Western countries promised Kiev almost 66 billion dollars in aid at the Conference on the Reconstruction of Ukraine

PARIS (Reuters) – Western defense companies are interested in producing weapons in Ukraine, but only after the war, say company executives Reuters spoke to at the Paris Air Show.

Ukraine is actively trying to increase its arsenal of weapons, from drones and ammunition to tanks, in the fight against the Russian invasion. It also seeks to increase employment opportunities and stabilize a war-torn economy.

On Monday, a Ukrainian deputy minister told Reuters that Kyiv is negotiating with defense companies in Germany, France, Italy and Eastern Europe about the potential production of weapons in Ukraine.

But company executives at the world’s largest aerospace industry meeting said the risk was too high for now.

“You just have to look at the bigger picture … and the risk associated with this joint production,” said Greg Ulmer, who heads the aeronautical business of US defense giant Lockheed Martin and was unaware of talks with Ukraine on joint production.

Representatives of two major defense companies confirmed that they had heard about the Ukrainian initiative, and one added that his company was ready to sign a letter of intent to discuss an industrial partnership in Ukraine after the end of hostilities.

But none of those interviewed expressed interest in investing while the war continues, as security is the main concern.

A DIFFICULT TASK

Germany’s Rheinmetall said last month it had formed a joint venture with Ukrainian state-owned conglomerate Ukroboronprom to build and repair tanks in Ukraine.

In May, President Volodymyr Zelenskyy said that Ukraine is working with the British company BAE Systems to create a Ukrainian base for the production and repair of weapons ranging from tanks to artillery.

But executives noted that repair yards are easier to create than full-scale assembly lines.

Former Russian President Dmitry Medvedev, a close ally of current President Putin, said Russia would retaliate against any Rheinmetall facility built in Ukraine.

“It takes time, as in any country, to assess who are the right partners, who can do what. And doing it during wartime is not an easy task,” said Mikael Johansson, CEO of the Swedish company Saab.

Ukrainian officials declined to comment on the defense companies’ concerns or say whether they offer insurance or other incentives for investment.

Major insurers tend to exclude Ukraine from policies, saying the risks are too great, although Britain and France separately said on Wednesday they were planning war-risk insurance mechanisms to help Ukraine recover.

The defense ministries of Great Britain, France, Germany and Italy refused to comment on any potential arms production in Ukraine.

“We are committed to supporting Ukraine… including its efforts to restore the industrial base. At this time, we do not have specific or additional information regarding joint production in the defense sector,” a senior official of the US Department of Defense told Reuters.

REMOTE SUPPORT

However, many leaders see a potential big opportunity in Ukraine after the end of the conflict.

“We know there is a highly skilled workforce, people who are eager to learn, extremely resourceful and have a can-do culture,” said Ricardo Mendes, CEO of British and Portuguese drone company TEKEVER.

TEKEVER has no concrete plans for its post-war activities, but has said it intends to “invest and make a significant contribution to the development of the Ukrainian drone industrial base.”

Some executives warned that existing rules could limit companies’ ability to work with Ukrainian industry even after the war.

“When it comes to co-production, the US government looks at these things very carefully … and always with a view to making sure that we’re not completely transferring all the technical know-how to a foreign partner,” said Nicola Johnson, senior director from the government relations of the American drone manufacturer General Atomics.

But in the opinion of analysts, voicing this idea at an early stage may be a wise move. If the war ends next year, Ukraine’s strategy could help start discussions about building a defense industry in peacetime.

“It’s a great idea. It’s only a matter of time,” said Richard Aboulafia, aerospace analyst at AeroDynamic Advisories.

“In the long term, the main goal will be to attract Ukraine to the Western industrial ecosystem and, perhaps, even to a political and military alliance,” he added.

But currently, most manufacturers want to continue to support Ukraine with weapons from afar.

“Never say never, right? But right now, the focus is on making sure they have what they need,” said Chris Kalio, chief operating officer of US defense company RTX.