Operation Midas revealed a systemic management failure at Energoatom, one of Ukraine’s largest state companies. But things can get much, much worse. 

How the government responds will determine if this scandal only affects the nuclear operator, or every other state company, destroying years of hard-won reforms that tried to lift Ukraine out of its Soviet past. For now, the government is not off to a great start. 

Prime Minister Yuliia Svyrydenko announced three decisions after news of the corruption scandal broke:

• Energoatom’s supervisory board was fired without following the legal framework
• The Ministry of Economy was told to find new board members in just a week
• An urgent audit of Energoatom was launched

However, it later emerged that another decision was adopted on the same day, without being announced — effectively nullifying independent performance evaluation for supervisory boards of all strategic state-owned enterprises (SOEs), not just Energoatom.

These steps, in combination, raise serious concerns that a reform rollback is possible. If that happens, it can lead to more political meddling at SOEs, paving the way for a new wave of systemic scandals in the future. 

This can weaken the greatest pillars of Ukraine’s economy during a time of war, compromise the country’s future recovery, erode its integration into the EU, and make it more like Russia, something that thousands of volunteers fought tooth and nail to prevent. 

Corporate governance reform is meant to fix Ukraine’s post-Soviet dysfunction

Energoatom runs the nuclear plants and is responsible for more than half of the country’s power generation. 

Like other strategic SOEs, Energoatom went through corporate governance reform in 2023 and 2024, to establish efficiency and transparency. Part of this reform involved creating a supervisory board — the first one Energoatom had in history. 

This was supposed to break Ukraine's Soviet legacy of state enterprises where ministers acted as owner, manager, and controller simultaneously — a system where only 15% of Ukraine's 3,100 state enterprises turned a profit, while the rest accumulated $16.7 billion in debt between 2018 and 2023. 

The 2024 reform, a prerequisite for EU membership and IMF funding, aimed to replace political appointments and extraction schemes with independent boards selected through transparent competition. It was meant to finally complete what reformers started in 2014.

The failures of Energoatom’s supervisory board

For Energoatom, proving Ukraine could manage strategic assets to OECD standards is essential for attracting the billions in reconstruction investment the country desperately needs.

In theory, the system should work as follows: the state sets strategic goals and appoints a supervisory board to ensure their implementation. The board hires and oversees management. The state then evaluates whether the board has fulfilled its mandate.

In practice, however, the board’s independence was compromised from the start. 

Despite official statements denying political interference, real events suggested otherwise. A six-month delay in signing contracts with newly elected board members — which prevented the board from starting its work — led to the resignation of independent member Timothy Stone. 

As a result, the supervisory board never obtained the legally required majority of independent members. And it subsequently failed in its responsibilities: 

• Controlling management activities: Regular reporting, risk assessment, and personnel decisions are basic tools the board should have applied.
• Establishing an effective internal control system: Compliance, risk management, and internal audit mechanisms at Energoatom proved ineffective. For example, if the whistleblowing mechanism had functioned properly, the so-called “bar gate scheme,” in which officials stole $100M of state money through kickbacks, could likely have been detected much earlier.
• Ensuring transparency: The suspension of financial and non-financial reporting during wartime — although justified as protection from external threats — effectively facilitated internal abuse by corrupt officials.

Members of supervisory boards at SOEs must fully understand their fiduciary duties.

If a board cannot explain what it has done over the past year to prevent or detect corruption schemes in a company long associated with scandals — and provides only vague general statements — this indicates a lack of due care.

As such, the Ministry of Economy’s position that the supervisory board “was not involved” in the actions under investigation seems unclear. While board members were not beneficiaries or perpetrators of the corrupt schemes, their core responsibility was precisely to ensure such schemes could not occur.

Even more contradictory is the Ministry’s claim that this board “helped establish modern corporate governance processes.” If large-scale corruption was allowed to flourish, it is difficult to describe the system as modern or effective.

A comparison with the banking sector is instructive: managers and board members whose banks collapse lose their impeccable business reputation and are barred from similar positions. At Energoatom, however, the board under whose watch corruption thrived was essentially thanked for “building modern corporate governance.”

Throwing the baby out with the bathwater

One of the government’s first reactions to the scandal was to prematurely terminate the powers of this board. 

At first glance, this may seem logical: the board is the key element of the corporate governance system and is accountable to the state as the owner.

However, the way the government went about it — firing from the hip while ignoring legal procedures —may suggest that it’s more interested in sweeping the problem under the rug than solving it.

1. The premature dismissal of the board

The Law On the Management of State Property Objects contains an exhaustive list of grounds for early dismissal of supervisory board members.

Nothing on that list says you can fire the board based on a subjective assessment of ineffectiveness. 

The decision must rely on a formalized performance evaluation. Since no proper evaluation was conducted, the government likely lacked legal grounds for the dismissal.

Even the government’s amendments adopted on 11 November, allowing evaluations to be conducted solely by Energoatom’s owner (the Cabinet of Ministers through the Ministry of Economy) — without independent consultants — do not eliminate the requirement to actually perform the evaluation.

Under the legally-mandated procedure:

• All board members must complete questionnaires
• Company data must be analyzed
• Each element within the scope of evaluation must be given a score
• An action plan to fill identified gaps must be prepared
• Board members must be allowed to give their explanations

None of this could reasonably have been completed in a single day. The absence of a published evaluation report, which is explicitly required by law, further indicates that the evaluation did not take place.

