Ukraine has to deal with intermediary companies during the purchase of weapons and ammunition, which many times overstate the purchase prices.
Points of attention
- Intermediaries selling weapons to Ukraine overstate purchase prices, leading to exorbitant profits and shortages.
- Ukraine faces the dilemma of purchasing weapons at inflated prices from intermediaries or risk being left without necessary resources.
- The market dominance of middlemen and speculators complicates Ukraine's efforts to obtain non-standard ammunition from Soviet weapons.
- Despite official bans, Ukraine resorts to intermediary companies to procure critical shipments of ammunition, navigating around government restrictions.
- The rise in weapon prices in Ukraine is attributed to speculation and hoarding by suppliers, posing challenges for the country's defense procurement.
How middlemen make money from arms sales to Ukraine
According to the founder and head of the Defense Procurement Agency, lawyer Volodymyr Picuso, Ukraine buys a large amount of Western weapons, but the Ukrainian military also needs weapons that are not produced by NATO countries.
In particular, Picuso and his company are looking for Soviet weapons all over the world, primarily non-standard ammunition.
The supply is limited, the market is dominated by middlemen and speculators, and stocks are quickly depleted by both Russia and Ukraine, the publication emphasizes.
Picuso emphasized that the production of such ammunition by NATO countries is almost non-existent. Although the Czech Republic, Bulgaria, Romania and Slovakia are now resuming production.
At the same time, Ukraine would like to cooperate with arms manufacturers without intermediaries and tried to establish other ways of supply.
According to one of the interlocutors of the publication, he and his partners repeatedly tried to convince manufacturers from Sweden and Norway to start production lines, but were refused due to the high cost of investments and the lack of a sufficient level of profitability.
In this connection, Ukraine had to turn to mediators in different parts of the world.
According to Picuso, there was simply no other choice.
When you try to buy a Mercedes Benz..., you want to get the product directly, but the factory tells you that you won't get it. The same is true in the arms market. Of course, I am not saying that there is no corruption in this market, but we must understand which risks associated with corruption are critical and which are acceptable, - explains the head of the Defense Procurement Agency
According to him, Ukraine has never bribed officials or agents in other countries.
At the same time, Picuso admitted that the shadow arms trade market has its advantages.
I will not name specific countries... but in many such countries their corruption is our ally. In these countries, we sometimes do things that are prohibited by their laws, Pikuso admitted.
How Ukraine purchases weapons despite the official ban of a number of countries
As an example, he told how his agency tried to purchase a critical shipment of ammunition, the export of which was prohibited by the government of that country.
We get a flat refusal, but then we get a call and are advised to send a letter of intent to a certain intermediary company, maybe not even in this country. When we send a letter of intent and are provided with a draft contract, we immediately receive permission to deliver this batch to Ukraine. We understand that it is not surprising that some specific intermediary can deliver something that was completely restricted by the government, - says Picuso.
According to the journalists of the publication, at the moment it is a problem for Ukraine to understand the suppliers that they can dictate the conditions regarding the price and try to raise it as much as possible.
The list of weapons received from representatives of Ukraine shows the authors of the material that the cost of many key types of weapons increased almost six times during the war.
In particular, at the beginning of the war, middlemen sold 122-mm Soviet Grad rockets for $900 per projectile, and now they are asking for $6,000, while Ukraine receives $4,700 of them.
Other ammunition, such as 152-mm shells for howitzers D20, long-range artillery, jumped from 1.2 thousand to 5.7 thousand dollars.
Ukraine so far manages to conclude agreements for half of this price, but soon it may have no other choice but to agree, the authors of the article emphasize.
Picuso believes that the most obvious reason for the rise in prices seems to be pure speculation.
The interlocutor added that some suppliers and warehouse owners keep their goods because they know that in six months the prices will double.
