Ukraine’s role in Europe's REARM program

BLUF: Ukraine has experience quickly integrating new technologies into the army. Cheap and mass production are key to rearming Europe.

In other news: Russian gliding bombs are hard to counter due to the Kometa module responsible for navigation. Two new state representatives were appointed to the Supervisory Board of the Defence Procurement Agency replacing Taras Chmut and Yuriy Dzhygyr. A Ukrainian startup, Skiftech will develop laser systems for the U.S. Army, among nine other companies.

THE BIG STORY: How Europe can be rearmed with Ukrainian tech

The Trump administration has taken a course toward self-isolation and has effectively announced its withdrawal from European continental security. 

In March, the European Commission developed a plan to allocate a record 800 billion euros for the Europe’s rearmament. Ukraine’s experience in implementing rapid changes and surging tech along with production capacity will help the EU to rearm efficiently.

The European Council and Parliament are planning to provide access to European industrial programs for Ukraine, said Andrius Kubilius, the European Commissioner for Defense and Space. He is expecting that decision to be adopted by the Summer.

Joint Production between Europe and Ukraine

One of the main tracks in Ukraine is the creation of joint production facilities with Europe. Since the beginning of the year, at least six memorandums of partnership or plans to launch joint production have been signed:

• Ukraine and German KNDS Deutschland launched a joint venture in Ukraine, which will maintain and repair German weapons in the Ukrainian army;

• Ukrainian manufacturer of radio electronics and optical equipment Radionix signed a memorandum of cooperation with Swedish aircraft and defense producer Saab;

• Belgium will launch joint ventures with Ukrainian companies, with plans to cooperate even after the end of the war;

• Ukraine signed a memorandum with German air defense manufacturer Diehl Defense. It provides for increased production of air defense systems and anti-aircraft missiles.

• Swedish air defense manufacturer Kongsberg plans to integrate an anti-aircraft missile with Ukrainian technologies into the NASAMS air defense system.

• French defense giant Thales signed a memorandum with Ukroboronprom, a state-owned association, on establishing joint production.

The European Union pointed out seven main priorities in rearming:

• air defense systems;

• artillery;

• missiles and ammunition;

• drones and anti-drones;

• critical infrastructure protection, including space-related objects;

• military mobility;

• cyber, artificial, and electronic warfare.

Across all priority sectors, Ukraine can strengthen Europe. The production of the Bohdana self-propelled howitzer can be compared to the whole European production capacity. 

For instance:

• Ukraine – up to 20 Bohdana per month;

• France – six, with plans to scale up to 12 Caesar units per month;

• Germany – The production numbers are not public, but KNDS will fulfill the contract with Bundeswehr on ten PzH-2000 for three years. Ukraine will be the first operator of RCH-155 SPH, but in 2025 they will receive only five units.

When it comes to ammunition production, the entire world faces a shortage of explosive materials. Ukraine has produced more than 2.5 million units of different caliber ammunition last year. A joint approach to solving these issues will help reinforce Europe.

Joint ventures with Rheinmetall, Babcock, BAE Systems, and others are already operational. In the first stages, they primarily work on repairing and maintaining Western weapons for the Ukrainian army. But Rheinmetall, for example, plans to produce ammunition and air defense systems in Ukraine.

This also strengthens Ukraine by increasing financial inflows, bolstering the military, and expanding industrial potential.

What could Ukraine's role in European rearmament be?

Ukraine is integrating into the European Union, so it will become a participant in the REARM Europe plan. 

On March 10, the European Parliament published a white paper on the future of European defense. Ukraine is recognized in the document as an integrated part of the European security system. 

The European Union plans to reform its policy based on experience from the Ukraine war and the development of new technologies. Due to the threat from Russia, the Black Sea region is recognized as a central theater of military operations for the EU and NATO, along with the Baltic Sea.

The experience and knowledge of Ukrainian military personnel and engineers is Ukraine's competitive advantage that Europe needs, said Viktor Lokotkov, CMO at Airlogix, a drone manufacturer. European industrial giants move slowly, while Ukraine integrates technologies very quickly.

"Most importantly, we are several times cheaper. If you look at the Vector (German UAV) or FlyEye (Polish UAV), you will see that the cost is 3-4 times higher than Ukrainian analogs. Why buy such expensive drones if the quality is not better?" Lokotkov said.

Cooperation with Ukrainian miltech, also occurs through the ‘Danish model’ (read our story about how the program works). The white paper about Europe’s defense calls it mutually beneficial, and EU countries are encouraged to participate even more in these contracts.

“There is an underutilisation of Ukraine’s defence industrial capacity, estimated at around 50 percent, and it brings many advantages to both sides, such as cheaper equipment, speedier and safer logistics, and greater ease of training and maintenance,” reads the white paper.

The Danish model allows for providing the Ukrainian industry with contracts, as it can produce much more than the state and volunteers can buy. Ukraine signs a contract with a manufacturer, and, for example, Denmark finances the implementation.

