With U.S. Aid Fading, Ukraine Urges Europe to Fund Domestic Arms Production

In the face of declining aid, Ukraine built a drone industry. Since Russia’s full-scale invasion in 2022, Ukraine’s defense sector has exploded, expanding production capacity 35-fold—from $1 billion to $35 billion annually.

The problem was that this potential had no outlet due to a lack of funding.

The U.S. is backtracking. According to The Wall Street Journal, the Trump administration redirected key anti-drone defense technology—initially intended for Ukraine—to U.S. forces in the Middle East. The move signals a shift in Pentagon priorities and reduced involvement in Kyiv’s defense.

Specifically, the redirected technology includes special rocket fuses for the Advanced Precision Kill Weapon System, essential for downing Russian drones. These fuses will now go to Air Force units preparing for possible clashes with Iran or the Houthis in Yemen.

First, the criticism. Although emergency spending powers authorize the measure and officials notified Congress, critics argue it undermines Ukraine’s defensive capability and lacks transparency. Meanwhile, the administration hasn’t requested more funds for Ukraine aid. Senior officials, including the defense secretary, have skipped key NATO meetings and insist Europe must shoulder more of the military burden. The U.S. has turned its focus to the Pacific.

Advanced Precision Kill Weapon System.

Lack of funds. This isn’t new for Ukraine. Since the Russian invasion in 2022, a shortage of aid has remained constant. Ukraine’s booming defense industry includes major companies and small workshops, some operating out of private garages to meet frontline demands. Despite this capacity, limited funding holds back production. The national budget supports only about $11.5 billion in arms purchases—leaving over two-thirds of industrial potential unused.

According to Business Insider, industry leaders and officials agree Ukraine could triple arms production with enough funding, boosting resilience and lowering reliance on foreign suppliers. They believe Denmark offers a solution.

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The Danish model. To solve the funding bottleneck, Ukraine proposes a model already in limited use: the so-called Danish model. Since 2023, Denmark has allowed allied countries to purchase Ukraine-made weapons directly instead of sending aid from their own stockpiles or Western suppliers.

This approach lowers costs, speeds up delivery, and gives soldiers weapons built to their tactical needs with optimized logistics.

Several countries have adopted the model, and others—like Germany—are working on their own versions. Thanks to this system, Ukraine ramped up production of key platforms such as the Bohdana self-propelled howitzer. A growing list of ready-to-produce weapons, including artillery and armored vehicles, awaits funding under the program.

Collaboration and alternatives. While the Danish model is the fastest and simplest, it isn’t the only path. Serhiy Goncharov, president of Ukraine’s National Association of Defense Industries, and other leaders have pitched more complex ideas to the European Commission. These involve co-production and financing of Ukrainian-made weapons using European components.

This model moves more slowly but could appeal to European industries expanding in response to fears of Russian aggression. Officials are also weighing the use of frozen Russian assets and forming industrial alliances for technology transfer. Goncharov warns, however, that many Western partners are still not scaling up defense production urgently—leaving Ukraine to grow independently to meet its own needs.

Strategic opportunity. Working with Ukraine offers allies a way to boost defense in the short term and seize a strategic opportunity. Forged in conflict, Ukraine’s defense industry has direct combat experience invaluable to any military power. Its frontline proximity allows constant design and performance updates based on real battlefield data—something many Western firms can’t replicate quickly.

In that light, partnering with Ukraine gives Europe and other regions a dual advantage: strengthening a crucial supply line to Kyiv and gaining insights from a resilient, innovative military-industrial ecosystem. As Goncharov said, “We unfortunately face this situation when we have war on our territory, and it’s not our choice, but it is what it is”—and the production lines are ready.

Image | Ministry of Defense of Ukraine

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