Ukraine’s Drone Manufacturers Caught Between Politics And Success

Negotiations to end the nearly four-year Russia-Ukraine War have grown increasingly tense. In mid-November, the Trump team unveiled a 28-point ceasefire plan quickly criticized for being heavily influenced by Russian demands and perhaps, even written, at least in part, by Russia’s negotiator, Kiril Dmitriev. Under continued U.S. pressure on Kyiv, talks with Ukrainian officials produced a revised 19-point plan omitting provisions unacceptable to Ukraine and the European Union. EU members are also worried that any agreement not respecting Ukrainian sovereignty could ultimately encourage an attack by Moscow against NATO members. The term “high stakes” is an understatement as the fighting continues.

Following these events, on December 2, Ukrainian President Volodymyr Zelenskyy’s office outlined Ukraine’s peace efforts, stating that Zelenskyy is “focused on increasing financing for drone production and expanding joint defense manufacturing.”

Ukraine, The Drone Battleground

Since Russia’s 2022 invasion, Ukraine has invested heavily in the defense sector, with its drone industry emerging as a key strength. Ukrainian-made drones, such as the Leleka-100 unmanned systems, the heavy-lift Kazhan, and the long-endurance V-BAT “Shmavik,” have enabled strikes on Russian military targets. These unmanned aerial vehicles have targeted Russian oil refineries, damaging the energy supplies needed to power Russian military vehicles, and they were used to destroy Russian ammunition depots.

Production costs for these drones are surprisingly low. The Leleka-100 costs around $35,000, and some Ukrainian UAVs are being built for as little as $300. Despite their low price, deploying them in large numbers has delivered major battlefield results and strengthened Ukraine’s defense. Their success has also drawn interest from U.S. and European military officials and investors.

Looking ahead, Ukraine’s drone innovations and growing global attention position it to become a key supplier of high-demand defense technology. Having already exceeded expectations on the battlefield, expanded drone partnerships would further demonstrate to NATO that Ukraine can meaningfully contribute to collective defense and security.

Sharing its drone technology with allies and partners could also serve as a major revenue generator for the war-weary Ukrainian economy. The EU has already committed to purchasing $2 billion worth of Ukrainian drones. The U.S. may also be interested in a deal.

The revenue is much needed as Ukraine is fighting a deficit. According to reported EU projections, the Ukrainian government will need €135 billion (about $157 billion) in external support for critical government and defense programs in 2026-2027. Seen in this light, revenue from Ukrainian drone production is badly needed.

Abuse Of The Ukrainian Law Enforcement System?

But there is a potential problem. That is none other than Ukraine’s second fight, the politicization of Ukrainian law enforcement system. Ensuring correct business conduct, especially in wartime when profiteering is a temptation, is necessary, but it can also cross the line to a point where the risks outweigh the potential rewards, endangering Ukraine’s war effort as well as its hoped-for recovery.

In the Summer of 2025, amid the heavy fighting at the front, the Economic Security Bureau of Ukraine launched an investigation into dozens of the country’s drone manufacturing companies. The State Bureau of Investigation is also involved in the examination. These investigations have halted production of several Ukrainian drones, such as the battle-tested Kazhan and the Ukrainian replacement for China’s Mavic, the “Shmavik,” UAVs produced by Reactive Drone and used daily by the Ukrainian Armed Forces.

When discussing these UAVs with Oleksii Kolesnyk, the founder of Reactive Drone, he told me that “What we are seeing in Ukraine is an attack on the drone sector, including my company Reactive Drone, and our international suppliers. Multiple companies are being investigated for finding a way to obtain critical parts needed for drone production. For Ukraine to be able to produce drones and get them to the frontlines, supply chains had to be established carefully and creatively, and that is common knowledge for Ukrainian Armed Forces. The investigations by ESBU and SBI have disrupted these methodically created supply chains and slowed down the supply of critically important drones to the battlefield.”

Importantly, in the first months of war, when foreign payments were blocked, importing components for drones was a covert operation-like activity, at times involving several international actors. The drone manufacturer’s use of global supply chains is a widely-known industry standard. However, Kolesnyk noted that the “ESBU and SBI have targeted only certain leading drone producers.” For him, this raises a question of “who is benefitting from the attack in the light of potential exports of Ukrainian drones to partner countries such as the United States. Especially since the investigation into [his] company was launched this fall, right after [he] and [his] team came back from the U.S. where [they] explored the idea of future exports.”

