OPEN LETTER: Ukraine Opens Up Arms Exports, Allocating 20 to 30% to the Defense Fund

Maxime Marquette

2026-07-14 19:40:22

27 countries have already joined

This new export mechanism is based on the “Drone Deal” framework, which President Volodymyr Zelensky announced on June 18, 2026, as bringing together 27 partner countries, including 15 NATO members and 12 non-member states, according to Interfax-Ukraine. This partnership model involves the exchange of proven combat experience, technologies, and drones in exchange for funding, rare raw materials, or assistance in the energy and air defense sectors.

Only countries that already have intergovernmental agreements under the Drone Deal are eligible for this new direct export mechanism, Ukrinform notes, which explicitly excludes any open market accessible to any interested buyer.

Six Agreements Already Signed, Twenty Countries in Discussions

According to Mezha.net, six agreements have already been signed under the Drone Deal framework, while more than twenty other countries are actively working to join this model. A “Fast Track” decree has also been adopted to reduce the review period for non-critical export applications from 90 to 30 days, significantly speeding up the administrative process.

This administrative streamlining reflects a clear political will to quickly capitalize on the growing international demand for Ukrainian technology—forged and proven under the most demanding wartime conditions Europe has seen in decades.

The fact that 27 countries—including 15 NATO members—want to buy directly from Ukrainian manufacturers speaks volumes about the complete reversal of the perceived balance of power. Ukraine is no longer just a country receiving aid; it has become a sought-after supplier.

The safeguards that protect the war effort

Ukraine’s military priority remains absolute

Fedorov was explicit on this point: “Exports will be authorized only if the needs of the Ukrainian military are fully met. If the state needs a particular defense product, the export license may be denied.” This key provision ensures that the new mechanism will never jeopardize supplies to Ukrainian forces on the front lines.

At the same time, manufacturers will be able to export their products if they can guarantee the simultaneous fulfillment of government contracts and export orders—a dual requirement that protects the war effort while opening up a new source of revenue for the Ukrainian defense industry.

A List of Critical Products Excluded from All Sales

The Ministry of Defense maintains a list of “critical products” that are entirely excluded from export, regardless of the potential buyer. Neither Jane’s nor other specialized media outlets have published the precise contents of this list, but its very existence signals that Ukraine’s most sensitive or strategically important systems will remain off the market, protected from any foreign sale.

This methodical caution illustrates the delicate balance Kyiv is trying to maintain: opening up its industry enough to generate significant revenue, without ever compromising the critical operational capabilities on which its own defense depends in the face of the ongoing Russian invasion.

This clear hierarchy between military needs and commercial opportunities strikes me as exactly the right approach. No export contract should ever deprive a Ukrainian soldier of a drone or a shell that he needs on the front lines.

The Specific Figures for the New Mechanism

A Contract Threshold and a Time Limit

The mechanism applies to transfers with a minimum value of 15 million hryvnias—approximately 335,000 U.S. dollars—a threshold that filters out minor or informal purchases to direct the system toward institutional buyers—allied defense ministries and their prime contractors—rather than individual users.

Once a partner country submits an export request, Ukrainian authorities have 30 days to process it, down from 90 days previously for non-critical goods, according to ZBROYA, the official portal of the Ukrainian Ministry of Defense.

No Transfer of Intellectual Property

According to reports by FlightGlobal and Ukrinform, transfers made under this mechanism do not include any transfer of the underlying intellectual property rights: buyers obtain the equipment and associated technology, but never ownership of the Ukrainian design know-how itself.

This clause protects the sustainable competitive advantage of Ukrainian industry, ensuring that even in the event of a massive sale of technology, the core of the innovation remains the exclusive property of the Ukrainian designers who developed it under enemy fire.

I find this intellectual property clause remarkable. Ukraine is selling the right to use its technology, not its industrial soul. It is a subtle legal distinction, but one that is strategically essential to preserving its long-term advantage.

The Re-export Clause: A Strategic Lock

Mandatory Written Consent

If a partner country wishes to transfer technology of Ukrainian origin to a third country, it must first obtain Kyiv’s explicit written consent. This clause prevents any uncontrolled dissemination of Ukrainian technology to unauthorized parties, including potentially states with ties to Russia.

This control mechanism ensures that Ukraine retains permanent oversight of the final destination of its technologies, even after their initial sale to a trusted partner—a level of control rarely seen in traditional international arms trade agreements.

