Ukraine Will Try to Revive Weapons Industry, Lawmakers Say : Economy: New president may work with Russia to improve share of export market. Deal with Iran in ’93 reported.

President-elect Leonid Kuchma will try to boost this nation’s moribund economy by reviving its military industries and teaming up with Russia to grab a bigger share of the arms export market, Ukrainian lawmakers said Tuesday.

Experts here say Ukraine’s weapons industry, which largely ground to a halt after the collapse of the Soviet Union, has revived somewhat and that new automatic rifles and highly accurate short-range missiles are being built at Yuzhmash, the gigantic rocket factory in Dnepropetrovsk that Kuchma headed before becoming prime minister in 1992.

Kuchma, 55, defeated President Leonid Kravchuk in Sunday’s elections to become independent Ukraine’s second president. Kuchma, who is due to take office next Tuesday, campaigned against a “suicidal course of isolation from Russia” and courted Ukrainian military support.

A report released last month by the campaign of Ivan Pliushch, a rival presidential candidate and former Speaker of Parliament, asserted that in May, 1993, during Kuchma’s tenure as prime minister, Ukraine gave Iran 50 MIG-29 fighter-bombers, 20 tanks and eight “super-modern” anti-ship missiles in exchange for Iranian oil.

After the Soviet breakup, former CIA Director Robert M. Gates warned that Iran had a long shopping list of Soviet-made weapons, including MIG-29 planes. Ukrainian officials have made a series of contradictory and Delphic comments about whether weapons were sold to Iran.

Before the oil deal, some Ukrainian officials said the swap might involve military supplies, while Pliushch said that Ukraine would not swap weapons for the oil but would give Iran commodities instead. Afterward, Kravchuk neither confirmed nor denied a weapons swap and other officials were equally evasive.

“Ukraine does not trade arms with U.N.-sanctioned countries,” Deputy Foreign Minister Boris Tarasiuk said in December. “I can’t say there are grounds for distress over massive sales of arms to Iran. But rumors of anti-ship missiles for the Iranian navy are not true.”

A 1993 Ukrainian government decree made information about weapons sales a state secret.

A U.S. source said the government had “no evidence” of Ukrainian arms sales to Iran.

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Russian analyst Andrei V. Kortunov of Moscow’s USA-Canada Institute said Ukraine is believed to have sold “a few dozen tanks” to Iran. But Russia got wind of the deal and elbowed Ukraine out of a deal for several hundred more tanks by promising Iran parts and service, he said. Though more expensive, the Russian deal gave Iran vital maintenance guarantees that Ukraine could not offer.

A Clinton Administration official and other experts said Iran has bartered with Russia and other former Soviet republics for weapons, including MIGs and tanks. But these sources said the figure of 50 MIGs was probably too high. As of 1993, Iran’s air force consisted of 210 planes, including at least 30 MIG-29s.

With its economy in a shambles, Ukraine may find it difficult to turn down buyers that the West considers troublesome.

The Pliushch report states that India, once one of the biggest clients for Soviet weapons and still on an arms-buying spree, is offering Kiev a long-term credit of up to $7.5 billion to “orient its military exports on India and cooperate in the production of strategic weapons, particularly fighter-bombers, submarines, tanks and rockets.”

Last year, Russia reluctantly abandoned a deal to sell commercial satellite technology to India because of U.S. insistence that the launch-ballistics technology could help India deliver missiles.

Ukraine’s military-industrial complex, which includes tank factories, naval shipyards, aerospace and missile plants and other high-tech military research and development facilities, employs 2.5 million of its 52 million citizens.

During the presidential campaign, Kuchma often noted that 70% of this vast industrial net once relied on supplies, parts, fuel and orders from Moscow. With overall industrial production plunging 40% last year, Ukraine cannot afford to lose its profitable weapons markets and must team up with Russia to sell its wares, Kuchma said.

“Most of Ukraine’s economic ties with Russia were through the military-industrial complex,” opposition lawmaker Ivan Zayets said. “Renewing those ties means building weapons.”

Russian officials also see their arms and aerospace industries as the sectors that are most competitive on the world market--and they are unlikely to want to share their arms clients with Ukraine. By stressing cooperation, not competition, with Russia, Kuchma may be hoping to get a piece of the lucrative market from which Ukraine might otherwise be shut out.

Now that Kuchma has been elected president, Kortunov said it is possible that Ukraine and Russia will shelve their competition and work together to boost arms sales. “Naturally there are forces in Russia quite interested in such cooperation,” he said.

Few Ukrainians are likely to complain.

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“This could fill our budgetary holes,” said economist and lawmaker Volodymyr Pylypchuk. He complained that Ukraine’s excess arsenal--the Soviet Union left it with 6,300 tanks--is not being sold but turned into scrap metal to comply with treaties reducing conventional forces in Europe.

“We sawed up 140 tanks last year,” Pylypchuk said. “Even if we had sold them at bargain prices, we would have no budget deficit.”

In fact, the Pliushch report viewed arms sales as objectionable only if they gave Russia too much leverage over the Ukrainian economy.

“Ukraine will become an appendage of the Russian military industry and will lose the chance to independently enter the international weapons market,” the report warned.

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Times staff writer Efron reported from Moscow and Times special correspondent Mycio from Kiev. Times staff writer Robin Wright in Washington contributed to this report.