If this violation of a core reform safeguard is ignored, protection of SOE supervisory boards from political interference will collapse. If Energoatom’s board can be dismissed in this manner, any SOE board could be dismissed next, regardless of objective justification.

2. Appointment of a new supervisory board in one week

The Ministry of Economy stated that, in coordination with G7 partners, it would propose a new board composition within a week.

However, the procedures established by law and Cabinet resolutions 142, 143, and 777 require:

• a formal decision to launch the selection;
• competitive selection of a recruiter;
• publication of candidate requirements;
• acceptance and evaluation of applications;
• shortlisting by a nomination committee;
• Cabinet approval.

This process typically takes at least three months. Completing it in seven days is not realistic under current rules.

Some stages may be accelerated in exceptional circumstances, but bypassing transparency and competition is not flexibility — it is regression. Transparent, merit-based selection is a cornerstone of sound corporate governance. Any informal or opaque approach will further erode trust.

The inconsistency is striking: the government can amend resolutions overnight when it seeks to weaken transparency (as with the evaluation procedure), yet has failed for months to approve reforms aimed at strengthening selection rules — despite these being legal obligations and long-overdue IMF benchmarks. 

This explains why official claims of “commitment to reform” now face skepticism.

3. Dismantling the supervisory board performance evaluation mechanism

A key win of the 2024 reform was the introduction of regular performance evaluations of SOE supervisory boards. The law required the Cabinet to define procedures and specify cases where an independent consultant is mandatory.

The core principle was clear: board effectiveness must be assessed based on objective evaluation, not political judgment.

However, on 11 November, the government decided that, during martial law, evaluations will be conducted solely by the ministry that owns the SOE. 

This enables ministries to unilaterally determine supervisory board effectiveness without independent oversight.

This marks a return to direct state control over these companies. Any supervisory board can now be dismissed at a ministry’s discretion — a practice common before the 2024 reform.

Also, the legality of the amendment is highly questionable. The 2024 reform law clearly defines the list of exceptions allowed during martial law — and none of them involve evaluating a supervisory board’s performance.

Reform on the brink

Corporate governance cannot be strengthened by methods that undermine its core principles: procedural integrity, transparency, and independence.

Operation Midas demonstrated that Ukraine still operates within a framework of simulated corporate governance.

The reform will become real only when:

• Supervisory boards are held personally accountable for their actions and inaction;
• Transparency and accountability of SOEs and managerial decisions are ensured;
• The government refrains from political interference in corporate processes.

Violating established rules in pursuit of a “quick result” is not reform — it is dismantlement. Unless these decisions are reversed, Operation Midas will be only the first in many similar scandals to come. 

Oleksandr Lysenko

Oleksandr Lysenko is an independent corporate governance and legal consultant, who co-authored the 2024 corporate governance reform for Ukraine's state-owned enterprises.

Taiwanese companies continue to supply precision industrial machines for factories that fuel Russia’s war machine, in defiance of sanctions, according to an investigation by Ukrainian watchdog organization StateWatch. 

Precision tools process high-strength alloys used in the production of artillery barrels, missile bodies and drones. Russia imports at least 70% of its Computer Numerical Control (CNC) machines from companies in Europe and Asia. Most countries involved have banned selling Russia equipment that can be used to make war materiel. 

Moscow gets around these bans, largely by working with middlemen in countries like China and Türkiye. However, “even Taiwan, a strategic partner of the US, has been implicated in these supply chains,” StateWatch wrote in its 13 November report. 

Since 2022, millions of dollars worth of dual-use machinery has made its way into Russia through Taiwan’s involvement. These include brands like Fedek, Sunmill, and Golden Machinery.

The recipients include companies linked to Russia's military-industrial complex, including Zenik, Kami-Group, Intervesp, Metalmash, and Stanki Tekhnologii Instrument. 

At least 70% of Russia's CNC machine tools are imported, largely from the US, EU, and Japan. Over 80% of all CNCs end up in Russia's military production facilities. 

Over $10 million worth of industrial equipment 

LNS Group is a global company that manufactures bar feeders and CNC lathes. According to Russian customs data, LNS machines worth nearly $5 million have entered Russia since the start of the full-scale invasion. 

These exports were mainly facilitated by Taiwanese company TWT Global Enterprise limited. Kami-Group, which sells machine tools, is the largest Russian recipient, according to the report. 

Russian company Zenit published a YouTube video in December 2024, showing LNS’s Fedek-branded equipment at its factory.  

A flashlight manufacturer, Zenit also makes red-dot and thermal sights, laser target designators, and tactical firearm accessories for Russia's troops and intelligence agencies, on top of donating products to Russian troops in Ukraine.

Fedek machines have also been spotted at the G.I. Petrovsky Plant in Nizhny Novgorod, which makes equipment for the Russian Navy, engineering troops, and manufactures avionics.

Zenit's video also shows Sunmill machines. The manufacturer, Jeenxi Technology Co, of Taiwan, “supplied high-precision equipment directly to Russia’s military sector” also to the tune of $5 million, as of December 2024, according to StateWatch.

Russian state contractors Intervesp and Intervesp-M, both of which are internationally sanctioned, were reportedly among the recipients. 

Taiwanese Golden Machinery Co, which manufactures beverage bottling equipment, supplied $800,000 worth of industrial machines  to Russia, according to customs data.