“I never rush to make broad claims about ‘pressure on certain manufacturers’,” Halyna Yanchenko, a member of Ukraine’s Parliament and the Chair of the Parliamentary Task Force on Investment in Defence Industry, told me in an interview. “My position — and this is a rule we follow when reviewing individual cases in the Parliamentary Special Commission on Investor Protection — is simple: don’t draw conclusions until you’ve studied the documents.”

“[However], there are indeed situations where law enforcement agencies interfere with the work of producers who haven’t broken the law,” Yanchenko added. “Whether this happens intentionally or unintentionally is hard to say. But blocking the activities of defense companies creates security risks, and there are legitimate questions for various law enforcement bodies.”

It is not the first time Ukrainian drone manufacturers have faced investigations. In fact, they have occurred frequently since the start of Russia’s full-scale invasion.

“According to my information, starting from the spring of 2022, 90% or more of Ukrainian drone manufacturers have found themselves at the center of investigations by various law-enforcement agencies,” Yuriy Gudymenko, Chair of the Public Anti-Corruption Council of the Ministry of Defense of Ukraine, told me in an interview. “Primarily, this is because Ukrainian legislation is convoluted and highly bureaucratized, and therefore, if desired, any competent law-enforcement officer can easily find violations in the paperwork and open a case.”

The efforts by the ESBU and SBI might undermine Ukraine’s defense. Fewer drones mean the military will have less equipment and capability to strike Russian targets, and protect Ukrainian lives both on the battlefield and at home.

“We are dealing with a paradox,” Gudymenko told me. “Ukrainian society hates corruption and demands that corruption in the defense industry be eradicated. Understanding this public demand, the heads of law enforcement bodies demand more investigations from their subordinates. The subordinates search for and find pretexts. As a result, drone-manufacturing companies spend more money on lawyers and government relations. This, of course, costs money and drives up the production cost. As a result, the army spends more money per unit and, given a limited budget, buys fewer drones — which obviously harms defense and leads to loss of people and territory.”

Politicization Of Law Enforcement System

The timing of this latest investigative foray into Ukraine’s drone industry is peculiar. Several days before the ESBU announced the probe, ESBU Director Oleksandr Tsyvinskyi told the Ukrainska Pravda that his organization is working to “clean up [its] own system” of corruption.

“After the arrival of the new director and the start of the reboot of the ESBU, an organization that had previously been quite ineffective and often harmful began to show a positive trend toward change,” Gudymenko told me. “They have started to handle challenges better and are trying to restore their name and reputation. Time will tell whether they will succeed in the long run.” Gudymenko added that the SBI has a reputation for being “highly politicized.”

It is strange that an economic organization is examining how defense equipment is made, despite lacking the technical knowledge or industry expertise for defense supply chains and manufacturing. This gap in technical understanding will further delay important production lines and hinder Ukraine’s ability to protect its national defense.

“Business, let’s be honest, is a complicated field, and not all entrepreneurs act in good faith. Completely banning law enforcement from investigating criminal cases would only make the sector attractive to fraudsters,” Yanchenko told me. “But if you are a fair and honest business owner, there are plenty of tools to protect your rights. The Parliamentary Special Commission on Investor Protection, which I chair, is just one of them. Public visibility is also essential. If law enforcement agencies violate business rights, companies should speak about it openly — and Parliament does respond to such statements. Yes, law enforcement officials can sometimes act aggressively. But honest businesses have nothing to fear. On the contrary, effective and professional work by law enforcement helps ensure transparency and strengthens partners’ trust.”

Meanwhile, the investigation of the ESBU may dissuade Europeans and Americans from collaborating with the Ukrainians on drone technology and other capabilities. When speaking with Kolesnyk, he told me that “By attacking some leading drone producers, rather than others, ESBU and SBI have limited Ukrainian market competition. As a result of the attack, one leading company’s market share has increased from 30% to 60% of domestic market. This is a clear monopolization attempt that is taking Ukraine backwards.” Kolesnyk concluded that instead, the ESBU and SBI should work in tandem with Ukraine’s drone manufacturers to improve transparency and strengthen Ukraine’s defense and economy.

Corruption scandals have previously slowed Ukraine’s progress, and vigilance against abuse and war profiteering remains essential. Yet urgent priorities must prevail. Halting drone production—vital to saving Ukrainian lives and building future economic partnerships with allies—would weaken both Ukraine and the West at a critical moment.