Evolution of Ukraine's defense tech AI regulations

BLUF: Ukraine has announced it will not regulate defense tech AI while the country is at war. But how will ongoing U.S./EU regulations impact the future of Ukrainian rules and innovation?

Also, Danish firm Blink Troll Robotics to open office in Ukraine; new counter-Shahed drone tech we’re spotting; and Buntar Aerospace seeking capital in early 2025.

THE BIG STORY: The future of AI regulations in Ukrainian Miltech?

Due to the full-scale war against Russia, the Ministry of Digital Transformation does not plan to regulate AI development in the defense sector during the war.

Minister of Digital Transformation Mykhailo Fedorov:

A decision not to regulate AI could put Ukraine out of step with its Western and European allies, creating a challenge from the perspective of long-term European integration. 

However, the ministry does envision regulation in the future.  In June 2024, Ukraine’s Ministry of Digital Transformation outlined its vision for AI regulation. The document describes regulation strategy, especially ways for Ukraine to fall in line with EU rules.

Here’s their take: It’s crucial for the government to regulate AI, both to attract more investments and to make sure that personal data is secured.

The core of the ministry’s strategy is to put together a regulatory approach with consultation from startups and tech firms:

But that’s an issue that has been punted for post-war consideration – and many AI-related firms are hoping it’s punted further. 

Anton Tarasyuk, co-founder of Mantis Analytics, a company that provides a platform for situational awareness with the help of AI, told Counteroffensive.Pro that there are two dilemmas with Mykhailo Fedorov’s statement:

PRESSURE FROM ABROAD: 

Tarasyuk believes that the EU’s experience in regulating AI may be of limited use. The question for him is whether Ukrainian regulators are ready to move beyond it.

Others support harmonizing Ukrainian and European legislation. 

CEO of Ailand Systems Dmytro Titov develops autonomous smart drones to detect mines on the ground. Dmytro said Ukraine will synchronize rules with the EU AI Act, and Ailand Systems fully supports this policy.

Meanwhile, there are growing concerns in the U.S. regarding the safety of artificial intelligence and generative tools. The U.S. Department of Commerce is proposing new regulations to increase accountability for AI developers and ensure their safety/resilience against cyberattacks. It would require developers to report on cybersecurity measures, as well as conduct testing for vulnerabilities against cyberattacks.

In November 2023 Ukraine signed the AI Safety Declaration along with 28 other countries, including the US and the UK, which are collaborating on AI safety research.

Among countries in Central and Eastern Europe, Ukraine hosts the second-largest population of AI companies, with 243 reported as of the end of 2023. Right now, AI is currently being used by Ukraine’s military to:

• analyze satellite images;

• identify targets on the battlefield;

• provide facial recognition;

• predict how best to strike certain targets.

Tarasyuk warned about treading lightly around regulating the AI industry in Ukraine.

It’s still quite vulnerable, he said: AI regulations for defense are different from AI for commerce, and startups should have a “safe zone” to avoid stifling technologies or pushing them abroad.

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BUSINESS LUNCH TOPICS: What our reporting shows!

1. Danish company Blink Troll Robotics is opening an office in Lviv. The company produces moving targets to improve training, making it closer to real battlefield conditions.
   
   CEO Kenneth Skorpen and COO Øystein Hatlestad Hovland told us that the manufacturer is looking for a Ukrainian chief operating officer.

   

   Source: Screenshot from a video by Blink Troll Robotics

   
   “We need presence to be able to service and support and manufacture and do all things to help the guys get these systems in the best possible way. We have to be here and get the presence … It's very important for us to have local production as much as possible here. We have some friends we’re already discussing certain things with,” said Kenneth Sorpen.
   
   For now, Blink Troll Robotics will send equipment as part of military aid from Denmark, but in the future they expect to get orders directly from the Ukrainian Ministry of Defense. One system costs approximately €15,000.

2. Ukraine developing air defense drone to target Iranian-made Shahed drones. Ukrainian engineers are looking for cheap means to counter Shahed kamikaze drones, which can carry up to 50 kg of explosives. In August 2024, Russians launched 789 Shahed drones, a record.

   
   Over the course of this year, Ukrainian operators have learned how to strike Russian reconnaissance drones like Orlan-10, Zala or Supercam with modified FPV-drones. 

Ukrainian company Tenebris says it is now ready to test its new technology on real Shaheds under military supervision. They produce a new drone called the Bahnet. 