The main recipient was Stanki Tekhnologii, which trades in metalworking equipment and its website shows it regularly signing contracts with Russian defense enterprises.

Stanki Tekhnologii got $430,000 worth of equipment directly from the manufacturer and the rest via a Turkish intermediary.

South Korean firms also implicated 

South Korean brands have also been spotted in Russia, according to a recent report by the Economic Security Council of Ukraine, a Kyiv think tank. 

Between 2024 and 2025, more than $3.7 million worth of Korean-made cutting tools and CNC machines got into Russia through complex transshipment networks involving China, Türkiye, India, Uzbekistan, Lithuania and Thailand.

Products from at least three South Korean precision toolmakers were exhibited at the annual Metalloobraboka expo in Moscow in May.

“The key issue is not simply covert shipments,” Olena Yurchenko, director for analysis and investigations at ESCU, wrote in a statement to Korea JoongAng Daily and Euromaidan Press. 

“What we find alarming is that products made by South Korean brands, which are de facto banned from Russia [since 2022], are now being openly advertised and promoted in Moscow."

Moscow casts a wide net

These figures are a drop in the bucket compared to the $18 billion worth of machine tools reportedly supplied to Russia from Europe and China.

This includes 57 CNC machines worth over $26.5 million from European subsidiaries, along with components and consumables valued at more than $9.5 million.

In October, Germany raided Spinner, a high-precision machine tool manufacturer suspected of knowingly supplying equipment to Russia's military industry. Three individuals have already been charged with violating sanctions.

Russian crews complain that hefty, improvised armor shells break the transmission on their tanks after just a few kilometers. 

According to interview excerpts posted by Russian tank historian Andrei Tarasenko, mounting this “tsar mangal” style turtle armor on the tank’s chassis quickly overloads the gearboxes. 

One Russian tank “didn't even make it 10 kilometers before one of the side gearboxes failed,” an interviewee told Russian outlet Vault8. This tank was equipped with a makeshift shell made out of cables.  

If the armor shell is instead mounted on the turret, the weight burns out the driver, making the turret impossible to rotate, especially by hand. 

Ukrainian tank operators from the 13th Khartia Brigade confirmed the Russians’ woes to Euromaidan Press.

Passing along his colleagues’ words, Khartia spokesman Volodymyr Dehtiaryov said that improvised armor that weighs several tons does take Russian tanks out of order quickly.

However, he added that the Russians don’t seem to mind losing tanks in this way, as long as they are able to get close enough to inflict enough damage to Ukrainian positions. 

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According to Tarasenko’s post, the Russians are also complaining about shortages of reactive armor, especially the modern Relikt system. Russian crews are trying to make up for the shortage with improvised solutions. 

“On the turret cheeks, there’s a homemade version from garage workshops — sheet metal shaped like factory plating with an explosive insert from the UR-77 mine-clearing line charge. It works about 50/50 at a 45 degree angle,” the Russian crewman is quoted as saying. 

Tanks struggle to evolve in the age of drone warfare

Tanks often lead Russian mechanized assaults, absorbing drone attacks with their bolted-on armor, clearing mines with their front-mounted rollers, and firing their cannons to suppress Ukrainian troops.

This add-on armor comes in a variety of shapes, sizes and weight profiles, evolving over the course of the full-scale invasion from simple cages, to solid steel sheds, to an arrangement of bristling cables, resembling the quills of a porcupine.

There is evidence to suggest that improvised armor is effective at letting the tanks survive more hits from certain types of drones, like FPVs. Some Russian assaults hinge on whether the defenders can run out of drones before the Russians run out of vehicles to overwhelm their positions.

However, the Russians cannot keep sacrificing tanks forever. The Kremlin may be desperate enough for usable armor to pull old T-64s out of storage and try to make them work. Alternatively, the Russians could continue to rely on infantry offensives in the short term, to buy more time for their mechanized forces to recover.

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As Washington flip-flops on granting Tomahawk cruise missiles to Kyiv, there is a more practical, politically expedient solution, which doesn’t involve an American veto of every target that Ukraine may want to hit. 

That solution is twofold: fund Ukraine’s defense companies to make their own missiles and long-range drones, and supply Kyiv with cheaper, less advanced munitions in greater numbers, observers and insiders said. 

This will still let Ukraine scale up its deep-strike campaign, meant to grind down the Russian offensive rather than face its full might on the front lines, saving both lives and money. 

“Right now, we need less missiles to meaningfully reduce the Russians’ capabilities, compared to 2022, because now we have drones,” said Serhii Kuzan, chair of the Ukrainian Security and Cooperation Center. 

"But let's imagine that you also add missiles... this is a few dozen-fold enhancement to our long-range capabilities."

American Tomahawks and German Tauruses, which would be very helpful for deep strikes, remain blocked by politics for the time being. However, the Ukrainians have already made up for their dearth of missiles by innovating a menagerie of effective homegrown solutions. They just need support to make more. 

Ukraine’s drones have proven effective at hitting softer targets like refineries, but also factories. One Kyiv-based developer told Euromaidan Press that drones can now penetrate a meter of concrete and deal heavy damage with warheads lighter than 100 kilograms.

Ukraine also produces its own missiles, like the Neptune and, more recently, the Flamingo. It also gets cruise missiles from less reticent allies — the Storm Shadows and SCALPs provided by the UK and France, respectively. All of the above have been used in successful strikes against Russia.

