Ukrainian arms and Iraq: a few more facts (09/29/02)

Ukrainian arms and Iraq: a few more facts

by Roman Kupchinsky
RFE/RL Crime, Corruption and Terrorism Watch

Earlier this year, a number of highly placed Ukrainian officials, including President Leonid Kuchma, have again publicly denied charges that Ukraine was selling arms to rogue regimes. The accusation centers on indications that it sold sophisticated weapons to Iraq in 2000.

On March 14, the head of the State Committee for Export Controls of the Military, Leonid Rozen; the head of the State Service for Export Controls, Oleksander Legenda; and the first deputy director of Ukrspetseksport, Viktor Korenkov, all told the UkrInform press agency that, "Ukraine, in all its years of independence, never had any intentions to develop military-technical cooperation with Iraq." Mr. Korenkov had to make the denial on behalf of his company, since the head of Ukrspetseksport, Valerii Malev, died in a car accident on March 6.

Later, that same day, President Kuchma denied National Deputy Oleksandr Zhyr's claims, as did Prime Minister Anatolii Kinakh. Mr. Kuchma said these were lies concocted by "competitors in the arms sales business, in order to push Ukraine out of the market."

Volodymyr Horbulin, the former national security adviser and presently the head of a state commission on the military-industrial complex, stated on March 20 in Donetsk that once Ukraine reached the level of $400 million to 500 million in arms sales, others began accusing the country of "arms sins." He went on to say, "For the past 10 years, no illegal contracts were signed by Ukraine. Ukraine as a state, is not involved in these deals."

Since no figures (aside from the $400 million to $500 million figure cited by Mr. Horbulin) or facts were quoted to back these allegations, it is worthwhile to examine the Ukrainian arms sales business to see the true state of affairs.

In the November 2001 issue of Jane's Intelligence Review, Viktor Zaborsky, from the Center for International Trade and Security at the University of Georgia, wrote:

"According to the Stockholm International Peace Research Institute (SIPRI) report, made available in mid-August 2001, Ukraine's arms sales dropped in 2000 by 84.8 percent to $67 million against $446 million in 1999. The report concludes that Ukraine had fallen from seventh to 16th position in the list of world leading weapons traders, being left behind by such countries as Belarus, Israel, Holland, Sweden, Georgia, Slovakia, Canada, the Czech Republic and even Indonesia."

At about the same time, the German news agency DPA published a report entitled "Ukraine Gunning For Arms Sales - Not So Picky About Customers, Though." The report alleges that Ukraine sells tanks, armored personnel carriers, assault helicopters and surface-to-surface missiles to UNITA rebels; small arms and ammunitions to Afghanistan's Taliban regime and Chechen rebels; Kalashnikov rifles, guided missiles and ammunitions to Eritrea."

The DPA report was shown to be untrue. No Ukrainian weapons were ever sold to Eritrea, the Taliban, or Chechen fighters by Ukrainian state companies, and it seems that the sources for these stories were individual Russian arms dealers who did in fact want to push their Ukrainian competitors out of these markets.

Mr. Zaborsky goes on to show that there was some confusion as to the actual figures cited by the Stockholm report:

"It did not take long for Ukrainian officials to respond to Western media reports. At a press conference on August 20, 2001, Valerii Malev, director-general of Ukraine's major arms trading company 'Ukrspetsexport,' denied SIPRI figures. Moreover, he denied the mere fact of a decrease in Ukraine's arms sales. According to Mr. Malev, in 1998 Ukrainian arms exports increased by 125 percent compared to 1997, in 1999 by 145 percent compared to 1998, and in 2000 by 103 percent compared to 1999. The expected increase in 2001 is 7 to 8 percent.

"Experts at the Kyiv-based Center for Army, Conversion and Disarmament Studies believe that the lack of transparency on Ukraine's arms sales is the major reason for a discrepancy between SIPRI figures and Ukrainian estimates. SIPRI analysts use mostly open source information when totaling the arms exports revenue. Ukraine has not overcome an old tradition of secrecy with respect to 'military and technical cooperation with foreign countries' and does not maintain any publicly available records."

Mr. Malev's figures, if correct - and his death in a suspicious car accident makes them more difficult to verify - indicate that Ukrainian arms sales were growing at a healthy pace and managing to compete with other countries.

It is also important to note that Ukraine's main competitor in arms sales is Russia. Both countries have billions of dollars' worth of former Soviet weapons which the former USSR sold to the Third World. Only Ukraine, Russia and Bulgaria are in a position to upgrade and service these weapons, and their prices are more than competitive with those offered by British, American, French, or Israeli arms dealers.

