Europe's arsenal. Can Ukraine replace US weapons with EU support?

Contents

• Danish procurement model
• How the Danish model works
• Which Ukrainian weapons interest Europe
• Joint ventures with the EU

The confrontation between Ukraine and the United States has reached a new level. After a clash between Ukrainian President Volodymyr Zelenskyy and his American counterpart Donald Trump, the US halted military aid to Ukraine. This is a continuation of Trump’s strategy to pressure Ukraine into negotiations on unacceptable terms. A political response to this challenge has yet to be found.

The pause obviously does not apply to the entire volume of aid. "Even Trump cannot completely stop all assistance because some programs are backed by congressional decisions. No matter what Trump decides, this aid will continue because failing to comply with these decisions would be a violation of the law," said Illia Neskhodovskyi, head of the analytical department at the ANTS, in a comment to RBC-Ukraine.

First and foremost, it is about a large aid package for Ukraine worth over $60 billion, allocated in April 2024. According to open sources, about one-third of this amount remains unspent. However, in any case, Trump's decision raises a long-standing pressing issue — how to compensate for the loss of US military aid.

Ukraine has a resilience reserve for approximately six months, even without systematic US support, said Member of Parliament and member of the Verkhovna Rada Defense Committee, Fedir Venislavskyi, in a comment to RBC-Ukraine. However, the situation will become significantly more complicated, which is why efforts are underway to find alternative sources of critically needed weaponry.

"Everyone is now working - the president's team, the Verkhovna Rada, and our committee - to consider options for compensating for this quantity and quality of weapons that the United States may stop or have already stopped providing us with," said Venislavskyi.

While some types of weaponry, particularly air defense systems and long-range precision MLRS, can only be supplied by the US, most of the necessary arms could be produced by Ukraine and Europe.

The problem lies in production volumes. As RBC-Ukraine previously reported, Europe remains a "sleeping giant" that is only now beginning to awaken. Defense budgets are growing, but there is a lack of capacity for mass arms production. In response to this challenge, several mechanisms are already being implemented to help Ukraine meet its current needs and, in the long term, to support Europe itself.

Danish procurement model

In the fourth year of the war, a paradoxical situation emerged in Ukraine: the number of arms manufacturers has surged, particularly private ones. For various reasons, they have been able to scale up production much faster than European companies. However, there are still problems with orders.

According to the Tech Forces in UA association, private defense companies in 2024 were capable of producing over 2.7 million units of weaponry, but due to orders from the state and charitable foundations, only just over 1 million were manufactured. This accounts for only 37% of total production capacity. The situation is further complicated by the ban on arms exports from Ukraine, leaving much of the industry effectively idle.

As the Ministry of Strategic Industries (Minstrategprom) told RBC-Ukraine, the global fundraising project ZBROYARI is yielding some short-term results.

"Ukraine’s defense industry is already capable: we have production facilities, equipment, functioning technologies, and engineers. What is urgently needed right now is funding," the ministry stated in response to a request from RBC-Ukraine.

The project allows European partners to purchase weapons for Ukraine directly from Ukrainian manufacturers. Denmark was the first to do so. In April 2024, it allocated approximately $28.5 million. Soon, other countries joined the Danish model, including the Netherlands, Sweden, Norway, Canada, and the Baltic states.

President of Ukraine Volodymyr Zelenskyy and Prime Minister of Denmark Mette Frederiksen (photo: Office of the President of Ukraine)

The Danish model has been used to finance the production of critical weapons, including Bohdana self-propelled artillery systems. In general, procurement is focused on what can be quickly produced and used at the front, such as drones and artillery. Preference is given to equipment that is fully or mostly produced in Ukraine to maximize the economic effect.

“This is a kind of 'export', but with the difference that the weapons remain in Ukraine, and we receive funds for development,” Taras Yemchura, head of the Defense Policy sector at the BRDO, told RBC-Ukraine.

How the Danish model works

"For financing to take place, the parties agree on a list of weapons and the amount of funding based on proposals from the Ukrainian side, which are determined by the needs of Ukraine’s Security and Defense Forces and the capabilities of Ukrainian arms manufacturers," the Ministry of Strategic Industries explained to RBC-Ukraine.

Throughout 2024, more than $500 million was utilized under the Danish model from a total budget of $1.5 billion, the ministry reported. Work is now underway to expand the model’s capabilities.