“The situation is not binary, and Ukraine could undoubtedly make effective use of 50 or so Tomahawks. However, since the US is highly unlikely to donate these missiles, European governments might be better advised to channel the estimated $125–200 million they would cost… directly into Ukraine’s missile industry,” wrote missile expert Fabian Hoffmann of Oslo University. 

“Given that expanding Ukraine’s domestic missile production remains a major strategic priority, this may represent the more beneficial option.”

Deep strikes into Russia need to be scaled up

If necessity is the mother of invention, she has been an especially fruitful mother in Ukraine, birthing a wide variety of tech for both the front line and strategic attacks deep inside Russian territory. 

When Western allies refused to grant long-range weapons out of fear of escalation, Ukraine was forced to develop a plethora of effective attack drones of different shapes and sizes, from their Shahed analogues like the Batyar, to bombers resembling civilian aircraft, like the UJ-22 or the Horynych, to high-altitude balloons and more. 

Using these unmanned technologies, Ukraine has been striking Russia’s hydrocarbon infrastructure for years, but this campaign really kicked into high gear in 2025, with President Volodymyr Zelenskyy claiming that attacks are happening practically every day. 

In spite of the economic damage, Russia has so far kept up the frontline pressure, demonstrating that it can still afford to throw money and bodies at the problem, something that Ukraine, short on both funds and manpower, cannot do. 

Still, Kyiv hopes that by disabling enough strategic targets with more attacks, Russia’s military sustainability will falter. 

Observers and insiders who spoke to Euromaidan Press said that deep strikes will not win the war or reconquer lost territories, but they can still weaken Russia’s war effort and halt its advance, with the right choices of targets and sufficient means to hit them. 

• Drones work better against softer targets like refineries, but these are easier to replace
• Industrial machinery is harder to replace but harder to damage and is farther away from the front, so missiles work better against it
• Missiles are also useful for killing commanders in bunkers — if enough are killed, this can paralyze a regional offensive, thanks to Russia's top-down command style
• Tomahawks would be very useful to hit hardened targets, but chances of Ukraine getting them seem remote, with the White House constantly changing its mind
• Up to 50 missiles were under discussion; Ukraine would need hundreds of Tomahawks to take out entire factory complexes — plus, Washington could tell Kyiv what targets it's allowed to shoot
• For the same cost, the US and European allies could provide cheaper missiles and funding to buff up Ukraine's deep strike capabilities

Blasting Russia's refineries and industrial base

Designing a deep strike campaign around drones means choosing softer targets, said Marc DeVore, a defense policy scholar, who advised the UK’s Foreign Office on Russia’s full-scale invasion. 

“I think that Ukraine has done a great job in terms of identifying some of those target sets,” he told Euromaidan Press. 

Well-placed drone strikes can take refineries offline but to keep them that way, the attacks have to be regular and repeated, with most drone-sized payloads. 

“Repairs and restoring a refinery to operation is not necessarily rocket science and there's a sufficient number of producers of the necessary equipment that the Russians will be able to source,” DeVore said. 

Replacement piping, pumps, and other components can be easily acquired from China or built at home. Now, drones can do lasting damage to cracking units, which break down crude oil, and may be harder for Russia to source.

Missiles are able to do a lot more devastating damage to these targets, which would keep them offline longer. But missiles can be even more valuable if used to strike harder to reach targets, such as factories that make weapons or the stuff that goes into them.

Such plants are better-protected and also contain hefty industrial machinery like CNC machines or rotary forges that make parts for military vehicles. A recent investigation by InformNapalm showed that Russia must resort to evading sanctions to get its hands on more of these machines. 

These machines are hard to damage with small payloads, but also much harder to replace if they are destroyed by a larger blast.

“Russia doesn't produce its own rotary forges, and China also is a laggard. So the rotary forge industry is largely dominated by one Austrian company, (GFM), and Russia depends on it for rotary forges,” DeVore said.  

“So if one could either destroy those forges or inflict sufficient damage, it would be very difficult for Russia to replace them,” assuming the company doesn’t sell its tech to a random middleman that pops up overnight. 

Range is also a factor. Tomahawks can go up to 1,500 kilometers. A significant proportion of Russia’s heaviest military production assets are located far from the front lines, requiring any weapons to cross major distances to reach them.

The majority of long-range attack drones and cruise missiles that Ukraine uses now typically have ranges in the hundreds of kilometers, without breaching the 1,000 kilometer mark. Ukraine’s Flamingo cruise missile has a claimed range of up to 3,000 kilometers, but this has yet to be verified independently. 

Killing Russian command staff to halt the advance

Missiles are typically more effective at penetrating command and control centers, which are typically shielded by thick concrete. An attack like that can kill important command staff, which can be very disruptive to the Russian military, with its top-down command structure.

It was a Ukrainian Storm Shadow strike in 2023 that blasted the Black Sea Fleet headquarters and command center in Crimea, reportedly killing dozens of officers. 

Missile strikes were also instrumental in hitting the command posts of Russia’s 155th Naval Infantry, “paralyzing that entire direction” for a while, according to Kuzan. “The same story played out in Kursk in the spring.”

Successful attacks over the course of a month can disable command and control of an entire assault grouping, he said. But this requires a sufficient number of missiles.