A 20% levy on all re-exports

If such a re-export occurs, 20% of the value of the re-exported product must be remitted to the Ukrainian state budget. This provision transforms every secondary transfer into an additional source of revenue for Kyiv, ensuring that the economic value of its innovation continues to benefit Ukraine even as it circulates beyond the initial direct purchaser.

This cascading levy structure demonstrates remarkable legal and economic sophistication for a country that has been at war for more than four years, showcasing an administrative capacity that few would have anticipated amid such an intense and prolonged conflict.

This 20% levy on re-exports is a clause that many wealthier and more stable Western countries would struggle to negotiate as skillfully. Ukraine is demonstrating an administrative maturity that commands respect.

Zelensky and the Political Background of the Decision

A promise made as early as April 2026

According to Ukrainska Pravda, President Volodymyr Zelensky announced as early as April 28, 2026, that Ukrainian arms exports would become a reality, specifying that the National Security and Defense Council would coordinate the export process to ensure that the needs of the Ukrainian defense forces were met first, and that only surplus weapons would be exported.

Zelensky made this announcement in unambiguous terms: “Ukrainian companies will have a real opportunity to enter the markets of partner countries, provided that our military has the right to receive the necessary volume of weapons first—only what companies can produce beyond the state order will be exported.”

A partial and conditional lifting of the ban

According to Breaking Defense, this announcement in April already represented a partial lifting of the ban on exports of weapons produced in Ukraine, though limited to countries deemed uncooperative with Russia—a distinction that the Ukrainian Ministry of Foreign Affairs, in cooperation with intelligence agencies, was tasked with defining precisely.

This two-fold condition—non-cooperation with Russia and compliance with the Drone Deal agreements—illustrates the geopolitical caution that continues to guide every step of the Ukrainian defense industry’s gradual opening to international markets.

I note with satisfaction that even in its quest for revenue, Ukraine refuses to sell to anyone who flirts with Moscow. This is a moral consistency that many more prosperous Western countries would do well to emulate in their own trade relations.

Phantom Defence and the companies already involved

Manufacturers Ready to Seize the Opportunity

According to UASFeed, companies like Phantom Defence are already among the Ukrainian manufacturers ready to sell directly to the 27 partner countries of the Drone Deal, rather than having to route their orders through slower government channels. This ability to sell directly significantly speeds up the sales cycle for companies that have developed unique expertise during the war.

These companies—many of which were founded or have expanded significantly since the start of Russia’s full-scale invasion—embody the rapid transformation of Ukraine’s industrial ecosystem, which has evolved over four years from a limited industrial base into a cutting-edge technology sector internationally recognized for its innovation in drones.

Production Now Exceeds Domestic Needs

According to The Defense Post, Ukraine is opening up these exports because its defense industry has developed a production capacity that now exceeds the country’s own needs—a remarkable turnaround for a nation that, as recently as four years ago, depended almost entirely on Western shipments to equip its armed forces.

Rather than being viewed as a luxury, this excess capacity is presented by the Ukrainian government as a strategic opportunity to directly finance the strengthening of its own defense industrial base, creating a virtuous cycle between production, export, and reinvestment.

The fact that Ukrainian industry now produces more than it consumes itself is perhaps the most underestimated statistic of this war. It fundamentally changes the nature of the relationship between Ukraine and its Western partners.

What This Means for Future Western Aid

A Transition Toward Partial Financial Autonomy

This export mechanism does not replace the ongoing Western military aid that Ukraine still needs to repel the Russian invasion, but it introduces a complementary source of funding that could, over time, reduce Kyiv’s exclusive dependence on aid budgets approved by Western parliaments, which are often subject to the vagaries of electoral cycles and domestic politics.

This diversification of funding sources for the Ukrainian defense industry could prove strategically valuable in a context where uncertainty persists regarding the long-term commitment of certain Western partners, notably the United States under the Trump administration.

A Model That Could Inspire Other Reforms

This mechanism could also serve as a model for other structural reforms within Ukraine’s war economy, illustrating a capacity for administrative and legal innovation that contrasts with the sometimes widespread perception of a state at war as necessarily paralyzed by the daily urgency of the conflict.

This capacity for institutional innovation, in the midst of war, deserves to be highlighted as an indicator of resilience that extends far beyond the military sphere to encompass the country’s economic and industrial governance as a whole.