In 2024, equipment worth 597 million euros was delivered under the Danish model. And for 2025, it's planned to attract over 1.3 billion euros. One billion will be allocated from frozen Russian assets.

The scale of Ukraine's potential in drone production is vast. The government has announced its plans to purchase 4.5 million drones in 2025. For comparison, more than 1 million drones were purchased a year ago. And still, according to the Tech Force in UA survey, miltech companies are only producing about one-third of their full capacity.

Another priority area for Europe is armored vehicles. Ukrainian armored vehicle manufacturers began their work back in 2000-s and developed actively since the beginning of the Russian-Ukrainian war (read our deep dive on the evolution of Ukrainian armored vehicles).

"For us, 'combat proven' means presence on the battlefield since 2014. We didn't start fighting in 2022. We are also in touch with the frontline. This allows us to upgrade equipment quickly," said Vladyslav Belbas, CEO of Ukrainian Armor, a manufacturer of armored vehicles and ammunition.

Ukrainian Armor already produces 122mm ammunition with one of the NATO countries. 

"Europe has money. And we have growing technical capability. Let's combine these for synergy," said Belbas.

A separate challenge for Ukrainian manufacturers is entering European markets. Currently, this issue is irrelevant due to the practical impossibility of exporting military products abroad.

However, getting into the procurement of a European country is a complex and lengthy process due to regulations. Before the full-scale war, Ukroboronprom dealt with this issue centrally. Now, individual manufacturer associations or special exporters handle this matter.

Ukraine’s homework on regulations

For Ukraine, the main challenges lie in regulatory issues:

• Intellectual property protection – this is being addressed by the Ministry of Defense of Ukraine (read our Deep dive on that here).

• Export of technologies and weaponry abroad (follow our detailed coverage at this link).

• Integration of Ukrainian regulations and legislation in line with EU requirements.

The new program REARM Europe is based on five pillars, including a loan program with a €150 billion budget, changes in budgetary requirements, and evolving policy investments in defense (read our previous coverage about harmful European bank policy for defense).

A qualified majority voting (15 members out of 27 states vote in favor; or the proposal supported by member states representing at least 65 percent of the total EU population) in the EU Council is sufficient to approve of the rearming program. The vote itself is scheduled for the end of March.

Also, today, the EU will publish a white paper on implementing a rearmament plan, a spokesperson of the European Commission told Counteroffensive.Pro.

BUSINESS LUNCH TOPICS: What our reporting shows:

1. New members of the Defense Procurement Agency appointed from the state

The Cabinet of Ministers renewed the composition of the Supervisory Board of the Defense Procurement Agency (DPA) of the Ministry of Defense.

The Supervisory Board is in charge of approval of financial plans, draft strategies, and organizational structure of the DPA. They’re also appointing the head of DPA and evaluating the director’s performance.

Ivan Havryliuk, who holds the position of First Deputy Minister of Defense, and Stanislav Haider, former Deputy Minister of Defense, were appointed state representatives. DPA is purchasing lethal equipment for the Ukrainian army. 

Now, the Supervisory Board comprises two state representatives (Havryliuk and Haider) and three independent experts - Kateryna Kuznetsova, Patrick Auroy, and Lukasz Stolarski. 

2. The main challenges to counter Russian gliding bombs (FAB with UMPK)

Ukraine faces two main challenges in countering Russian-guided aerial bombs called UMPK (Air-dropped bombs, called FAB with a module for gliding and correction). These are the Russian ability to buy components abroad and the EW resistance of UMPK, stated the participants of the discussion organized by the NGO NAKO Independent Anti-Corruption Commission last Monday in Kyiv.

Actual sanctions can't block supplying all components important to produce UMPK. Some controllers used in these bombs are civilian goods which are used in household items like washing machines. And another challenge is the risk of lifting sanctions from Russia. 

Additionally, UMPK bombs are equipped with the Kometa, a controlled reception pattern antennas module, responsible for the Global Navigation Satellite System. To suppress a bomb via electronic warfare, Ukraine would need to jam 80 percent bombs of communication sources. But Kometa usually has 6-8 or even 12 communication sources. 

For effective jamming, Ukrainian soldiers would need one less, 5, 7, or 11 respectively EW systems, said Illia Kukharenko, spokesperson for EW and Electronic Intelligence issues at the Ministry of Strategic Industries in conversation with Counteroffensive.Pro.

Furthermore, the algorithm inside the Kometa can identify jamming and ignore it, ordering the bomb to fly via satellite signal, added Kukharenko.

Ground-based EW systems also must be positioned at specific distances from each other and along the contact line to a depth of up to 40 km. EW manufacturers have managed to saturate certain areas with EW systems and control them centrally. That’s why the media reported that Ukraine can jam Russian gliding bombs, but its capabilities are limited.

Another potential countermeasure is spoofing. This involves imitating satellite signals, so the Kometa antenna considers them genuine sources. Such developments are currently underway.

The Russian army has significantly increased its use of guided aerial bombs, FAB, with a module for gliding and correction, called UMPK. In 2023, they used 10,378 bombs, while in 2024 this number jumped to 39,469.