The limits and opportunity costs of expensive missiles

With a few dozen good missiles, Ukrainians can force Russians to divert their air defense assets to protect more strategic sites, possibly weakening air coverage along the front. Or the Russians can be forced to spend resources to disperse production and harden facilities, especially if they don’t know how many missiles Ukraine has. 

However, “if your goal is inflicting decisive damage on the Russian economy, yes, you would need hundreds,” DeVore said. 

Hoffmann would agree, writing that destroying production plants with conventional missiles requires large salvos. Each Tomahawk can obliterate everything within a radius of 13 meters, but the Alabuga plant that makes Russia’s weapons stretches across 160,000 square meters. 

It’d take at least 150 Tomahawks to destroy 50% of the facility, assuming all of them reach their targets. This is a lot more than the amount Washington had reportedly considered.

“This is not to suggest that this type of counter-industry targeting is inherently unfeasible. It is not,” Hoffmann wrote. “Still, such operations are more demanding than commentators generally suggest, and arguably require more heavy missiles than Ukraine has access to in the short-term.”

With fewer missiles, Ukraine can focus on disrupting supply chains like electronics, explosives, propellants, and so on, which it has been doing with some success, using drones and Storm Shadows. 

“The other problem… is that for the Tomahawk to be used, it requires an entire targeting infrastructure that's dependent on the Americans,” DeVore said.

“Even if the Americans were willing to provide this system, they would have a de facto veto on every use case which I'm not sure is the situation you want to be in when the occupant of the White House seems to change his mind a lot.” 

The more expedient alternative: help Ukraine develop missiles and drones

With that in mind, if Washington is unwilling to supply Ukraine with its most advanced, exquisite missiles, the US and other NATO allies can still improve Kyiv’s ability to degrade Russia’s oil industry and military production capabilities. 

“Whether or not Tomahawks arrive in Ukraine, this will not decide the war. What matters far more is that European governments continue to invest substantial funds directly into Ukraine’s missile sector,” Hoffmann wrote. 

Zelenskyy said that while Ukraine uses foreign missiles like Storm Shadows, 95% of deep strikes are conducted using Ukrainian weapons. 

For example, some Ukrainian attack drones are more powerful than people give them credit for, despite having a limited payload size on paper, said Viktor, a Ukrainian technician who works in a lab developing Shahed-like delta-wing UAVs to attack Russia. His full name was omitted from the article for security purposes. 

He claimed the cost of the basic hardware is just $5,000, although incorporating jamming-resistant antennas raises the price several times. According to Viktor, some Ukrainian companies have learned to squeeze a lot more damage out of a relatively small payload, just tens of kilograms in mass.

"Some ammo is made by ordinary guys... they don't know the chemistry or physics that they should know," he said.

"But I know a few companies that paid hundreds of thousands of dollars for special simulation programs for how they need to make the ammo to penetrate a meter of concrete, with a small amount [of explosive charge] and cause huge damage inside."

He added that Ukrainians already have the ability to use digital image matching to hit stationary targets on the ground. This is similar to what the Tomahawk uses for its terminal guidance. 

In fact, there is a “whole list” of much simpler weapons that allies can deliver to Ukraine by the thousands, relatively inexpensively, Kuzan said. For example, air-launched munitions with cheap guidance, like turbo-powered versions of the glide bombs Russia keeps dropping — these “ersatz-missiles,” as he called them, can strike from 300 to 450 kilometers away. 

While Russian air defenses are able to shoot cheaper weapons down with relative ease, Ukrainians have proven adept at punching corridors through these defenses with decoys, anti-radiation weapons, and other tech, enabling them to deliver sufficient firepower against stationary targets. 

"You can carry out strikes against sites where weapons, equipment, fuel, and everything else the army consumes, are being stockpiled. That's the mission," Kuzan said. "The more such sites are hit, the slower the advance. So, in fact, it's precisely these strikes that can halt the invasion."

Russia’s next-gen strategic bomber program may struggle to get off the ground if the West can prevent Moscow from evading sanctions, according to an investigation by InformNapalm, a Ukrainian intelligence community.

InformNapalm on 4 November reported that it acquired a trove of internal documents from Russia's aerospace component manufacturer OKBM, which the EU sanctioned in October. Purported copies of some documents were published with the investigation. 

The papers show that development of the Poslannik strategic bomber and parts for the Sukhoi-57 fighter are running into delays. This is partly due to Moscow’s shortage of precise machining tools made by foreign companies that have left the Russian market. The documents linked by InformNapalm directly name this as a reason. 

“At this stage, the Russian Federation is not able to produce parts for its promising aviation complexes on its own… they need to purchase foreign automated production equipment, high-precision CNC (Computer Numerical Control) machines,” InformNapalm wrote.  

“This is why sanctions work and they are important, because they significantly hamper Russian military capabilities. But it is no less important to track schemes and ways to circumvent sanctions through third countries and impose secondary sanctions.”

According to the investigation, OKBM used Taiwan-made Hartford HCMC-1100AG and Johnford SL-50 machines, as well as a Serbian Grindex BSD-700U CNC grinder, bought through subsidies from Russia’s Ministry of Industry and Trade.

InformNapalm pointed to these acquisitions as examples of the Russian state’s attempts to evade sanctions. 

The founder of InformNapalm, who goes by Roman Burko, told Euromaidan Press that the intelligence gathering operation directly contributed to OKBM being included in the latest sanctions package. The organization went public with the data to cause additional damage to the Russian manufacturers.

