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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Tank Repartition

16 November, 1999 - 00:00

Henceforth the Malyshev Plant will sell the tanks it produces on its own. A November 4 government decision gave this Kharkiv-based factory the status of a special exporter, although as recently as four months ago it was denied this privilege.

Inadequate market research forced the Commission for the Policies of Export Control and Military-Technical Cooperation to decide in July that the Malyshev Plant could only enter the foreign market via the Ukrspetseksport state intermediary. The new decision testifies to a fundamental redivision of the nation’s arms business.

Trade in armored vehicles is one of Ukraine’s most profitable weapons exports, along with aviation equipment, radar, and ammunition.

The $620-million contract with Pakistan, involving the supply of 320 T-80ud tanks, has allowed Ukraine to break into the world’s top ten arms exporters, and the plant itself, subsidized heavily by the state, has completed formation of a closed cycle of tank production. And just now, with heads still dizzy from the Pakistani success and the Pakistani-Indian- Turkish-Greek prospects of armored exports is exciting the frenzy of the gamblers used to high-rolling, the Malyshev people have launched a successful attack on the front-line of the struggle for their rights and interests. For who ever said that those who forge weapons are weaker than the equipment they make, even if these are tanks with a strong frontal armor?

Early in October Malyshev Plant general manager Hryhory Maliuk unexpectedly stated that the plant, as well as some other Ukrainian enterprises, should enjoy the status of an independent special exporter of sensitive products and know-how. “We believe we were unjustly struck off the list of such enterprises,” Mr. Maliuk is quoted by the media, “so we challenge this and will work for a positive result.”

The general manager, incidentally Leonid Kuchma’s current campaign worker, especially stresses that when the President visited Kharkiv on October 11-12, he also favored the awarding of this exclusive right to the Malyshev Plant and, according to Mr. Maliuk, all they should do is “to formalize this affair in a document.”

Corresponding documentary instructions by the President and Prime Minister came a week later, and on October 25 the Commission for the Policies in Export Control and Military-Technical Cooperation was convened to make a decision favoring Mr. Maliuk. The export control state service urgently drew up a draft Cabinet resolution, and as soon as November 4 the draft became a full-fledged document, which Interfax reported the next day. This is the factual side of the matter. Now we can infer a few conclusions.

How could Mr. Maliuk, even enlisting the initial verbal support of the President, have achieved his old dream in the shortest possible time? Only if he had a sound backing. And Kharkiv had taken care of this well in advance. A company called Ukrainian Armored Vehicles was formed with a sole declared purpose of putting together the financial, research, technological, and production potential of Ukraine’s hundreds industrial units in order to develop and manufacture the latest military hardware. Over 35 enterprises and banks are among the company’s founders.

Deputy Minister of Ukraine for Industrial Policy Hryhory Maliuk was, of course, elected president of Ukrainian Armored Vehicles.

We can state on the basis of the Ukrainian Armored Vehicles affair that the nation’s arms business is beginning to form financial-industrial groups capable of lobbying their interests quite effectively. This is conclusion No. 1.

Secondly, we can predict that the main tank builders’ independent policy will now be aimed among other things at redistributing the financial flows that are connected with arms contracts. Naturally, with due account of the interest of the banking structures involved in the armor company. But to do this, the plant badly needs a new and resounding contract. Otherwise, friends will not understand and well-wishers will not let the plant go on. The only question is whether Kharkiv will be able to outdo itself and secure a big job on its own.

After the Malyshev people went head-on and decided not to heed Kyiv’s advice to think and act later,” Kharkiv can hardly rely on help from Kyiv-based arms trade structures. From now on, any pratfall Kharkiv may make on the foreign market (to which Kyiv would hitherto turn a blind eye) can mark the beginning of a new tank reshuffle in Ukraine. This reallocation could turn out to be as well planned as the current one, and as fierce as the World War II tank battle of Kursk.

THE DAY’S DOSSIER

The only units authorized in today’s Ukraine to export independently the military-purpose goods are the state-run company Ukrspetseksport and its subsidiaries Ukroboronservis, Prohres, and Ukrinmash. Also among the elite are the Promoboroneksport foreign-trade investment enterprise, Spetstekhnoeksport self-financing foreign trade enterprise, Artem Holding, Motor-Sich, Kyiv’s Aviant Plant, Antonov Aviation Complex, and Kvant-Radiolokatsiya state-run radar-producing enterprise. The right to export and import military explosives and ammunition has been granted to the state-run TASKO-Export Foreign Trade Firm.

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