The crazy increase in the price of weapons and even their transfer, but with certain commercial conditions, is what is currently happening on the international market.
Ukraine actively independently imports weapons in fairly significant volumes, which are necessary for the Defense Forces of Ukraine, and does not rely only on partners’ help. But it is quite difficult to call the situation problem-free because weapons are needed right now, and the arms market in the world has changed radically.
And the fact that weapons have become many times more expensive, that the pace of their production does not keep up with demand – all this is the reality that Ukraine is now facing, and not only us but also the rest of the world.
Volodymyr Pikuzo, head of the Defense Procurement Agency of the Ministry of Defense of Ukraine, told quite interesting things about the situation on the international arms market in an interview on Apostrof TV.
The increase in the price of weapons
“Increasing the cost of ammunition by 4 times in one year is our reality,” stated Volodymyr Pikuzo. And it should be noted that this applies not only to shells because prices have increased several times for all products, starting from the same shells and ending with the F-35, which has increased by 1.5 times.
It is quite simple to explain why this happened. The defense market is subject to the same laws as the market for ordinary goods. There is a demand, and the current industrial capabilities cannot satisfy it; the result is an increase in the price of weapons in general.
The Stinger is a great example of a situation where a weapon is needed, but this MANPAD was discontinued.
And the situation when weapons are needed now cannot be solved by production capacities at all because there is a question of technological cycles and production volumes in general.
It is possible to order, but it will take years to wait, and a great example, again from aviation – the queue for fighter jets. And this is the same situation when having money must be taken in 8 years.
But this applies not only to aviation. This applies to everything, tanks, which in the case of Leopard 2, must wait until 2026, like Norway, or at least 2.5 years for 18 self-propelled guns, like Romania. And this also applies to demining equipment, which is extremely necessary for the Ukrainian Forces right now. But as a result:
“We as the Ministry must contract with these manufacturers of the best demining equipment – negotiations with them, as a rule, end with our question “When will you put what we need” and their answer “In 2025”, – said the head of the Defense Procurement Agency of the Ministry of Defense of Ukraine.
The consequences of the reduction of the defense industry
Why so – again explains the law of the market economy. After the end of the Cold War, defense industries worldwide had huge orders and corresponding production volumes. But after 1991, the process of reducing Ukrainian forces and defense budgets worldwide began. As a result, there are no new large orders – there is no need for large-scale production – production is reduced.
A great example is the production of Leopard 2 tanks for the Bundeswehr in the 1980s when 1,050 tanks were delivered in three years, from 1982 to 1985. And in general, from 1979 to 1992 – 2125, this is only for Germany’s armed forces, 445 for the Netherlands, and 380 for Switzerland.
But after the end of the Cold War, these tanks became unnecessary, and that is why they began to be sold off or given away for a symbolic 1 euro, as in Poland in the early 2000s, because the Bundeswehr disbanded its tank units. And that is why the production capacity of KMW is exactly what it is now because there was simply no demand for products. That demand was actually completely satisfied due to the modernization of already-produced weapons.
And, of course, what has been shrinking for 30 years cannot be restored in the same volumes in 2-3 years at most. And that is why those countries that kept their own defense in good shape will win on the international market.
A great example is Korea, which could not afford to fall into a lethargic dream of collective security because it is next to the DPRK.
Aid to arms with conditions
Returning to another problematic aspect of the supply of arms to Ukraine, which Volodymyr Pikuzo said, this is a situation where Ukraine is helped with arms, but under certain conditions. And we are not talking about the rule not to use Western weapons for strikes on the territory of the Russian Federation.
For example, weapons can be transferred free of charge, but the requirement is to bring them to a suitable condition on the country’s territory. This is exactly the situation with the Italian howitzers, which were stored in the open and needed repair but could strengthen the Ukraine forces. And this choice is obvious because Ukraine now needs weapons.
At first, they wanted to buy them out, but then it was agreed that it would be free help. But the condition was that they would be restored to the country’s territory.
“We hired the company based on consultations with international partners, based on the results of studying their capabilities to repair a large batch of howitzers – I will not name the exact number – in two months… And our partners did not cope with their tasks. Now we are with them in court.” , – said the head of the Defense Procurement Agency of the Ministry of Defense of Ukraine.
And although later all the howitzers were reinforced by the Ukraine Armed Forces, the “slag” in the form of court cases regarding non-fulfillment of contractual obligations remained. On the other hand, especially if we are talking about the FH70, it was hardly possible to restore it in Ukraine. But the situation is quite indicative – sometimes additional conditions can be hidden with help.
In general, these are the rules of the game on the international arms market, which must be considered. And this means the need to simultaneously solve short-term tasks and remember that for some types of weapons, the queue must be occupied years before it will be manufactured. And so far, there are no signs that this trend will change.