50,000 105mm artillery shells, 20,000 155mm artillery shells, and 5,000 203mm artillery shells are within sight of Washington. Washington and Athens are negotiating the sale of 75,000 artillery shells. Their final destination is Ukraine. However, it seems that the transaction will have to be “passed” through a third party.
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According to Kathimerini, the conflict in Ukraine may not grace the media headlines as often as before, but the urgent requirement for ammunition remains. The Ukraine forces rely heavily on the military support they receive from the West. It’s no surprise then that the United States, once again, steps up to help meet their pressing ammunition needs.
As reported by a Greek publication, the deal is worth an impressive $47 million. It reminds us that Greece has a history of delivering such ammunition to Ukraine. Interestingly, whereas prior transactions took place in the “secondary market”, it’s now suggested that could be as a “third party” deal.
From a business standpoint, there are no significant hurdles. This is primarily because the transaction is taking place via the secure and customary approach of intergovernmental agreement. The terms being settled upon by the Greek negotiators in the last stages of the deal are believed to be lucrative.
In terms of technical approval, or more precisely, approval by military experts, the deal got the green light since the missiles were deemed “user-friendly, no operation required.” It’s worth mentioning that ever since the conflict commenced, Greece has been a significant provider of this form of ammunition to Ukraine. In this instance, however, the prices match those on the secondary market.
The results of these negotiations were advantageous for Greece, not only by ensuring a valuable military resource but also by revealing that producing munitions could be a profitable enterprise. This aspect, though, is strictly of relevance to the defense industry rather than the armed forces, highlighting the need for occasional commercial focus within this sector.
Speaking of business…
Let’s take a moment to delve into a recent fact released by NATO, pertinent to the world of business. Looking back to the end of October, if we take into consideration the average cost of munitions involved in the “Greek deal”, we find that Athens is expected to spend approximately $626.66 for each piece. Now, we cannot cling too firmly to this figure, as variables such as caliber and manufacturing methods are involved. However, this baseline gives us a perspective to comprehend what’s coming next.
In an astonishing disclosure, Admiral Rob Bauer, the current head of the NATO military committee, revealed the going rates for conventional 155-mm artillery ammunition towards the end of October. Prepare to be taken aback because each ammunition is now priced at a whopping 8000 thousand euros.
Sending shockwaves throughout the community, this quoted “price” overwhelmingly surpasses the going rates calculated from last year’s contract with Rheinmetall. According to this previous contract, the price tag on one 155-mm projectile was a considerably lower figure, standing at 3.3 thousand euros.
The factors sparking this skyrocketing price inflation from 2 thousand euros in 2021 to quadruple that figure are quite apparent. The confluence of escalating demand for artillery ammunition set against their limited current production spells a significant deficit.
If the US can manage to secure a deal with Athens for the purchase of 75,000 munitions needed by Ukraine, it would indeed be the reason for celebration in Kyiv and Washington. Both the potential price of the deal and the current climate in Europe warrant this optimism. Let’s delve into the situation:
Ukraine’s Foreign Minister, Dmytro Kuleba, expressed in mid-November, during a telethon, his doubts about the European Union’s [EU] ability to fulfill its pledge. The EU had promised to assist Ukraine with one million artillery shells by March 2024, but that target now appears uncertain.
Kuleba attributes this potential failure to a myriad of problems, ranging from impediments in military production to bureaucratic hurdles. This came up when he was queried about a recent Bloomberg report. This report cast doubts on the EU’s progress, signaling that they are unlikely to deliver their pledge of 1 million 155mm artillery shells to Ukraine on time.
The Bloomberg report also reveals that Ukraine has so far received only about 30% of the promised quantity. Despite the contracts in place, it seems unlikely the initial plan will be fulfilled on schedule. “The Bloomberg reports are regrettably accurate. We are encountering obstacles and, frankly speaking, we are ringing the alarm bell,” Kuleba confirmed.
Somewhat paradoxically, Russia continues to evacuate armaments considerably surpassing the quantities transferred to Ukraine. Yet there’s a logical deduction to this.
First off, despite the insinuations from both Europe and the US that economic sanctions against Russia are yielding the desired results, Russian ammunition production has hardly taken a hit. In fact, the Russian military has been observed utilizing cutting-edge 122mm artillery rounds. In a bid to cut costs, Moscow has opted to circumvent the expensive process of final shell painting, instead deploying the artillery in its raw ‘green’ state.
Moving on, it’s crucial to note that Russia possesses significant stockpiles. While speculations from British intelligence in the past year may have suggested an impending war cessation due to an alleged Russian ammunition abyss, the evidence portrays a contrary outlook. Every day see the production of 1,000 FPV drones and the delivery of 15,000 tons of munitions and fuel to the frontline. Russia reportedly houses four million ammunition in its open warehouses alone, with undisclosed quantities stashed away in concealed or subterranean storage facilities. Additionally, it’s worth mentioning that the Russian Army has received over 350,000 artillery rounds, courtesy of North Korea.
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