I believe this financial diversification is vital. No democracy should depend 100% on the shifting political goodwill of foreign parliaments to finance its survival, no matter how supportive its allies may be today.

The Risks and Limitations of the New System

Bureaucracy That Could Slow Things Down Despite Good Intentions

Despite the announced acceleration of processing times, some observers question the actual capacity of the Ukrainian administration—already stretched thin by the day-to-day management of the war—to effectively process a potentially growing volume of export applications within the announced 30-day deadline.

This concern, while legitimate, must be balanced against the Ukrainian government’s clear political will to get this system up and running quickly, as evidenced by the adoption of the “Fast Track” decree, specifically designed to avoid administrative bottlenecks that could discourage international partners.

The Risk of Diversion to Undesirable Actors

Despite the legal safeguards put in place—including a ban on re-export without written consent—some security experts highlight the residual risk that Ukrainian technologies could end up, through indirect channels, in hostile hands—a risk inherent in any export of sensitive military technology, regardless of the country of origin.

This risk, well-documented in the history of the international arms trade, justifies the methodical caution with which Kyiv has constructed this mechanism, prioritizing strict controls over rapid and unregulated trade liberalization.

I remain fully aware of these residual risks: no control system is perfect, and the history of the arms trade is littered with examples of technology being diverted. But Ukraine’s current approach minimizes this risk as much as possible.

A Comparison with Other Defense Industries During Wartime

A Rare Historical Precedent

Few nations in modern history have developed a significant arms export industry while simultaneously engaged in an active existential conflict on their own territory. This situation places Ukraine in a nearly unique category, where the need for survival has paradoxically accelerated industrial innovation that now exceeds its own immediate needs.

This dynamic is reminiscent, to a lesser extent, of the rapid industrial transformation observed in other nations facing prolonged existential threats, although the Ukrainian context remains distinct due to the scale of international support received and the specific nature of the drone warfare that has largely defined this conflict.

An Industry Forged by Necessity Rather Than Planning

Unlike many Western defense industries, which have developed over decades of strategic planning during periods of relative peace, Ukraine’s drone and defense technology industry has emerged out of absolute urgency—under bombardment—with innovation cycles accelerated by the immediate need for survival on the battlefield.

This unique origin gives Ukrainian technology an operational credibility that few Western competitors can claim with the same legitimacy, having been tested and refined under the most demanding combat conditions rather than in laboratories or simulated exercises.

This combat-proven legitimacy is Ukraine’s most powerful selling point. No Western laboratory, however sophisticated, can replicate the authenticity of the operational experience gained under enemy fire over the course of four years.

Ongoing negotiations with Washington

A "Drone Deal" Agreement Still to Be Finalized with the United States

According to Reuters, Ukraine is also seeking to conclude a “Drone Deal” with the United States—a negotiation that, if successful, would constitute another major recognition of the strategic and commercial value of Ukrainian defense technology by the West’s greatest military power.

These negotiations with Washington take place against the broader backdrop of at times strained relations between Kyiv and the Trump administration over the issue of continued military support, making any progress toward a mutually beneficial defense trade agreement all the more significant.

A Sign of Mutual Trust Despite Political Tensions

The fact that a “Drone Deal” with the United States could materialize despite occasional political tensions between Kyiv and Washington would illustrate the intrinsic value of Ukrainian technology—which is attractive enough to transcend the diplomatic vagaries of the moment and draw on lasting strategic and commercial interests on both sides.

This dynamic could also strengthen Ukraine’s position in its broader negotiations with Washington on other issues, as defense technology becomes an additional diplomatic lever in a bilateral relationship otherwise marked by a certain degree of unpredictability.

I remain cautious about Trump: his administration has at times cast doubt on its commitment to Ukraine, but if Washington signs a drone deal, it would be proof that U.S. strategic interests always ultimately prevail over temporary political hesitations.

The potential impact on Ukraine's war economy

A New Source of Revenue Unrelated to International Aid

This export mechanism provides Kyiv with a new revenue stream independent of international aid—a source of funding generated directly by an industry that Ukraine has built almost entirely under enemy fire. This type of self-sustaining revenue could gradually strengthen the Ukrainian government’s fiscal resilience as the conflict enters its fifth year.

This partial financial autonomy, while not a substitute for indispensable direct military aid, contributes to a broader transformation of Ukraine’s economic posture—shifting from near-total dependence on foreign aid toward a hybrid model combining international support with its own industrial revenues.

