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Dramatic changes ahead for import/export and privatisation within the Ukrainian MIC?

June 26, 2018

Following the final successful vote on the “On National Security” law of 21st June, among several notable changes in a generally good if not perfect framework law, it became clear that serious changes to the SBU and Ukrainian military industrial complex would occur.

Both the SBU and Ukrboronprom in particular will feel the changes brought under the new legislation – and to be blunt, rightly so and long overdue.

While new legislation, or piecemeal amendments to the legislation that harnesses the SBU will take some months to appear, as will new processes for greater public scrutiny and a parliamentary intelligence committee being formed, it so follows that Ukrboronprom and the MIC will not see immediate change either.

Those MIC changes however begin with the creation of a body under the Cabinet of Ministers that takes away the management and administration of the MIC from the influence of State monolith (and to some degree monopoly) Ukrboronprom (and similar unwieldy State MIC entities).  They will be expected to produce and no longer direct the MIC.

Some potential industry changing noises have been made already.

In what will be a major shock to the Ukrainian MIC, contained within an announcement by NSDC Chairman Olexandr Turchynov, notable (indeed some might say radical) changes to procurement, import/export and privatisation will occur in the not so distant future.

While it is incumbent upon the Ukrainian authorities to insure that it meets any ratified international obligations relating to arms control, and also keeps a watchful covert eye upon foreign investors in any MIC privatisations, nevertheless in what would be a far more liberal/market friendly MIC regime it has to be stated that it is a long overdue measure if the Ukrainian MIC is to develop as swiftly and sensibly as is practicable.

Definitely something to keep an eye upon over the next 6 months or so as it could be a real game changer for the Ukrainian MIC.

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