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Ukraine Cuts Deals While Waiting for US

March 1, 2015 (Photo Credit: Joe Gould)

ABU DHABI — By striking a deal with the UAE at IDEX, Ukraine sent a simple message to the other nations at the show: While it wants US help in its fight against Russian separatists, Kiev can also find friends elsewhere while it waits for an answer.

Ukrainian President Petro Poroshenko made a surprise visit to the show last week and announced a deal with the UAE for unspecified military and technical cooperation.

Poroshenko made the announcement Feb. 24, and met with the crown prince of Abu Dhabi, Mohamed bin Zayed al-Nahyan, and also the Pentagon's chief weapons buyer, Frank Kendall. He also strolled by booths stocked with armored vehicles, bombs and firearms.

"We are in a very practical dialogue, and we hope in the very near future, we have a decision to help us obtain defensive weapons," Poroshenko said of talks with theUS. "I want to stress that the defensive capabilities for the Ukrainian Army are only to defend our territory, to keep our independence, to keep our sovereignty. We do not have any plans to attack anybody."

For the UAE, the deal was said to include a diplomatic visit to Ukraine and investment opportunities. A cash infusion from the UAE, whose annual defense budget is $14 billion, would surely help Ukraine, whose defense budget is $5 billion. Russia's annual defense budget is $60 billion, according to the Global Firepower Index.

With the deal, Kiev sought to show that its defense industry, beleaguered and long entangled with Russia's, is open for business and hungry for trade partnerships. Poroshenko's office later announced that Ukrainian companies had signed several contracts worth tens of millions of dollars — including a partnership with South African firm Paramount to further develop the Mi-24 Superhind helicopter.

Separated by several national pavilions on the sprawling show floor, representatives of the the Ukrainian state concern Ukroboronprom and Russian counterpart, Rostec, were seeking trade partners for products and parts since cutting ties with each other. Ukraine sought new customers and investors for its domestically made hardware, while Russia — from a much larger display of weapons and tanks — worked to maintain its foothold in the market and offset the impact of sanctions.

The Russia booth at IDEX.
Photo Credit: David Brown/staff

The Ukraine-UAE announcement also marked a striking counterpoint to Russia's military cooperation agreement with the Arab world's arch rival, Iran, signed last month as a joint response to US "interference." A day before Poroshenko's announcement, news broke at the show that Rostec CEO Sergei Chemezov offered to sell a powerful air-defense system to Iran, a move that could not have endeared executives at the Russian pavilion to its hosts.

In an interview with Defense News, Chemezov said Russia will produce all of its own defensive equipment by 2017, breaking its Soviet-era reliance on Ukraine weapons plants and factories. Its own news from the show included a deal to deliver 12 Russian Mi-17 helicopters to Belarus.

"I cannot say that the sanctions did not have a total impact on the industry, but it made us produce our own components instead of importing them from other countries like Ukraine, it gave us a kick to make our own productions in the country," Chemezov said.

For the UAE, the Ukraine deal likely provides defense manufacturing and technological know-how as it consolidates its home-grown defense industry and weans itself from America's notoriously ponderous foreign military sales process. The UAE's Emirates Defence Industries Co. (EDIC) recently acquired 16 UAE defense firms under its umbrella, seen as both a powerfully symbolic and practical move toward independence.

"You start to say we've brought this piece to the table, and this piece, and soon you don't need any of the Western companies supplying toyou, you only need the highest technology because you're self-sufficient," said Avascent analyst Alek Jovovic. "If you're Serbia, if you're Ukraine, you're looking for any investment at all. You might be more willing to do tech transfer or production because there's not enough of a domestic market to prop you up."

Ukraine, in the industry, was largely known as a supplier to Russian firms with some sales in the neighborhood, such as Odessa Aircraft Plant's deal to upgrade Croatia's MiG-21 aircraft.

The Ukraine booth at IDEX.
Photo Credit: David Brown/staff

At the booth for Ukroboronprom — the state concern in charge of 100 companies across five industries — Poroshenko stopped at the armored cars on display beside an assortment of radars, rockets and scale models of planes.

"To keep the peace, we should have the ability to defend ourself," he said. "Today, here united, we do a great job, to increase the defense capability of Ukraine."

The visit punctuated Ukroboronprom's strenuous efforts since the conflict began to equip its neglected military to a basic level; upgrade artillery, weaponry and battle tanks; and implement maintenance programs.

"Sometimes when you have this kind of enemy on your border, the people get their act together and start moving very quickly," Nadiia Stechyshyna, the investments adviser to Ukroboronprom's CEO, told Defense News. "Nobody actually paid any attention to the way the Army was equipped for the last 23 years. Everybody was feeling safe and secure, so there was basically zero investment in the armed forces. So sometimes what we are doing right now is getting back to the basics."

Ukraine has in recent months replaced 70 percent of the armored vehicle parts that it imported from Russia — "a very tough job, and the very heavy lifting has been done in the last few months," Stechyshyna said.

Though not on display, Ukroboronprom's armored vehicle offerings at IDEX included the homegrown Oplot main battle tanks, which the Ukrainian Army may field to its forces this year or next as it divests from the Soviet-era T-64 and T-72.

She said Ukraine wanted to make a statement.

"Not being here might have been interpreted that we are scared," Stechyshyna said. "We have to show that we have the production. We have to show that we have the products that can defend ourself from threats."

Ukrainian President Petro Poroshenko at the IDEX show in Abu Dhabi.
Photo Credit: Joe Gould

At the Munich Security Conference in early February, NATO's military commander, Air Force Gen. Philip Breedlove reportedly favored sending weapons and equipment to Kiev's beleaguered forces, while German Chancellor Angela Merkel and French President François Hollande had spearheaded a peace initiative that included no such aid.

Former US Defense Secretary William Cohen, now CEO of the Cohen Group, was walking the floor at IDEX before Poroshenko's visit. He had been to Munich, he said, where there was "quite a difference of opinion ... about the nature of the response" to Russia.

"I think you can't leave people you've encouraged to join the EU and, potentially at some point, NATO," Cohen said. "They move toward you, and Putin moves in and he has very little resistance. [Ukrainians are] fighting tanks with rifles. The West has an obligation to provide some defensive equipment, not offensive. Whether that reflects the whole Congress remains to be seen."

Awad Mustafa contributed to this report.

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