Ukraine Aims for Arms Sales

KIEV -- Ukraine, where one-third of the former Soviet Union's military industry was based, is making a determined bid to increase its share of the world's arms market to match its potential.

Ukrainian military experts complain that the market for Ukrainian arms has dried up to nearly zero since the break-up of the Soviet Union.

When Soviet rule foundered, military experts put Ukraine's annual arms export potential at $8 to $10 billion.

Among military prizes that Ukraine inherited is the Yuzhmash rocket factory -- the world's biggest -- which used to be run by newly-elected President Leonid Kuchma.

Official figures show that last year Ukraine sold arms worth $29 million and employed 2 million people. Unofficial government sources put the figure at $100 million.

Military experts argue that selling more arms would improve the stagnant Ukrainian economy and they are counting on Kuchma, elected earlier this month, to help them.

"In America they have a saying, 'What's good for General Motors is good for America.' I think what's good for Yuzhmash is good for the whole country," Kuchma told employees at Yuzhmash celebrating the plant's 50th anniversary last week.

"We must preserve our industrial potential in this area, our technology -- then we'll get on our feet. And then the world will stand up and take notice."

Last year, the United States warned Ukraine not to sell arms to Iran after news reports that Kiev was involved in a deal to supply Tehran with 50 MiG fighters, 20 tanks and eight anti-ship rockets. The foreign and defense ministries in Ukraine, which has been courting Iran as a possible source of energy supplies to end dependence on Russia, vehemently denied the reports.

Similar denials were issued about alleged illicit sales of arms to the Irish Republican Army, to Iraq and Libya and to both North and South Yemen during the recent civil war.

The most recent accusation was a Serb newspaper report this month that Ukraine had sold Croatia 20 anti-rocket units in violation of a ban on arms trade with former Yugoslavia. The Defense Ministry dismissed that report as well.

Valery Shmarov, the deputy prime minister in charge of Ukraine's arms industry, is unabashed about seeking new markets. Neighboring Russia, for instance, has sold military hardware to Iran, Malaysia, Brazil and Turkey.

"Once we develop this area we could pull in several billion dollars," Shmarov said. "We're only making the first steps -- we would be fools not to go forward. It's one of the most civilized and profitable businesses in the world."

Shmarov wants a concerted marketing approach for its trump cards like the T-84 "super tank," scheduled to be ready to roll off assembly lines next year in Kharkov, Ukraine's second city.

"In Soviet times, Moscow was the sole representative for the arms trade," he said. "There's a big paradox here -- Russia represented the T-80 tank in arms exhibitions. But it was made right here in Ukraine."

Viktor Petrov, Ukraine's Military Complex Minister, also emphasized Ukraine's need to sell arms on the world market.

"Ukraine made a huge mistake when it stopped selling weapons on the world market. "There are countries in the world with significantly less scientific technical potential, but they are trading arms consistently with good-sized turnover," he said.

The biggest highlight of Ukraine's sales efforts so far this year is a contract for six MiG-25 aircraft to India for $26 million.

Not all sales efforts have gone so smoothly.

Ukrainian negotiators last year clinched a deal to sell machine-guns to the west African state of Sierra Leone. But a year of vacillating passed before the sale was officially approved -- by which time a coup had toppled the government.