Se­crecy thwarts Ukraine’s army, de­fense pro­duc­tion

Kyiv Post - - National - PONO­[email protected]

Ukraine’s un­der­de­vel­oped de­fense in­dus­try is held back by in­ef­fec­tive, non-trans­par­ent man­age­ment and ex­ces­sive se­crecy, Ukrainian law­maker Oksana Sy­royid said at the Kyiv Post’s 6th Tiger Con­fer­ence on Dec. 5.

She said there is still no clear view of the over­all sit­u­a­tion in Ukraine’s mil­i­tary man­u­fac­tur­ing, as a con­sid­er­able num­ber of its en­ter­prises are lo­cated in ar­eas oc­cu­pied by Rus­sia, and many of the others are not func­tion­ing prop­erly.

“Un­for­tu­nately, no­body knows what is go­ing on at those en­ter­prises, be­cause it’s all cov­ered and shel­tered with se­crecy,” Sy­royid said dur­ing the “Trans­form­ing Se­cu­rity and De­fense” panel. “And I think that this is the big­gest prob­lem that pre­vents us from know­ing what their real po­ten­tial is, and what the ca­pac­ity of the Ukrainian mil­i­tary in­dus­try is.”

She said the se­crecy that breeds mas­sive cor­rup­tion in state de­fense pro­cure­ment and pro­duc­tion has to end, with the ex­cep­tion of in­no­va­tive de­vel­op­ments.

More­over, an over­haul of out­dated Soviet-style man­age­ment is nec­es­sary at the state-run de­fense hold­ing com­pany UkrOboronP­rom, she said.

“(Only af­ter that) you can ex­pect in­vestors to come,” she added. “Be­cause only if those en­ter­prises are well-man­aged and (well) or­dered by them­selves will in­vestors be able to es­ti­mate how much money they can put in, and how much they will get out.”

UkrOboronP­rom cur­rently man­ages around 130 en­ter­prises and mo­nop­o­lizes the coun­try’s de­fense pro­duc­tion sec­tor. Cre­ated in 2010 by for­mer Pres­i­dent Vik­tor Yanukovych, it has been headed since 2014 by Ro­man Ro­manov, an al­leged long-time busi­ness part­ner of cur­rent Ukrainian Pres­i­dent Petro Poroshenko.

Over the past years, the con­cern has faced a num­ber of cor­rup­tion scan­dals.

Ac­cord­ing to Sy­royid, UkrOboronP­rom was de­signed by Yanukovych to har­vest prof­its from the de­fense sec­tor and to ruin it, and now Poroshenko is re­luc­tant to de­stroy this cor­rupt sys­tem promptly.

“(Poroshenko) is re­spon­si­ble for the ap­point­ment of the board at UkrOboronP­rom,” the law­maker said. He should an­swer for any cor­rup­tion or fraud at the state-owned com­pany. “This is his per­sonal re­spon­si­bil­ity.”

Another prob­lem that thwarts progress in de­vel­op­ing Ukraine’s mil­i­tary sec­tor is a lack of trans­parency and pub­lic over­sight of de­fense bud­get­ing.

“For the three years we have been re­quest­ing a de­tailed bud­get,” Sy­royid said. “Just show us how many hel­mets, boots, tanks you want to buy, and at which price… If some­body wants to hide this and claim that it’s be­cause of the war, it’s not true.”

“The war in­creases de­mands for trans­parency…The army is the only in­sti­tu­tion to pro­vide (safety) for this coun­try. That’s why we have to en­sure that any hryv­nia pro­vided by Ukrainian peo­ple for the Ukrainian army is spent de­cently and will make us stronger.”

Speak­ing at the debate, UkrOboronP­rom Deputy Di­rec­tor Gen­eral Denys Gu­rak ad­mit­ted that ex­ces­sive se­crecy and out­dated man- age­ment still ham­pers the smooth func­tion­ing of the busi­ness.

“What we’re do­ing now… is re­struc­tur­ing and re­form­ing the UkrOboronP­rom,” Gu­rak said. “Hope­fully, early next year a trans­for­ma­tion process will start, which will lead to a com­pletely dif­fer­ent or­ga­ni­za­tion. The aim is to have cor­po­ra­tized com­pa­nies in­te­grated into West­ern sup­ply chains and able to sell their shares on the open mar­ket.”

He added that the state-owned com­pany is ver­ti­cally man­aged, closed and in­ef­fec­tive.

Ariel Co­hen, se­nior re­search fel­low at the At­lantic Coun­cil in­ter­na­tional af­fairs think tank based in Wash­ing­ton D. C., says that the poor man­age­ment has been in­her­ited from the Soviet Union.

“What is clear is that the full state own­er­ship and man­age­ment that comes from the Soviet era, that was not trained in the West, that does not speak for­eign lan­guages, that does not have ex­pe­ri­ence in sell­ing these weapon sys­tems and in ser­vic­ing and fi­nanc­ing them, is not go­ing to be com­pet­i­tive for Ukraine in the world mar­ket,” the pan­els mod­er­a­tor con­cluded.

“The UkrOboronP­rom is un­for­tu­nately trapped by an ab­so­lutely in­ap­pro­pri­ate sys­tem pro­vided by the leg­is­la­tion and it has to be de­stroyed, sorry.”

Ukrainian law­maker Oksana Sy­roid (C), UkrOboronP­rom Deputy Di­rec­tor Gen­eral Denys Gu­rak (L) and mil­i­tary in­tel­li­gence of­fi­cer Al­bert Mitroshkyn debate at the Kyiv Post's Tiger Con­fer­ence in Kyiv on Dec. 5. (Volodymyr Petrov)

Oksana Sy­roid, Ukraine’s “Samopomich” party par­lia­ment mem­ber.

BY I LLIA PONO­MARENKO

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