Repeatedly denied permission to use powerful Nato-supplied missiles to hit targets deep inside Russia, Ukraine has developed its own ballistic missile that reportedly can hit Moscow.

The as yet unnamed ballistic missile has been tested and the results are "positive," President Volodymyr Zelenskiy said on August 27.

Since the start of the drone war phase of the war, both Ukraine and Russia have been constantly innovating. In the last year Ukraine has doubled the range of its drones and last week attacked a Russian refinery inside the Arctic Circle for the first time, over 2,000 km from the Ukrainian border.

Moscow is only 841 km from the Ukrainian border and has already been hit several times by Ukrainian drones, although to date there have been no fatalities from what have been largely symbolic attacks.

The first drone attacks on Moscow were launched in March last year, when several weaponised long-range reconnaissance drones, packed with explosives, almost reached Moscow, shot down by air defence systems on their approach to the Russian capital.

In the most sensational attack, two drones hit the Kremlin itself in the early hours of May 3, in what the Kremlin claimed was an attempt to assassinate Russian President Vladimir Putin, despite the fact that the drones arrived in the middle of the night and carried only a small amount of explosives that did little damage.

Zelenskiy's announcement of the new ballistic missiles comes three days after he said the country had successfully launched a new long-range missile-drone, Palyanytsia. The missile is named after a traditional Ukrainian bread with a word that Russians find hard to pronounce, which is consequently often used as a password. The drone Palyanytsia is capable of striking Russian military airfields deep within enemy territory.

“What other developments are there in Ukraine? I thought it was too early to talk about it, but… There was a positive test of the first Ukrainian ballistic missile. I congratulate our military production complex on this,” Zelenskiy said at a press conference in Kyiv.

He said he could not provide any more details at this stage, but shared the news, "so that Ukrainian society would know and appreciate domestic defence producers working 24/7."

Increasingly frustrated by the slow pace of delivery of Nato-supplied arms and munitions and also worried about Western support coming to an end next year, Kyiv is increasingly investing into the manufacture of its own weapons.

Zelenskiy unveiled plans last year to make Ukraine a military production hub and since then several Western arms manufacturers have entered into joint ventures to set up arms production factories in Ukraine, led by Germany’s biggest arms-maker Rheinmetall, which is building a factory to manufacture shells in the country.

Ukraine has already invested $7bn in the domestic defence industry so far in 2024, Defence Minister Rustem Umerov said speaking at the "Ukraine 2024: Independence" forum in Kyiv on August 27, as Kyiv seeks to dramatically enhance its defence production capabilities.

The investment is going into the development of drones, robotics and electronic warfare systems, all of which are "already yielding tangible results on the battlefield," he said.

The rest of the world is looking on as Ukraine rapidly introduces several innovations that have already changed the face of modern war. In particular, Ukraine has excelled at adapting low-cost commercially available drones and weaponising them by strapping Soviet-era grenades to their underbelly to drop on unsuspecting Russian soldiers and defensive positions to devastating effect.

In one famous occasion, a Ukrainian First Person View (FPV) operator dropped a grenade through the skylight of an SUV full of Russian soldiers attempting to flee an attack, killing all the men inside.

One of the consequences of the Ukraine conflict is that armies around the world will pay less attention to very expensive high-tech smart missiles and follow Ukraine’s lead in investing heavily in low-cost drone swarms in hunter-killer pairs that have effectively to a large extent countered Russia superiority in artillery and made the no-man’s land on the line of contact a kill zone for any troops incautious enough to wander into open country between the lines. Drones are far more accurate than indiscriminate shelling and can target individual soldiers or tanks with an extremely high kill ratio.

Despite making significant military production progress in the last two years, Ukraine remains heavily dependent on Western defence aid packages, particularly for air defence systems and ammunition, partly due to the lack of funds, Zelenskiy said. As bne IntelliNews reported, Kyiv is short $12bn in its budget this year, earmarked for defence spending. And the Ministry of Finance (MinFin) said this week, Kyiv expects to be short another $15bn next year due to the falling amount of international aid expected in the next two years.

Western countries currently do not directly finance Kyiv’s armed forces, instead assisting with military aid packages and training. However, several countries, including the Netherlands, Denmark and Canada, have provided funds for defence producers in Ukraine to make weapons for Kyiv's troops.

The war has gone into a new phase where Ukraine is increasingly taking the fight to Russia, and actively ignoring Western concerns about escalation that may draw Russia into a direct conflict with Nato. As bne IntelliNews reported, Kyiv did not ask its American allies for permission for the Kursk incursion, which may turn out to be a major strategic blunder as it draws some 10,000-20,000 of the Armed Forces of Ukraine (AFU) best fighters away from the Donbas front line where the defence is reportedly slowly starting to crumble.

Now it appears that Kyiv will start targeting military assets deeper inside Russia using its own long-distance drones and missiles to cause chaos and stymie Russia’s ability to hit targets inside Ukraine with impunity from its own territory – targets that have been off-limits until now. Russia has already withdrawn 90% of military planes beyond the range of US-supplied ATACMS missile range, a US official claimed on August 27 the Kyiv Independent reports, and it has also already withdrawn almost all of the Black Sea fleet from its bases in the Crimea after Ukraine started actively striking naval bases using its own longer-range drones last year.

Kyiv hopes to circumnavigate the ban on using powerful Nato-supplied weapons on targets deeper in Russia by developing its own weapons. However, these programmes are in a race against time as winter looms and the country’s non-nuclear power plants (NPPs) have largely been destroyed. In the biggest missile barrage of the war, Russia fired over 200 missiles on August 26 mostly targeting what is left of Ukraine’s installed generating capacity, destroying more of what is left of the heating and power sector with the hope of freezing Ukraine into submission after the heating season starts sometime in November.