Ukraine is the most important state among the ex-Soviet republics in relation to the influence upon the Russian interests; it has an exclusive geopolitical position, the second largest political and economic potential in the post-USSR space and possesses significant military capabilities. Ukraine tries to counterbalance Russia in the post-Soviet space and to develop its national security strategy based on non-cooperation with Russia.

From the beginning of its development till now Ukraine's military policy is based on two major principles: in relation to the CIS - non-participation in any military and political associations and blocs; in relation to NATO states - maximal level of cooperation and intention to join the North-Atlantic Alliance in future. The Ukrainian government didn't conceal that it was creating its armed forces to protect its independence, first of all, from Russia.

After the collapse of the Soviet Union Ukraine inherited a powerful army group that included around 800 thousand men, divisions and regiments of the second strategic echelon - the most efficient units of the Soviet Army equipped with modern armaments. Today the Ukrainian Army is still one of the largest armies in Europe.

The president of the country is directly in charge of Ukraine's military organization. Many Ukrainian experts believe that today Ukraine's Armed Forces are in deep crisis. That's why the country's government is interested to reform the military organization. According to the Ukrainian leaders, armed forces development program will create a modern, small in the numbers and mobile army. The modernization of the existing armaments in order to extend their operational life for 10-15 years more and to increase battle capabilities is determined as a major priority for armaments development in current conditions. After the collapse of the USSR Ukraine inherited almost one third of the Soviet MIC plants. Ukraine produced such unique military equipment as heavy aircraft carriers and missile cruisers, navy vessel power engines, missile and space equipment. Changed after the USSR's collapse political conditions and declared independence of Ukraine required radical reform in the military-industrial complex. It was based on the military production conversion. Such poorly considered restructuring resulted in the reduced by one forth military production volume in 1996 that made up 4% of the overall machine engineering production volume. Because of the limited financing by the Defense Ministry significant part of R&D was suspended.

Despite all these negative processes Ukraine is still capable to develop and produce sufficient range of military products. Nevertheless, due to the poor financing the Ukrainian Army can't purchase large amounts of armaments and military equipment now. Besides Ukraine has no completed production circle for the most military products.

The main feature of Ukraine's arms export was that on the initial stage it was limited by the export of surplus ex-USSR reserves that were excessive for country's defense needs.
Ukraine has a state monopoly for arms trade that is conducted mainly through "Ukrspetzeksport". Such principle of arms trade allowed to get rid of negative tendencies that existed in the first years of independence, and to increase export volume constantly.

On the arms market Ukraine promotes the most competitive-able samples of missile equipment, armored vehicles, products of electronic, shipbuilding, aviation and machine engineering industries. Successfully fulfilled contract for delivery of 320 T-84 tanks to Pakistan showed that Ukraine was an independent actor on the world arms market.

Ukraine considers military-industrial cooperation with Russia as an emergent necessity because Ukraine's military-industrial complex is a "fragment" of the USSR's defense industry and can't function without cooperation with the Russian Federation and other CIS countries now. In 1996 262 Ukrainian defense industry plants and companies had ties with Russia. Electronic and electromechanical industrial plants as well as some other industrial branches are the most dependent on the cooperation with Russia. At the same time there are serious contradictions in the military-technical relations between two countries due to competition on the world arms markets. Ukraine offers surplus arms at the prices that are significantly lower that the Russian ones.

Despite the considerable arms production facilities further prospects of Ukraine's arms trade is not quite clear. Ukraine's export capabilities can be seriously affected by the state's inability to render financial assistance to the national military-industrial complex and, in particular, to finance R&D.