"Russian contracts explicitly state that information leaks lead to investigations, bureaucracy, and contract terminations," Burko said.

Russia’s aircraft modernization program

The Tupolev PAK DA, also known as the Poslannik (Russian for "Envoy"), is a subsonic stealth bomber meant to replace the venerable Tu-95, which dates back to the 1950s.

Russian media and other online sources report that the PAK DA is meant to have a range of 12,000 kilometers, an operational ceiling of 20 kilometers, and carry a conventional or nuclear payload of up to 30 tons. Moscow reportedly began financing development in the late 2000s and since then, the program has run into multiple delays. 

Russian media previously reported that the bomber was supposed to be ready for serial production in 2027. According to InformNapalm’s investigation, OKBM is supposed to deliver components for actuating the Poslannik's weapon bays by August 31, 2027. 

The documents released by InformNapalm state that the program is marked secret and OKBM may lose its contract if it fails to maintain that secrecy. 

The investigation also found that OKBM is involved in making gearboxes for the weapon bays of the Sukhoi-57, a Russian multi-role stealth fighter with the NATO reporting name Felon. 

The Su-57 has fought in the full-scale invasion of Ukraine. As of 2023, Russia had only 22 Su-57s in service, although it intends to increase production. Russia’s United Aircraft Corporation plans to deliver 76 fighters by 2027. 

On top of modernizing its air force, Russia has entertained plans to export the Su-57 as a competitor to the American F-35 Joint Strike Fighter. 

India initially participated in the development of the Su-57 but pulled out of the program in 2018, citing lack of satisfaction with performance and other concerns. In October, Russian Ambassador Denis Alipov made an offer to India to launch “local production” of Su-57s. 

Russia evades sanctions to keep up manufacturing

At least 70% of all Russian CNC machine tools are imported, largely from the US, EU, and Japan. Over 80% of all CNCs end up in Russia's military production facilities. 

While Russian military manufacturing has suffered as access to this equipment dried up following the full-scale invasion, Moscow has been able to get its hands on foreign equipment either through intermediaries or foreign companies violating sanctions. 

Ukraine's Economic Security Council reported that Russia has procured $18 billion worth of machine tools from both Europe and China. This includes 57 CNC machines worth over $26.5 million from European subsidiaries, along with components and consumables valued at more than $9.5 million.

In October, Germany raided Spinner, a high-precision machine tool manufacturer suspected of knowingly supplying equipment to Russia's military industry. Three individuals have already been charged with violating sanctions.

More leaks on the way

According to InformNapalm, the documents it released on 4 November are only a fraction of the total it has managed to acquire and go over, in partnership with the cyber analytics center Fenix. Ukrainian intelligence was also reportedly involved in the operation.

InformNapalm wrote that it plans to continue publishing leaks about OKBM into the future, with the hopes that publicity will help strengthen the impact of Western sanctions on Russia's military industry.

Ukraine has taught the rest of Europe a lesson in what innovation is, and what it isn't. 

Gripped in the teeth of Russian aggression, Ukraine has harnessed engineers just out of university to develop next-gen drones, produced them at scale at the lowest possible cost, tested them in the field, refined them according to frontline feedback, and then repeated the process. 

Thanks to this ultra-modern approach to arms development and procurement, cheap, lethal, and increasingly sophisticated drones, which are able to keep pace or beat Russian countermeasures, have been streaming out of Ukrainian factories.

Compare this to what's happening in the European NATO member states. Defense budgets are growing, but procurement officers favor the big primes. These companies have big reputations, well-paid lobbyists, and direct lines to the right people. They receive lucrative contracts to develop platforms that take years to fulfill. 

Start-ups and smaller companies, exactly those best placed to innovate, are largely ignored. They often go unnoticed altogether.

Europe's drone wall faces reality check

These differing approaches to innovation matter. Last month, it was widely reported that the NATO member states would move forward with their plans to build a "drone wall" along the eastern flank of Europe. 

It would, in theory, be made up of a giant system of drones working together to create a defensive screen. These drones would fly in patrols, be linked by sensors, and be able to track and intercept threats. 

Plans have been expedited because Russia has been testing the waters outside of Ukraine. Poland shot down Russian drones that had entered its airspace. Denmark has been forced to buy anti-drone equipment. Romania said it found "new drone fragments" near its border with Ukraine.

Breaking free from Chinese supply chains

To build a drone wall, Europe will need to find a way to wean itself off Chinese materials. Much of the software and hardware used in drones comes from China, which makes NATO dependent on supply chains that are largely controlled by a major non-NATO power. 

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Ukraine already built Europe’s “drone wall”—here’s how it actually works

It's revealing that the US has been thinking about relaxing its decades-old controls on exporting certain American technology to its allies. Washington has historically limited the number of external operators allowed to use drones like the advanced MQ-9 Reaper. 

But it now sees that expanding sales of MQ-9s and other technology would have the twin effects of increasing interoperability with partners and of blocking out China and others from exploiting a gap in the market.

In short: the White House doesn't want NATO reliant on and strengthening its biggest rival, particularly by buying equipment critical to modern warfare.

This isn't the only issue, however. Talk of a "drone wall" betrays a lack of understanding about the nature of modern warfare. 

