The U.S. is reluctant to invest in Ukraine’s military industry

If Congress does not authorize Biden to provide another aid package to Kyiv, Washington will take a different approach by investing in Ukraine’s defense industry. However, if U.S. authorities do not exercise due caution, American taxpayers will have to foot the bills for expanding weapon production capacities for years to come, Responsible Statecraft reported.

The companies themselves are unlikely to willingly bear these expenses. The scale of investments needed for establishing and expanding production capacities in Ukraine is enormous. Contractors are generally reluctant to make substantial investments, as data indicates their priority lies in shareholder payouts. Therefore, it is challenging to imagine American contractors opening their facilities in Ukraine without guaranteed funding from the U.S. government, even with a supportive partner.

At the same time, such production could only be established in countries bordering Ukraine since opening expensive military factories within the war-torn country is not economically rational. Even Ukrainian officials acknowledge that Russian missiles would destroy any such facility, making it impractical to build.