The heyday for Ukrainian uncontrolled arms sales was in 1994-1997, when the Ukrainian State Service for Export Control granted 6,500 licenses for the export of arms and military equipment. Over 114 firms, organizations and companies took part in foreign arms trade, military and special technology sales. According to an article by Valentin Badrak for the Center for Analysis of Strategies and Technologies in the July/August issue of 2001: "products were exported to 40 countries around the world for a total of about $760 million, with sales often at less than market value." Many of these licenses were issued during the tenure of then-Prime Minister Pavlo Lazarenko, under whose jurisdiction the Service for Export Control worked. Mr. Lazarenko himself has stated that he took 10 percent from every deal, which went through his office, when he was prime minister.

It was then that Ukraine's reputation suffered most. Many criminal arms dealers would present fake end-user certificates to Ukrainian companies and buy whatever they had in stock. Much of this was going to Africa and the former Yugoslavia. But there is no hard evidence implicating the Ukrainian government in these sales. At the same time, numerous Ukrainian officials were party to these deals by taking bribes from arms dealers. They were never prosecuted, although the government knew who they were. The result of such official protection of friends from justice did not improve Ukraine's image abroad.

An ad hoc inquiry commission was formed within the Ukrainian Parliament to look into charges of illegal arms sales by the government, submitting its report on April 14, 1998. However, the government accused the commission of being politically motivated (the report came out prior to the presidential election campaign and was critical of President Kuchma, who had announced that he would run for re-election), and nobody was made to answer for possible abuses. In particular, the case of selling four SU-17 (NATO-Fitter) aircraft to Yemen in 1994 for $500,000 per unit was never revealed to the public.

By 1998 export controls had been tightened considerably. The United States' Nunn-Lugar program provided Ukraine with money to install automated export-control systems; and by 1999 Ukraine had received about $13 million for this system, which greatly helped enforce export controls.

In February 1999 a new agency, the Ukrainian State Commission on Export Control Policy and Military-Technical Cooperation with Foreign States, came into being by presidential decree. The decree included the provision that, in case of interdepartmental disputes on arms export cases, the issue was deferred for consideration to the head of state - President Kuchma. In practice, this meant that the automated export controls provided to Ukraine through Nunn-Lugar could be bypassed if the head of state signed off on a sale. In certain cases, deals could be carried out within 10 to 12 days, Mr. Malev said in an interview published by the newspaper Zerkalo Nedeli on September 30, 2000.

By 2001 reports began circulating that Ukraine had sold sensitive military technology to Iraq. The New York Times on June 18 wrote that two American arms-control experts found evidence that Iraq bought weapons or parts of weapons after U.N. sanctions were imposed in 1990. The experts, identified by the newspaper as Gary Milhollin and Kelly Motz, said they had found documents concerning illegal sales or potential sales by companies in Ukraine, Belarus and Romania. Among the purchases made by the government of Saddam Hussein were missile components and high-technology machine tools.

In an article in the U.S. journal Commentary (July/August 2001), Mr. Milhollin and Mr. Motz described their findings regarding Ukrainian deals with Iraq:

"In Ukraine, the Iraqi focus was more specific - missile components. In September 1993, a Ukrainian trader with a Ph.D. in electronics named Yuri Orshansky arrived in Baghdad. He was accompanied by Dr. Yuri Ayzenberg from a Ukrainian firm, Khartron, well-known for its ability to design missile-guidance systems. Within two months, an Iraqi delegation would travel to Ukraine to follow up.

"The Iraqi delegation was led by Brig. Gen. Naim Bakr Ali, head of Iraq's Scud missile-guidance program. With him were two officials from Iraq's Missile Research and Development Center, and rounding out the team were Brig. Gen. Safa from Ibn Al-Haytham, Iraq's largest missile-manufacturing site, and Maj. Raad from Al-Karama State Establishment, another such site. Their mission was clear: to negotiate agreements for as much help as they could get. As General Naim would himself tell the U.N. inspectors, his instructions were simple: 'If you find something good, sign; if you do not find something good, then don't sign.'