Why a wall won't work

This is no longer the year 122 CE, when Roman Emperor Hadrian built a wall in the north of England separating the so-called civilized world and the unconquered barbarian wilderness. You can't simply put up a wall of drones between Eastern Europe and Russia, and so block Russian forces from getting into the rest of Europe. 

Drones can appear anywhere, at any time. You can hide them in a truck, on a boat, or in a submarine. You can drop them out of space. Even if this "wall" is made up of a state-of-the-art drone fleet, an attacker can completely bypass it and release their drones thousands of miles away, near critical infrastructure. 

This is why Europe needs something like a drone dome: an integrated solution that includes connected drones, as well as passive systems, and countermeasures. That will take time, which is why Europe should start by shielding the most vital infrastructure and then, as drone production accelerates, protect other assets.

How Europe can learn from Ukraine

But Europe's main challenge is the drone technology itself. Drone countermeasures are becoming increasingly sophisticated. The vast majority of even state-of-the-art drones are intercepted, and a well-timed electromagnetic pulse can down a whole swarm. 

The drone wall on the Eastern flank has to be made up of cutting-edge drones, with the best software and hardware, shielded with the latest, EMI-resistant advanced materials. 

That requires, in turn, a truly modern approach to innovation and procurement that draws on the Ukrainian model and puts energy, ambition, expediency, and creative freedom above historic defense relationships and big, headline-grabbing platform procurement deals.

Neither this, nor the suggestion that Europe needs to inculcate a Ukraine-inspired culture of innovation, are unreasonable or unrealistic demands. The European NATO member states have the money, the research institutions, the intelligence, the innovation culture, and the talent to build a world-class, indeed world-leading defensive drone system. 

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From shared threats to shared tech—EU needs Ukraine’s secrets to power its “drone wall”

And, as Ukrainians know all too well, conflict isn't something that happens "somewhere else." Poland, Denmark, Norway, and Romania have complained that Russia is probing at their defenses. The former head of Britain's MI5 said only recently that she believes the UK may already be at war with Russia. 

The urgency of now

There's no time to lose. What is unreasonable, as well as unrealistic, is thinking that hostile actors will wait for Europe to wake up to the threat, or that without a concerted, sustained, urgent effort, Europe will rearm in the way that it needs.

EU Defense Commissioner Andrius Kubilius thinks a drone wall could be built in a year. Evika Siliņa, Latvia's prime minister, told reporters she thinks it could be "doable" within a year to a year-and-a-half. German defense minister Boris Pistorius says it will take more than three or four years. Though EU leaders in general have given the idea "broad support," there are clearly disagreements to iron out. 

But what we need is a dome, not a wall, and we need it to be in place quickly. To policymakers and opinion-formers: we need you to act before our enemies take the ability to act away from us.

Robert Brüll

Robert Brüll is the CEO of FibreCoat, an advanced materials technology company which develops ultra-resistant fibers and coatings used in dummy tanks, decoy ships, spacecraft, and chaff for fighter jets.

Editor's note. The opinions expressed in our Opinion section belong to their authors. Euromaidan Press' editorial team may or may not share them.

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Ukrainian company Degree-Trans LLC, doing business as Bullet, on 16 October signed a letter of intent with US aerospace company AIRO Group Holdings to make this happen.

Bullet makes modular drone interceptors that fly up to 450 kilometers per hour, making them some of Ukraine’s fastest, with a range of up to 200 kilometers. The drones can carry payloads of up to 9 kilograms and are highly configurable for different types of missions.

AIRO is playing the role of manager to “integrate” these UAVs “into US manufacturing and defense infrastructure," according to AIRO’s press release.

“This partnership unites the innovation and front-line experience of Ukrainian engineers with AIRO’s manufacturing and program-management expertise,” AIRO executive chairman Chirinjeev Kathuria said in the statement.

Bullet director Viacheslav Lvovych said this would allow his company to expand battlefield-proven tech into new markets. “Our shared objective is to deliver rapid, reliable air-defense solutions that strengthen Ukraine and the wider NATO alliance.”

While preliminary, the agreement is a sign that Ukrainian and foreign companies are looking to take advantage of Kyiv’s intention to loosen restrictions on arms exports to countries it can trust.

President Volodymyr Zelenskyy told the UN General Assembly in September that his country has decided to open up exports. Ukraine needs the revenue — most domestic defense contractors are operating far below capacity because the government lacks the cash to pay them to make more weapons.

Kyiv is also looking to leverage its military innovation to gain closer integration with its allies from the European Union and NATO.

The players involved

Modularity and adaptability is quite standard for Ukrainian tech, as innovation has kept the country in the fight against a wealthier, more numerous foe, in the face of constantly changing battlefield conditions.

According to Ukrainian transparency platforms YouControl and Opendatabot, Bullet (Degree-Trans) used to service and sell parts for ground transport vehicles, but has since transformed into a drone-maker, which itself is not uncommon. Many mechanically handy Ukrainian firms switched to making drones or parts for them after the full-scale invasion.

AIRO has been around since 2005 and has four segments: drones, avionics, training, and air mobility, with drones being the focus. It already makes recon drones like its Sky-Watch brand and its RQ-35 Heidrun.

The company completed a successful initial public offering in June, with stocks rapidly rising above the IPO price, pushing the company's market value to around $650 million and giving it $60 million in gross proceeds.

