Procurement: Ukraine Losses the Russian Contract

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June 25, 2008: Russia is sharply reducing the purchase of weapons, and related components, from Ukraine. Russia is not getting along with its former province of Ukraine (an independent country since the Soviet Union collapsed in 1991). Ukraine wants to join NATO, to obtain more protection from Russian aggression.

Russia has announced that it will build engines for its cruise missiles, rather than buying them from Soviet era Ukrainian factories. During the Soviet period, factories for weapons components were all over the Soviet empire. But when the communist empire fell apart, 14 new nations were created from pieces of the Soviet Union. Each new nation, by prior agreement, owned whatever Soviet assets were on its territory. At first, Russia said it would continue to buy components from these factories, that are now in a foreign country. Actually, it wasn't much of an issue, as the new Russia was broke (as was the former Soviet Union, which was why it fell apart), and it was a decade before military procurement recovered. Now Russia is building more cruise missiles, and it wants to keep the component business for Russian firms, and stick it to the uppity Ukrainians at the same time. Cruise missile engines are relatively low tech, so no special technology or manufacturing skills are involved.