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Germany-Ukraine Joint Arms Production Venture is ‘Money Laundering Scheme’ – Analyst

© AFP 2023 / INA FASSBENDERA cyclist rides past the logo of German defence company and automotive supplier Rheinmetall at their headquarters in Duesseldorf, western Germany, on April 21, 2022.
A cyclist rides past the logo of German defence company and automotive supplier Rheinmetall at their headquarters in Duesseldorf, western Germany, on April 21, 2022. - Sputnik International, 1920, 29.09.2023
Berlin and Kiev’s plans for a joint venture on Ukrainian soil will unlikely be implemented in the foreseeable future, Alexei Leonkov, a military analyst and editor of the Arsenal Otechestva (Arsenal of the Fatherland) magazine, told Sputnik.
German arms manufacturer Rheinmetall has received the go-ahead from the country’s Federal Antimonopoly Office to set up a joint venture with the Ukrainian Defense Industry, previously known as Ukroboronprom.

According to Rheinmetall, "The JV [joint venture] is to be based in Kiev and engage in service and maintenance as well as the assembly, production and development of military vehicles."

The developments come as a US newspaper reported that Kiev is due to host Western officials and international arms manufacturers for a forum on Friday, touted as an opportunity to increase weapons production inside Ukraine. The newspaper cited Ukrainian Foreign Minister Dmitry Kuleba as saying that representatives of 165 military contractors from 26 nations are expected to take part in the forum.
Alexei Leonkov told Sputnik that Kiev and Berlin are currently writing up an agreement of intent, which is presented as if the decision on the JV has already been made.

Actually, however, there are several factors that make these plans by Berlin and Kiev doubtful, the Russian analyst pointed out.

First and foremost, Ukraine is involved in hostilities, which means that its industrial sector is often exposed to Russian missile attacks and those conducted by Russian long-range combat drones, according to Leonkov.

Secondly, cash-strapped Ukraine's national debt will soon approach 100%, namely, it will be a bankrupt state in the near future and it remains unclear how investments into the country can be made. The analyst warned that investors’ hopes for some kind of economic effect from the possible JV may never be met because it’s not clear who will make payments.

Last but not least, Rheinmetall – a high-tech company – will most likely have to spend its own money to train Ukrainian workers so that they can be on a first-name basis with German technology, as per Leonkov.
“The only thing that can be done is, on the one hand, to do some PR, and on the other - to knock out money that will never be spent on creating the JV’s workshops and production sites. One can easily point the finger at Russian missiles that allegedly destroyed JV sites,” the analyst said, calling the Kiev-Berlin project “a money laundering scheme.”
He stressed that even if there was no Russian special military operation in Ukraine, creating the JV could take plenty of time.
“This project is at the level of crazy people. Making plans when your ship is already sinking is tantamount to the captain of the Titanic making plans that he will sail, for example, to Beijing next time. So no serious investor will invest in the project, which is a very attractive project in terms of money laundering,” the Arsenal Otechestva editor underscored.
Plans by Berlin and Kiev to create a JV fly in the face of Ukraine’s bungled counteroffensive, which kicked off in early June and has already claimed the lives of more than 71,000 Ukrainian soldiers. Russian President Vladimir Putin said that the Ukrainian Armed Forces, which has also lost over 500 tanks and 18,000 armored vehicles of various kinds since the beginning of the counteroffensive, made no progress on all frontlines.

Moscow has repeatedly slammed plans to create arms production units in Ukraine, with Kremlin spokesman Dmitry Peskov saying earlier this month that if the West decides to deploy military plants on Ukrainian soil, they will become the object of “special attention” of the Russian Armed Forces.

He added that the possible deployment of Western military factories in Ukraine cannot in any way affect “the predetermination of successful implementation and the completion of a [Russian] special military operation."
Russian Foreign Ministry spokeswoman Maria Zakharova, for her part, told a news briefing in early September that if plans to expand arms production in Ukraine are implemented, Russia will take “the necessary measures to stop threats to its security.”
“We consider such intentions as another confirmation of the direct involvement of the military-industrial complex and the ruling circles of Western countries in the armed conflict and support for the criminal Kiev regime,” Zakharova said.
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