Ukraine opens up arms exports, seeking to cash in on wartime technology

Ukraine's Strategy for Arms Exports

By Max Hunder

Growth of the Defense Sector

KYIV, Feb 9 (Reuters) - Ukraine is opening up exports of its domestically produced weapons, President Volodymyr Zelenskiy said, a way for Kyiv to cash in on a wartime technological arms race against Russia to generate badly needed funds.

International Interest in Ukrainian Technology

The four-year war has fuelled a boom in the defence sector, with industry associations estimating Ukraine has more than a thousand arms and military equipment manufacturers, most of them small, privately owned companies founded after Russia's 2022 invasion.

Production Initiatives in Europe

As companies scrambled to produce new weapon systems and ways to counter them, the defence sector has grown quicker than the government's ability to buy its products, leading Kyiv to seek money from its allies to help fund domestic purchases.

Ukrainian manufacturers, many of whom have established a track record of successful battlefield deployment, hope to tap into a historic boom in European defence spending driven by the continent's largest war since 1945.

UKRAINIAN TECHNOLOGY BOLSTERS EUROPE'S DEFENCE

Zelenskiy said 10 "export centres" for Ukrainian weapons would be opened in 2026 across Europe, adding that combat drones, also known as Unmanned Aerial Vehicles (UAVs), would be among the exports.

"Today, Europe's security is built on technology and drones," Zelenskiy said on Sunday evening. "All of this will be based largely on Ukrainian technology and Ukrainian specialists."

Ukraine's allies have expressed interest in learning from its wartime experience and technological innovation to bolster their own forces, many of them weakened by decades of low defence spending.

Since the start of the war, Ukrainian arms manufacturers have been unable to get government approval to export their products. Some have complained that Ukraine's state arms procurement rules are too bureaucratic, with tight restrictions on expenditure and a cap on profits, which restrict their ability to raise capital for expansion and for product development.

INTEREST IN DRONES AND ELECTRONIC WARFARE SYSTEMS

Zelenskiy said production of Ukrainian drones would begin in Germany in February, adding to those already being built in the UK under a joint production initiative. He did not identify the companies involved.

Ihor Fedirko, CEO of the Ukrainian Council of Defence Industry, a manufacturers' association, told Reuters international buyers are most interested in drones, as well as the electronic warfare systems that jam their connection to the pilot on the ground.

Fedirko said the systems generating the strongest interest included seaborne drones, UAVs used to drop small bombs, those that intercept other drones, and drones that operate on fibre-optic cables making their control signals unjammable.

Drones have upended the way war is fought in Ukraine since 2022, graduating from initial small-scale use to millions being made by each side last year. 

Ukraine's 2025 budget allocated 775 billion hryvnias ($18 billion) for domestically produced drones, with that amount bolstered by money from Kyiv's allies.

UAVs are now responsible for the majority of strikes on enemy targets and their ubiquity has turned a strip of up to 20 kilometres on either side of the frontline into a so-called "kill zone", where standing in the open for a few minutes can be enough to be hit by a drone. 

($1 = 43.1110 hryvnias)

(Reporting by Max Hunder; Editing by David Holmes)