these efforts, private companies must provide their systems free of charge for them to be “tested in combat conditions”, de facto increasing the risk of sinking companies whose economic health is precarious from the outset.
It is therefore all the more incredible that some projects have managed to keep their heads above water, probably inspired by the success of the most famous amongst them: the People’s Drone (PD-1) conceived and developed since 2015 by UkrSpecSystems. The robot is well-named given that the PD-1 is the first military RPAS fully funded by crowd financing. Thanks to the US$27,600 collected, a handful of “volunteers” were able to produce a first system, delivered to the Ukrainian armed forces in 2016.
With solid arguments, such as a range of 400km and autonomy of 10 hours, the PD-1 is now trying to enter foreign markets, although “the calls for tender to which we respond are only civilian because we are still not allowed to export military equipment abroad,” says Dmitry Naumenko, sales manager of UkrSpecSystems. This obstacle is one only private companies have to deal with, UkrOboronProm being one of the few state entities legally authorised to export arms. As a result, the state consortium, which exports 80% of its production, accounts for the overwhelming majority of the US$528m of military exports recorded by Ukraine in 2016, and in doing so increased its annual turnover by 15%. This financial health is proudly exhibited by the giant UkrOboronProm, but remains a mirage for the “small” private sector.
Paradoxically, the solution may soon come from the Ukrainian state, even if it is the very source of the problem in the first place. After two decades of leanness and spending which barely reached 1.5% of GDP, the Ukrainian military budget has been gradually growing since 2014 and the first clashes between its troops and the Russian forces in the east of the country. Three years later, Kiev now allocates 5% of its GDP ( €5.47bn) to its armed forces, and is not ready to backtrack in 2018. Kiev intends to centre this budget not only on the well-being of the troops, but also, and above all, on modernising the key players of its defence industry. What remains to be seen is who will actually benefit from the financial windfall …