Outfitted with vertical take-off and landing technology, the Bahnet boasts a maximum speed of 250 km/h and a 700mg warhead to strike air targets. The drone is capable of staying in the air for up to 25 minutes, which should be enough time to catch up with and destroy an enemy kamikaze drone.

According to the developer, the cost per drone without a night vision camera will be $1,400-$1,600; with a night vision camera — up to $3,000. To compare, the cost of one Shahed is more than $100,000.

During exhibitions at a conference this past week in Kyiv, various teams showed off other innovations to counter Shaheds, including anti-aircraft drones, specialized turrets for mobile air defense groups, and sound sensors that can detect drones in the air.

3. Ukraine develops VR-simulators for countering kamikaze drones. Ukraine has managed to improve its air defense efficiency dramatically over the last year. One of the key factors in this success is the work of mobile fire teams on pickup trucks. Soldiers equipped with machine guns hunt down Russian drones at night.
   
   The challenge they face is that the machine gun operator has only 100 rounds to take down his target before needing to reload.

The cost of just 100 rounds is about $1,700. To avoid wasting money and ammunition during training, and to improve the operators' efficiency, the Ukrainian company U-Force developed simulators that replicate the ballistics, shape, sounds and barrel heating of these firearms as well as the flight paths of Shahed drones under various weather conditions.

According to U-Force, a soldier needs about 70 hours of training to master shooting down kamikaze drones. A disadvantage of the simulator is that it doesn’t replicate recoil, but the developer says that this feature is on the way.

4. How the Ukrainian bomber drone, Vampire, strikes Russian positions at night. Our sister publication The Counteroffensive, in collaboration with Bihus.Info, published an article about the so-called ‘Baba-Yaga’ drone, which can drop high-explosive fragmentation or thermite ammunition from altitudes of 400 meters — a nightmare for Russians, who named the drone after a witch from folklore. 
   
   The drone’s official name is ‘Vampire.’ It is easy to use, relatively inexpensive at $10,000 apiece, and equipped with a thermal camera to work at night. 

5. C5 Capital announced a strategic partnership with Ukrainian accelerator Brave1. This collaboration will support Ukraine’s tech startups, accelerating the development and application of critical technologies. 

   
   Led by founders Andre Pienaar and Michael Hewitt, C5 Capital is a specialist venture capital firm with offices in London and Washington, D.C. It invests in cybersecurity, space and energy security. They are focusing on long-term relationships with resilient founders.

ON THE MOVE: Professional movement, promotions and industry news.

Know someone in the defense tech space who has made a professional move? Drop us a line at [email protected]! 

• Luukas Ilves joined the Ministry of Digital Transformation of Ukraine in a part-time advisory role. He will be working on the future of Ukrainian government and public service transformation.

• Niels Vejrup Carlsen launched ‘Final Frontier,’ a venture capital fund focusing on space and defense tech startups.

• Dorottya Zsiboracs joined Helsing as an analyst on the programs and partnerships team.

• Andriy Bogdanovsky left Ukrainian drone-company Skyeton. He's seeking a new job as director of technology operations, drone instructor or director of technology services.

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30 SECOND ELEVATOR PITCH: CONNECTING VCs with UKR STARTUPS:

Buntar Aerospace has created groundbreaking products like the Buntar-3 UAV for real-time ISR, the Skyhopper UAV for battlefield mapping into digital twin, and the Bounty Hunter for precision strikes. 

“Now we seek investment to develop two more secret projects attached to drones. We need additional finances to develop those products and hire more skilled engineers. In Q1 2025 the company will start a new round of fundraising,” said Ivan Kaunov CEO & co-founder of Buntar Aerospace.

MUST READS:

• Ukraine unveils its first domestically-produced towed howitzer, the 155 mm ‘Bondana-B.’

• British company BAE Systems plans to maintain and localize production of the M777 towed howitzer in Ukraine.

• D&M Holding Company signed an agreement with the state-owned Ukroboronprom to produce ammunition and special chemicals.

• The Ukrainian MoD signed a memorandum with Tech Force in UA to create a platform for collaboration between the private defense sector and the structures of AFU and MoD.

• US defense companies are seeking new, non-Chinese component suppliers, reports the WSJ. For now, Beijing is a dominant supplier of batteries, motors, sensors and rare-earth materials. (See our coverage of that here).

• The Ukrainian government has deregulated the gunpowder and explosives market and is preparing to fund construction of gunpowder factories.

• The Netherlands will allocate €400 million to start the development and production of drones in partnership with Ukraine. Half of them will be produced in the Netherlands and the other part in Ukraine and other countries.Share the newsletter

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