"He signed. In Ukraine, Orshansky, Ayzenberg and Naim executed a 'protocol' - amounting to an outline of future cooperation - that promised Iraq the keys to a trove of missile technology. Ukraine would sell guidance components for surface-to-surface missiles, help Iraq develop batteries of the latest anti-aircraft missiles, provide equipment for missile research, and even establish a college to train missile experts. To get things started, Iraq asked for price quotes on a test stand for rocket motors, a series of gyroscopes, and accelerometers for missile-guidance systems, and high-precision machine tools for making missile parts.

"Under questioning, Gen. Naim later claimed the deal was supposed to take effect only after the embargo was lifted and hence did not violate U.N. resolutions. As the inspectors pointed out to him, however, the agreement expressly stipulated that it would come into effect 'from the moment it is adopted by the governments of Ukraine and Iraq' - that is to say, almost immediately. (Both Naim's superior and the Ukrainian Cabinet approved the deal in 1994.) Gen. Naim also claimed that Iraq intended to work only on missiles that could fly under 150 kilometers, permitted under certain U.N. resolutions. But an appendix to the agreement described a system for 'separating the warhead from the bus.' Only long-range missiles, which Iraq is not permitted to possess under international sanctions, have warheads that are separated during flight from the rocket engine (or bus) that carries them aloft. In short, Saddam Hussein was aiming to project his power as far as possible.

"In November 1994, Gen. Naim led another Iraqi delegation to Ukraine. Aided by many of the same experts, he signed a second protocol as ambitious as the first. Khartron was now to provide four different types of missile guidance, two of them for separable warheads. According to the protocol, Iraq had already given Khartron the data needed to build the first type, and a schedule was included for receiving the data for the other three. Khartron also helped the Iraqis work on missile-guidance problems during the visit itself."

The evidence shows that, despite the protests of leading Ukrainian arms dealers, Ukraine did harbor the intent of selling weapons to Iraq. Did they? This has not been proven.

All available evidence indicates that no sales were completed at this time, despite the readiness of both sides to do business. However, the Ukrainian authorities never conducted an investigation into the activities of their citizen, Mr. Orshansky, who in fact was the "honorary counsel" of Iraq in Kharkiv. Was Mr. Orshansky conducting his own freelance "foreign policy," or was he doing so with a wink of approval from the president of Ukraine? Mr. Orshansky was interviewed a number of times by RFE/RL's Ukrainian Service and was found to be a member of the Communist Party of Ukraine and a rather staunch enemy of the West.

Ukrainian officials at that time responded more or less in the same manner as they are currently responding to renewed charges of selling weapons to Iraq. Anatoliy Gritsenko, the president of the Razumkov Center for Economic and Political Studies stated on June 20, 2001, that the charges were related to the stepping up of Ukrainian-Iraqi collaboration in non-military spheres, which is not to the liking of Ukraine's Western competitors.

A more revealing example of the attitude which is widespread in the military and arms export business in Ukraine was provided in Jane's Intelligence Report from November 2001:

"The Ukrainian government has also joined Russia in claiming legitimacy of arms trade with Iran. Although Iran has traditionally been a Russian customer, Ukrainian defense companies have managed to enter that market ... full of intent to expand [their] presence. Like their Russian colleagues, Ukrainian arms manufacturers claim their legitimate right to sell weapons to Iran and resist Western, mainly U.S., pressure to halt arms transfers to a 'terrorist' state.' Do not make big eyes when you hear about our military cooperation with Iran, says Grigoriy Malyuk, former director general of a tank and armor-producing Malyshev plant in Kharkiv. 'We have carried out delivery on a couple of contracts already and now are delivering on other contracts. Those are the contracts which were signed before the Wassenaar Arrangements came into force (July 1996) and we have to deliver on them. Otherwise, our reputation will be damaged.' Government and Malyshev officials, however, would not disclose specifics of the contracts with Teheran."

On February 5, 2000, Mr. Horbulin told Infobank news service that, "Ukraine may also successfully compete on world armaments markets selling aviation equipment and planes, anti-missile systems, radar, radar-jamming equipment and other military electronic equipment."

They have, apparently. Mr. Zhyr, a member of Parliament made the stunning announcement that he possessed the transcript of a conversation between President Kuchma and Mr. Malev concerning the sale of sophisticated anti-aircraft systems to Iraq for $100 million. In that conversation, according to Mr. Zhyr, President Kuchma gave his approval for the sale.

In his appearance on March 20 in Donetsk, Mr. Horbulin stated: "I don't contradict the fact that a conversation might have taken place between the president and Mr. Malev. I do, however, insist that Ukraine never sold Iraq $100 million worth of weapons."

Perhaps it was just $90 million, after commissions?

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