3. Ukrainian startup Skiftech will compete for a 10-year contract for the U.S. Army

Skiftech, a Ukrainian manufacturer of laser-based tactical simulators, became one of 10 participants in a potential 10-year contract with the U.S. Army worth $921.1 million. The company may produce laser equipment for military personnel training. 

The agreement aims to extend the service life of the U.S. Army's tactical collision simulation systems. Skiftech has not received a specific order yet, instead, it received a right to compete in a 10-year tender program for the U.S. Army, Maryna Shevchenko, PR team leader at Skiftech, told Counteroffensive.Pro.

"Still, we can supply individual components and complete products from our line or even develop new solutions to meet the needs of the U.S. Army,” said Shevchenko. 

The tender's participants include General Dynamics Mission Systems, Lockheed Martin, Cubic Defense, Saab, and others. 

Ukrainian orders/legislation changes 
By: Oksana Zabolotna:

State Support and Economic Recovery of the Rocket and Space Industry under Martial Law Conditions – Draft Law: No. 12271, dated 02.12.2024

Stage: Sent to the President for signature on February 17, 2025

Initiator: Member of the Ukrainian Parliament Mykhailo Sokolov (Political Party ‘Batkivshchyna’)

Proposals:

• Until January 1, 2026 — to impose a moratorium on the seizure of property and funds of State Enterprise Pivdenmash which is a debtor of the Pension Fund, or other targeted funds, will be temporarily suspended.

• Additionally, any seizures imposed before March 22, 2022, will be lifted.

• The Ministry of Strategic Industries of Ukraine will report to the Verkhovna Rada every two months during the moratorium period about the debt repayment by Pivdenmash for salaries, as well as reimbursement in the cause of injury or death due to criminal offenses.

Why it is important:

Pivdenmash is a unique enterprise that manufactures rocket and space technology and is strategically crucial to Ukraine's defense sector. It also employs thousands of highly skilled workers, making it one of Ukraine's largest machine-building enterprises.

Such measures are typically applied to strategically important state-owned enterprises facing temporary financial difficulties whose activities are critical to the state. For more than 10 years, Pivdenmash has had large deficits in salary and taxes. In 2020 the parliament agreed to allocate around 2,3 bln UAH to repay debts. Still, the company had to repay this money to the state starting from 2025.

Link to Defense Tech:

This law will help prevent a reduction in orders for rocket and space products, accelerate the recovery of production volumes, and facilitate the launch of new production facilities at ‘Pivdenmash.’ At the same time, it ensures that employees' rights and compensation for harm to health are protected, allowing the collection of salaries and compensation for damages.

The law will come into effect only after the signature of President Volodymyr Zelenskyy. We contacted the presidential office about their position on the law, but they didn’t answer.

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]! 

• Ark Robotics, an autonomous robotic systems developer, is hiring a 3D printing operator.

• Viktoriia Kovalchuk resigned from the position of communication leader in the state-owned defense cluster Brave1.

• Susanne Wiegand started a new job as an Executive Advisor at Quantum Systems, a drone developer company. Previously, she worked as a CEO at RENK, a component supplier.

30 SECOND ELEVATOR PITCH:

Skyway.AI is a developer of an AI-driven module based on Raspberry Pi. Their chip allows turning any type of drone into a high-performance AI-based drone with machine vision. It can be integrated into FPV drones, land drones, or maritime drones. The company also has speeded up Raspberry Pi to record 380 frames per second in processing images. Despite these capabilities, the module's price is still low.

“We are seeking $5 million to expand R&D and hire new team members. Also, a part of the raise will be used for civil use cases,” said a representative of the startup, who asked to remain anonymous due to security concerns.

MUST READS:

• Ukraine has successfully tested a long-range version of the Neptune cruise missile with a 1000 km range, said President Volodymyr Zelenskyy.

• Ukraine has tested a deep-strike drone with a 3000 km range, said Zelenskyy on March 17.

• The U.S. has resumed the complete supply of arms and intelligence to Ukraine. Artillery shells, anti-tank weapons, and HIMARS ammunition are once again flowing to Ukraine as part of the aid packages approved by Joe Biden’s administration.

• Aero Bavovna is developing a new installation for intercepting Shahed drones. The development will use a thermal imaging camera for drone detection, allowing the operator to detect the target in time.

• Swedish Saab and Ukrainian Radionix have signed a Memorandum of Strategic Partnership. Companies aim to cooperate in sensors and defense electronics, strengthening Ukraine's defense capabilities.

• Two Ukrainian drone manufacturers partnered with Swan and Auterion were chosen to prototype long-range, single-use drones for the Pentagon. They should be capable of launching quickly, carrying a range of payloads, and operating in low-bandwidth conditions.

• Ukrainian startup M-FLY made it into the list of 12 defense startups to watch according to VCs from Project A, NATO Innovation Fund, Twin Track Ventures, and Superangel.
  
  Correction: We made a mistake with the names of 12 startups to watch by Sifted. The correct startup in the article is Ark Robotics. We apologize for the error.

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