Shmyhal: Ukraine to launch "quasi-exports" instead of direct arms sales

Defense Minister Denys Shmyhal during the presentation of the government's program on Monday said that Ukraine will not open direct arms exports, but will create so-called quasi-exports for domestic producers.

"There is no legal ban, exports are possible. [But] exports are not happening because the needs of the Armed Forces remain unmet. These must be covered 100% by our own producers. Only after that can we exchange any surplus for the weapons we require," he said.

Shmyhal explained that the Defense City initiative and the President’s Build with Ukraine proposal include elements of quasi-export.

"This means building production facilities together with partners in secure areas that begin operating immediately and supply the bulk of their output to Ukraine. For example, 70–80% of production goes to Ukraine, while the remaining 20% is stored in partners’ warehouses, since they also need to stockpile weapons at their own facilities. This mechanism is already being developed. We are preparing to implement it, and the first steps are already under way," he noted.

The Minister stressed that traditional arms exports during wartime would be inappropriate, "from all perspectives — moral as well as geopolitical."

"Accordingly, our task is to secure partners’ resources if we cannot finance our defense industry from our own budget. The Danish model is a vivid example, where partners provide funding. The next step is the European SAFE instrument, which allocates significant resources for the next seven-year budget cycle: €150 billion from the European Commission’s budget and another €650 billion from the national budgets of member states. Ukraine aims to participate, and preliminary agreements have already been reached. Starting in 2026, this funding will compensate for the shortage of domestic financing, allowing us to produce and stockpile the necessary weapons and ammunition in our warehouses," Shmyhal said.

• In June, President Volodymyr Zelenskyy announced that Ukraine plans to export its own military technologies to partner countries in Europe and beyond, by establishing production lines abroad for drones, missiles, and possibly artillery.
• In July, it was reported that Ukraine and the United States were preparing a "drone deal" — under which Ukrainian drones would be sold in exchange for U.S. investments and American weapons supplies.