HIGHLIGHTS

1. Ukraine’s president signs law on management of state-owned defense enterprises
2. Ukrainian Chief of the General Staff visits the United States
3. Belarus reportedly deports two Ukrainian military diplomats
4. Russia seeks to rent NITKA aviation training complex in Crimea
5. Antonov to begin flight tests of An-178 military transport aircraft in 2013
6. Russia claims Ukraine’s sale of LCAC Zubr to China violates intellectual property rights
7. Ukrainian delegation in Washington for meeting on EURO-2012 security & “112” system
8. Government decree to allow public-private partnership on military housing

DEFENSE INDUSTRY NEWS
Ukraine’s President signed legislation establishing the responsibilities of the new state-owned defence industry conglomerate Ukroboronprom in managing state-owned defense industrial enterprises, including those financially dependent on Ukroboronprom subsidiaries. The new law tasks Ukroboronprom with implementing financial activities and foreign economic policy in relevant areas, as well as ensuring the development of state-owned scientific enterprises. President Yanukovych ordered the Director General of Ukroboronprom, Dmytro Salamatin, to ensure financial discipline in Ukroboronprom enterprises. He also underlined the need to bring young specialists into defense industry and to ensure smooth cooperation between defense industrial enterprises and scientific organizations.

INTERNATIONAL CONSULTATIONS AND AGREEMENTS
The Ukraine-US partnership is an important strategic vector for Ukrainian policy, according to Colonel-General Hryhoriy Pedchenko, Chief of the Ukrainian Armed Forces’ General Staff, during a visit to the United States on 4-7 July. In his comments, General Pedchenko emphasized that Ukraine’s decision to become a non-bloc state did not prevent the country from contributing to European collective security and partnership with NATO. The visit included consultations with NATO’s Allied Command Transformation and the U.S. Joint Chiefs of Staff (JCS). General Pedchenko met with Admiral Michael Mullen, the Chairman of the JCS, French Air Force General Stephane Abrial, NATO’s Supreme Allied Commander Transformation, and U.S. Deputy Assistant Secretary of State Daniel Russell.

A Ukrainian-Turkish Strategic Council will be established in November 2011. The Council’s first meeting will be chaired by the Ukrainian President and the Turkish Prime Minister.

Ukraine and Cyprus have signed an intergovernmental defense cooperation agreement, which calls for the realization of annual cooperation plans and reciprocal visits.

REGIONAL SECURITY
Ukrainian media has reported that Belarus expelled two Ukrainian military diplomats in June, purportedly as the result of a dispute between the countries’ senior leadership. Ukraine is said to have made reciprocal expulsions. Officials in both countries have denied the reports.

OPERATIONS, EXERCISES, TRAINING, FORCE DEVELOPMENT
Russia’s Defense ministry has reportedly requested that Ukraine rent it the NITKA carrier aviation training complex, Crimea, Ukraine. Ukraine’s Defense Minister has said that Ukraine is not interested in NITKA complex, as the country does not have flat-deck naval aviation. Ukrainian experts, however, believe that the NITKA complex could be profitable for Ukraine if it will be rented by foreign states. India and China are also reportedly interested in the NITKA complex.

Russia had suggested training Ukrainian military personnel in Russian military educational institutions. Ukraine’s Defense Ministry is examining the proposal.

Ukraine participated in the Black Sea Hawk-2011 exercises held in Novorossiysk, Russia. Coast Guards from Romania, Turkey, Bulgaria, Ukraine and Russia participated. The exercise involved information exchange about encroaching ships, as well as verification of information and detention of ships in the Black Sea maritime region. 

Ukraine’s Armed Forces will participate in the Center-2011 large-scale Russian strategic exercise this coming September with one company. Kazakhstan and Tajikistan will also participate. [Center-2011 is a high-profile exercise, which is being touted by Russia’s Defense Ministry as demonstrating the Armed Forces’ combat readiness in the context of ongoing military reforms. –Ed.]

Ukraine has rotated half the personnel from its peacekeeping contingent in Liberia, the 56th Separate Helicopter Detachment. Of the 126 peacekeeping personnel that returned to Nikolaev (Ukraine) on 28 June, 87 tested positive for malaria and 45 were hospitalized, according to Ukraine’s Ministry of Health.

AIRCRAFT
Russia’s Salut Company (Russia) is to suspend cooperation with Ukraine’s Ivchenko Corporation on production of D-436 engines for An-148 regional jet aircraft and Be-200 multipurpose amphibious aircraft, as well as the D-27 engine for An-70 military transport aircraft. The two engines are Ukrainian intellectual property; Russia is reportedly unwilling to pay royalties for the rights to manufacture the engines, and Ukraine was unwilling to accept a Russian proposal to create a joint enterprise on a parity basis.
Russia’s Aerosila Company will reportedly develop and supply the auxiliary gas turbine for the An-70 military transport aircraft. State performance tests on the company’s TA18-200 gas turbine are planned for 2012.

