Ukraine has a strong potential in the defense industry, capable of producing weapons worth $35-40 billion annually. However, this resource is not fully utilized due to a significant funding deficit. This was stated by Yegor Chernev, the deputy head of the Verkhovna Rada Committee on National Security.
This is reported by Finway
“The financial gap between the production potential of the Ukrainian defense industry and the actual volumes of contracting is a key limitation on the country’s defense capability, and overcoming this problem depends on political decisions by partners regarding direct funding for the Ukrainian defense industry.”
International Models of Defense Industry Funding
The first step towards attracting funds was the so-called “Danish model,” which allows international partners to purchase Ukrainian weapons for the needs of the Armed Forces of Ukraine. This was followed by the introduction of the “Dutch model,” under which the Dutch government independently identifies priority Ukrainian manufacturers and directly finances their activities.
Strategic Goals and Attracting Foreign Investment
According to Chernev, the strategic goal for 2025 is to fund about 50% of the production potential of the Ukrainian defense industry from the state budget, while the other half is planned to be covered by international partners. Last year, Ukraine managed to attract about $6 billion for the defense sector, while this year’s goal is to cover up to $17 billion of the financial gap for contracting domestic production.
Among the countries that have already expressed their readiness to finance Ukrainian defense production are Germany, Norway, the Netherlands, and other Northern European states. In particular, the Netherlands plans to allocate about €2 billion in 2026 to support the Ukrainian defense industry. Additionally, active work is ongoing to attract foreign companies for the localization of production in Ukraine, as well as to place Ukrainian defense enterprises abroad.