Ukraine has defense technology NATO allies want - but exporting it remains difficult

Ukrainian defense companies have expanded production dramatically since Russia’s full-scale invasion, but the state cannot purchase everything the industry is capable of producing. Industry representatives argue that exporting surplus capacity could help companies retain skilled workers and reinvest revenue in new weapons and technologies needed on the battlefield.

For Ukrainian defense manufacturers, exports are increasingly a question of sustaining production rather than simply finding new markets, said Andrii Pakhushchyi, deputy director general for international cooperation at Ukrainian Defense Industry.

Ukraine can produce more weapons than it can buy

Ukraine’s defense industry has expanded rapidly to meet changing battlefield needs, but those needs can shift faster than production capacity. Manufacturers may invest in a particular type of weapon or equipment only to see demand decline as warfare evolves.

“For Ukrainian Defense Industry, exports are a question of survival,” said Andrii Pakhushchyi, deputy director general for international cooperation at the state-owned defense conglomerate.

He said some production capacity developed earlier in the war is now underused as battlefield requirements have changed. Ukraine also has excess capacity in areas such as armored vehicle production.

Pakhushchyi argued that access to foreign markets would allow Ukrainian companies to preserve skilled personnel and technological capabilities while reinvesting export revenue in the development of new systems.

Europe, however, is a particularly difficult market to enter. Rather than trying to compete directly with established European defense manufacturers, Pakhushchyi said Ukrainian companies should focus on cooperation and supplying components for European-made systems.

He pointed to Ukrainian engines already used in Turkish aviation as an example of that model, arguing that a similar approach could be applied to unmanned systems.

Export rules can make Ukrainian weapons less competitive

Even when Ukrainian defense companies find potential foreign buyers, existing export rules can make pursuing a contract expensive before a sale is guaranteed.

Andrii Hrytseniuk, CEO of Ukraine’s Brave1 defense technology cluster, said manufacturers seeking permission to export must pay 20% of the value of a prospective contract upfront - even if the deal ultimately falls through.

“I don’t understand why we can’t introduce very simple rules,” Hrytseniuk said, arguing that Ukraine should move toward export procedures similar to those used in Europe.

He stressed that restrictions remain necessary for technologies Ukraine urgently needs on the battlefield, particularly new systems developed in response to emerging Russian capabilities. But he argued that products and components already manufactured in sufficient quantities should be treated differently.

Denys Chumachenko, chief technology officer at Ukrainian drone manufacturer Deviro, said the additional cost compounds another problem: Ukrainian defense products are not yet fully integrated into NATO and European battle-management systems and may require additional work by European companies before they can be deployed.

That can erode one of Ukraine’s main advantages - price. If export-related costs increase the price of a Ukrainian system by 20% to 30%, Chumachenko argued, European customers may instead choose a more expensive but already integrated and certified alternative.

“They would pay for Ukrainian experience tested in battle, but then have to pay extra to integrate it into their battle-management system,” he said.

Andriy Hrytsenyuk, CEO Brave1

NATO allies want Ukrainian technology

NATO allies, meanwhile, are interested in both Ukraine’s battlefield-tested technologies and the methods that have allowed its defense industry to develop and adapt them rapidly.

Phil Carrotte of the NATO-Ukraine Joint Analysis, Training and Education Centre (JATEC) said unmanned systems were one of the clearest examples. Technologies that were still relatively new during NATO operations in Iraq and Afghanistan have become “the backbone of the current fight in Ukraine,” he said.

“NATO allies - the countries that make up NATO - want those technologies,” Carrotte said. “They want to understand how they’re used. They want to understand how to bring those systems into NATO’s defensive plans.”

Allies are also interested in how Ukraine can make existing military technologies more effective and less expensive, he said, noting that NATO governments are under financial pressure and are looking for ways to “do more with less money.”

But Ukraine’s value to NATO is not limited to individual weapons or systems. Carrotte pointed to the speed at which Ukrainian companies develop and adapt technology, saying the development cycle for an unmanned aerial vehicle that previously could take one or two years has been reduced to roughly three to six months.

“It’s that speed of delivery, so that people aren’t wasting time and money developing something that in three years’ time is useless,” he said.

Cooperation, Carrotte added, is not simply about Ukraine adopting NATO practices.

“It’s not simply NATO trying to impose its ideas and systems onto Ukraine,” he said. “It’s trying to learn from Ukraine as well.”