Antonov will begin flight tests of the An-178 military transport aircraft in 2013. The new aircraft is developed on the basis of the An-158 regional jet. Antonov has also started development of a newmaritime patrol aircraft on the basis of the An-168 regional jet.

The Chuguev Aircraft Repair Plant is reportedly negotiating to equip Ukrainian aircraft with an Israeli-produced optoelectronic monitoring system. The system is planned for installation on Mi-2 and Mi-8 helicopters, as well as An-2 utility aircraft. Perspective clients include the State Border Guard Service, the Ministry of Emergencies, the Ministry of Internal Affairs, the State Environmental Inspectorate, and Ukrainian ports. The system has reportedly been proven in airspace surveillance on the US border and in Israel, at the G-7 summits in Russia (2006) and Canada (2010), and at the 2008 Beijing Olympics. A technology transfer agremenet between the Chuguev Aircraft Repair Plant and Israel’s Aeronautics Defense Systems Ltd was signed in December 2010.

SHIPBUILDING
Ukrainian shipbuilding companies currently have about 10 major ship construction orders, according to the Ukrainian President. The President also noted that it is anticipated that Russia will also order repair for its naval ships in Ukraine.

Russia’s state arms export monopoly Rosoboronexport has accused Ukraine of breaking Russian intellectual property rights in signing a contract for the supply of the Project 1232.2 "ZUBR" small air-cushion landing craft to China. A leading Ukrainian defense industry expert, Sergey Zgurets, has stated that the intellectual property for these landing craft are not determined, but that Russia had hoped to gain the contract with China.

ARMOR
Ukroboronprom, Ukrspecexport and the Kyiv Mechanical Repair Plant participated in BRIDEX-2011 (Brunei International Defence Exhibition, 6-9 July 2011). Ukraine demonstrated the BTR-3E1 APC and Stugna-P anti-tank guided missile firing possibilities for the leadership of Brunei’s Defense Ministry.
The chairman of the Kharkiv Regional State Administration has accused Iraq of not paying Ukraine for the delivery of BTR-4s, while claiming that Ukraine has implemented the contract in accordance with the schedule. 26 BTR-4 were supplied from the Kharkiv-based Malishev factory in April 2011. Other reports in the Ukrainian press have contradicted this statement, claiming that Iraq has paid for the first supply of BTR-4s under the contract. The total value of the contract is $457 mln for delivery of 420 BTR-4s.

SATELLITES & LAUNCH VEHICLES
The launch of the Ukrainian Sich-2 satellite has been postponed to 21 July 2011. The launch, on a Dnieper launch vehicle, was planned for 13 July from a launch pad in the Orenburg region (Russia).

A Brazilian Space Agency delegation visited Ukraine on 4-9 July to visit Ukrainian enterprises involved in Cyclone-4 project. The Brazilian representatives positively estimated the progress in implementing the project.

SECURITY
A delegation headed by Ukraine’s Minister of Emergencies visited Washington, DC on 19-20 July to discuss the potential for U.S. business to participate in high-visibility projects in Ukraine. These include the development of Ukraine’s “112” emergency phone system [comparable to the U.S. ‘911’ - Ed.] and support for the EURO-2012 European Soccer Championships, to be held in Ukraine and Poland in June 2012.  The delegation includes representatives from the EURO-2012 Agency, the Ministry of Health, and the airports of Kyiv, Kharkiv and Donetsk and other Ukrainian organizations involved in emergency management. The provision of security for EURO-2012 infrastructure, including security at stadiums and airports, is expected to be a major issue. [A report on the meeting will be sent out separately. - Ed.]

INFRASTRUCTURE
Ukraine’s Cabinet of Ministers approved a decree on 7 July that advances Defense Ministry plans to construct housing for military personnel using non-budget funding. The decree allows such housing to be built on Defense Ministry property without formally changing the designation of the property. The decision's declared aim is to increase the supply of housing and reduce corruption. [On 30 March, Ukrainian Defense Ministry officials briefed their plans in this area and potential opportunities for U.S. business at a meeting of the U.S.-Ukraine Business Council’s Aerospace and Defense Industry Committee (ADIC). For additional information, please contact Dave Rigsby, UMBRA LLC ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; 571-426-6159) or James Greene, Effective Engagement Strategies LLC ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; 434-466-1060). –Ed.]