As Ukraine enters the third year of the conflict, it faces a growing industrial disadvantage compared to Russia. Ammunition and guns are in short supply on the front lines, and dependence on Western military aid is only increasing. While the Russian invaders have announced a 70% increase in military spending and have already made the transition to a war economy, Kyiv must produce a considerable quantitative and qualitative industrial effort if it is to withstand the pressure.

There are many reasons why the Ukrainian defense industry is lagging. For decades, the sector – once massive during the Soviet era – was plagued by corruption and neglect, creating a deep distrust between industrialists, the military, the state and civil society. The rude awakening of 2014, triggered by the first phase of Russian aggression, with the annexation of Crimea and the occupation of the Donbas, did not result in a comprehensive reform of the sector. It took the massive invasion of February 2022 to revive a military-industrial complex (MIC) that had been cut to the bone.

Nevertheless, a significant part of Ukrainian industry survived the onslaught of Russian missiles that hit the country in the early months of the conflict. Production facilities were moved to secret locations, sometimes underground, often far from the front line or under the protection of anti-aircraft defense. Everything that could be produced or assembled by light industry (such as drones, ammunition and body armor) was dispersed across thousands of workshops throughout the large country that is one and a half times the size of France. When it became clear that military factories were able to operate despite the bombings, attitudes toward the defense industry changed: The Ukrainian state gradually began to consider placing large orders with the state-owned Ukroboronprom (UOP).

In 2023, the state bought around $1 billion (€920 million) worth of Ukrainian weapons, and the number of defense sector companies quadrupled from 50 to 200. This year, the defense ministry plans to spend a total of 265 billion hryvnias (€6.36 billion) on arms procurement, 25% less than in 2023, and most of these funds will be used to buy imported equipment.

As the main beneficiary of state orders, UOP said it had increased its weapons production by 92% over the past year, without giving further details. Among the flagship weapons produced by UOP are the Stugna anti-tank guided missile, the Neptune anti-ship missile system, the Vilkha multiple rocket launcher, the BTR-4 armored vehicle, and the T-64BV and T-84 Oplot tanks.

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