Ukraine looking to harness its biggest asset: battlefield experience

AIRO’s deal appears to be what Zelenskyy and his government envision in their two-pronged effort to export battle-tested tech to interested allies, while launching as many joint cooperation agreements with partners in allied states as possible.

On top of being tested, Ukraine’s drones also tend to be much cheaper than those produced in NATO countries.

In July, Zelenskyy discussed a drone "mega deal" with the White House, to the tune of tens of billions of dollars.

As Counteroffensive.pro reported, key challenges with the export scheme will be navigating the separate approvals required from the Ministry of Defense and its intelligence arm, the Ministry of Foreign Affairs and Ukraine's Security Service, then having it reviewed by the Intergovernmental Commission on Export Control.

Main issues include protection of intellectual property, specifying which countries are eligible for export, threat of sabotage, and estimating domestic production capabilities to ensure an exportable surplus.

Over 25 foreign companies looking to get in on the action

Kyiv recently established its Build With Ukraine program to allow domestic firms to open foreign production facilities.

According to a 22 October statement by the Ministry of Defense, more than 25 foreign companies are "at various stages" of production localization inside Ukraine. These include:

• BAE Systems from the UK to develop L119 howitzers.
• Rheinmetall of Germany, to create repair and production facilities for armored vehicles.
• SAAB of Sweden, to produce air defense systems.
• Northrop Grumman of the US for the joint production of ammunition.

Per the MOD, other companies include developers of unmanned systems, cybersecurity and anti-drone warfare systems.

In the past 24 hours, Ukraine was hit with many drones and missiles, but it also dished them out — striking a strategic chemical factory, a power plant, and other targets inside Russia.

According to the General Staff of the Armed Forces, a combined strike that included British-made Storm Shadow cruise missiles hit the Bryansk Chemical Plant about 125 kilometers north of Ukraine’s border on 21 October. This plant, which sits a few kilometers outside Bryansk, produces gunpowder, explosives, and rocket fuel components used in Russian munitions.

Ukraine's Unmanned Systems Forces Commander Robert "Madyar" Brovdi confirmed the plant's strategic importance, calling it "perhaps the largest frontline industrial production and repair base for heavy weapons that the Russian army uses today on the battlefield."

"This is a powerful blow to Russian combat capability on the battlefield, here and now," Madyar wrote, detailing that the facility produced ammunition and conducted repairs for artillery, TOS-1A thermobaric systems, all types of MLRS (Grad, Uragan, Tornado), engineering munitions, and Kh-59 cruise missiles.

The attack is part of Kyiv’s growing effort on hitting strategic targets inside Russia, focusing especially on oil refineries and factories producing war materiel. President Volodymyr Zelenskyy recently claimed that these attacks are happening just about daily.

In most cases, Ukraine uses a menagerie of different attack drones to hit these objectives, but has frequently added in missiles as well.

“The Defence Forces of Ukraine continue to strike strategic facilities of the military-industrial complex on the territory of the Russian Federation, thereby weakening the offensive potential of the aggressor state,” the General Staff wrote in a statement on the 21 October attack.

The Ukrainian forces said they are assessing the damage, without providing additional details. The Air Force, Land Forces, and Navy were involved in the attack, per the statement.

Russian media reported taking down the missiles and claimed to destroy 57 Ukrainian drones during the attack, while social media from the region posted videos of incoming weapons and reported the sounds of explosions around the industrial zone.

Power outages in some Russian neighborhoods reported

On the same day, power reportedly went out in Trubchevsk, a town just north of the Ukrainian border in Bryansk Oblast, with one Russian Telegram channel posting a video of what appears to be a burning substation purportedly located in the area.

Russian social media channels also reported that a fire broke out in the Russian city of Smolensk, 270 kilometers north of Ukraine’s border following a drone alert, possibly signaling more Ukrainian air activity in that area. Parts of the city reportedly lost power.

The Ukrainian General Staff did not comment on what happened to these energy infrastructure assets. Local Russian officials remained silent about the attacks.

The Bryansk Chemical Plant has been hit in the past. One strike took place in January, with some Russian sources claiming that US-made ATACMS missiles were used during the attack. An ammunition depot in the area was also reportedly struck.

More recently, Ukraine's General Staff reported that it used Neptune cruise missiles to attack the Elektrodetal plant in Bryansk Oblast. This plant produces electrical connectors for both military and industrial applications.

Ukraine wants more missiles for its deep strike campaign

The UK provided the air-launched Storm Shadows, with a range of over 500 kilometers in 2023. Ukrainian forces swiftly starting to use them in combined attacks against targets in Russia and occupied Crimea.

Ukraine is trying to ramp up its deep strike campaign in an attempt to cripple Russia economically and hinder its military production to freeze its creeping advance along the front. As part of this, it is trying to secure long-range missiles from allies and build some of its own.

Brigham McCown, a senior fellow at the Hudson Institute, said Ukraine likely needs "hundreds" of missiles.

Kyiv has lobbied the United States to provide Tomahawks, a cruise missile with a range of about 2,400 kilometers. The administration of US President Donald Trump appeared to show signs that it was considering it, but has so far rebuffed this request.

Ukraine also appears to be combat-testing its own Flamingo range of cruise missiles, which were just announced in August, with a recent attack against Russian targets in Crimea.

While the Flamingo's developer, Fire Point, claimed that it could produce one missile per day and ramp that up sevenfold in the future, it is unclear what quantities will be available to the Ukrainian forces and how quickly.