Direct reinvestment in production capacity

The funds raised through this mechanism will be directly reinvested in strengthening the production capabilities of Ukraine’s defense industry, creating a virtuous cycle in which each export helps increase Ukraine’s future ability to equip its own armed forces, beyond mere immediate financial gain.

This reinvestment cycle illustrates the strategic coherence of the entire mechanism: every dollar generated by exports ultimately serves to strengthen Ukraine’s ability to defend itself, rather than being diverted to other budgetary priorities unrelated to the war effort.

This virtuous cycle between exports and military reinvestment is, in my view, the most concrete evidence that this mechanism truly serves Ukraine’s war effort rather than mere commercial interests disconnected from the front lines.

What Western Allies Should Take Away From This

A Lesson in Industrial Adaptability in Times of War

Ukraine’s Western partners, facing their own challenges in rearming and modernizing their defense industrial bases, could learn valuable lessons from the speed with which Ukrainian industry has been able to adapt, innovate, and now commercialize its technologies, despite the most unfavorable conditions imaginable.

This capacity for rapid adaptation often stands in stark contrast to the bureaucratic sluggishness that characterizes many traditional Western arms programs, which are hampered by complex procurement processes and development cycles that can sometimes span decades before reaching operational capability.

A Partnership That Benefits Both Sides

Easier access for Western countries to battle-tested Ukrainian technologies, via this new export mechanism, could significantly accelerate the modernization of their own air defense and drone warfare capabilities—an area where Ukrainian expertise now surpasses that of many older Western militaries that are less experienced in this specific type of conflict.

This two-way transfer of expertise illustrates the truly reciprocal nature of the partnership that has developed between Ukraine and its Western allies throughout this war, going far beyond the simple relationship of unilateral assistance seen in the early years of the conflict.

I believe the West has much more to learn from Ukraine—about rapid innovation in times of crisis—than the other way around. This knowledge-sharing mechanism also presents an opportunity for our own militaries to modernize their drone warfare doctrines.

The Israeli Precedent and the South Korean Example

Two Models of a Defense Industry Born of Threat

The example of Israel, whose defense industry has historically developed in response to a permanent existential threat, offers an instructive parallel for understanding Ukraine’s current trajectory. South Korea, which has faced the North Korean threat for decades, has also transformed its defensive necessity into an arms export industry that is now recognized worldwide.

These two precedents suggest that Ukraine could follow a similar path in the longer term, transforming an industry born of absolute necessity into a sustainable economic sector that will survive well beyond the eventual end of the current conflict with Russia.

One major difference: the war is still ongoing

Unlike Israel and South Korea, which developed their export industries amid smoldering conflicts or deterrence rather than ongoing active warfare, Ukraine is building this model even as it fights a large-scale invasion on a daily basis—a circumstance that makes its administrative success all the more remarkable.

This major contextual difference also explains why the Ukrainian system includes such strict safeguards, unlike the Israeli and South Korean models, which were able to evolve gradually over several decades without the pressure of daily kinetic conflict on their own territory.

I see the Israeli and South Korean models as further evidence that Ukraine’s defense industry has a future well beyond this war. This is not a temporary bubble; it is the beginning of a sustainable economic sector.

Conclusion: Selling to Survive—A Reality We Must Accept

A decision that is not universally supported but is necessary

This new Ukrainian arms export mechanism—with its 20–30% levies directed to the state defense fund, strict safeguards on critical products, and sophisticated legal framework—illustrates a Ukraine that refuses to limit itself to the role of a passive recipient of Western aid, actively choosing instead to transform its industrial resilience into a sustainable strategic and financial advantage.

Whether this mechanism will fully achieve its financial objectives remains to be seen in the coming months, but its very existence—approved in the midst of an active war—demonstrates an institutional and industrial capacity that contradicts any simplistic image of a country defined solely by its vulnerability to Russian aggression.

A moral and strategic equation embraced without reservation

For Ukraine, selling what keeps it alive is yet another way to finance its own survival and strengthen its long-term capacity to defend itself—a moral and strategic equation that Kyiv openly embraces, without seeking to conceal it behind watered-down diplomatic rhetoric.

I’ll conclude with a conviction: a nation that finds a way to finance its own resistance in the midst of an invasion deserves more than our admiration. It deserves for the West, too, to accelerate its own deliveries without ever hesitating again.

Signed, Maxime Marquette, columnist