"The Danish model is currently a functioning and quite effective aid mechanism," confirmed Ukrainian Armor, a company producing armored vehicles, drones, ammunition, and other equipment.

The model operates in two formats, depending on the source of funding.

1. Funds are collected by partner countries such as Denmark, Norway, and others to purchase weapons.
2. Weapons are procured using profits from frozen Russian assets.

Each format has its nuances.

"For example, funds obtained from frozen Russian assets can only finance production between April and October. The classic Danish model, under which countries pool money, does not have such restrictions," the company explained.

In this case, direct financing allows European partners to determine the type and quantity of contracted products. Contracts with manufacturers are signed by Ukraine’s Ministry of Defense or the Defense Procurement Agency (DPA), which define priority needs. Western partners finance these contracts, and the allocated funds cannot be used for other purposes.

"Anyone can work under this model, and that’s great because it provides massive savings for our partners. The cost of our Bohdana self-propelled artillery system, for example, is significantly lower than similar systems supplied by France," said Illia Neskhodovskyi.

According to him, this addresses a long-standing issue in European defense planning, as companies hesitate to launch new production lines due to uncertainty about long-term contracts.

"If expanding production requires building an additional assembly line, the company must be invested in and guaranteed orders beyond just this year. To break even, the line needs 5–7 years of operation. If you foresee a need for ammunition for the next 5–7 years, it’s better to manufacture it domestically. But if you need to meet urgent demand, it's more efficient to purchase from Ukrainian manufacturers," the expert explained.

Crucially, this model lays the foundation for future cooperation. "Hybrid formats may emerge later, such as trilateral agreements where part of the production goes to the partner country, and the rest to Ukraine’s defense forces. Alternatively, joint ventures could be established to manufacture components in different jurisdictions, reducing risks," said Taras Yemchura in a comment to RBC-Ukraine.

Technology transfers and licensed production of Ukrainian weapons in other countries are also promising ways. It would safeguard production from airstrikes while enabling future arms exports to European countries — after the war ends, of course.

Which Ukrainian weapons interest Europe

Ukraine’s Defense Forces have the most extensive experience in Europe with modern defense technologies in all aspects of warfare, and that is recognized at the highest levels within the European Union.

"Ukrainian defence industry has shown extreme capabilities to adapt to the new needs. This is especially obvious in the fields of unmanned systems including air, ground and maritime drones. For example, the number of UAV-s, UGV-s and USV-s produced and used annually in Ukraine is very likely higher than in the whole EU combined (no good data exists on EU numbers), giving them a huge experience from the mass effect," the European Commission stated in response to an inquiry from RBC-Ukraine.

Also, electronic warfare systems supporting unmanned systems and countermeasures, especially against UAVs, create an extremely valuable combination of knowledge for any armed forces.

According to the European Commission, this is a unique expertise that Ukraine’s defense industry is gaining. " The EU will make sure Ukraine industry can build on their experience and will become a full contributor of the European Industrial base in this field," the Commission said.

Bohdana self-propelled artillery system (photo: Getty Images)

The greatest potential likely lies in the field of digital technologies and combat artificial intelligence, says Yemchura.

"In my opinion, the benefit for the EU is obvious: battle-tested solutions and unique Ukrainian developments. In return, we gain access to their resources, technology exchange, and integration into supply chains. Such a scenario aligns perfectly with Europe's strategy to strengthen its defense capabilities," the expert said.

Most European countries require weapons certification according to NATO technical requirements and standards. Furthermore, Western manufacturers such as France and Germany may resist the promotion of Ukrainian weapons on the European market. Therefore, it is important for Ukraine to develop defense cooperation with specific companies.

Joint ventures with the EU

Another area where Ukraine and Europe can mutually strengthen each other is the creation of joint defense enterprises. Germany currently leads in this direction, as the Ministry of Strategic Industries reports.

Several examples of such cooperation:

• Ukrainian Defense Industry JSC and the German concern Rheinmetall have established a joint venture for the repair of German infantry fighting vehicles. In June last year, the first workshop for armored vehicle repair and production was launched within the JV.
• The German company Flensburger Fahrzeugbau Gesellschaft is building an armored vehicle service center in Ukraine in partnership with a Ukrainian military equipment manufacturer.
• KMW (KNDS Deutschland) has created a joint venture with a Ukrainian company to service and repair its military equipment, which first arrived in Ukraine in 2022.
• Norwegian Kongsberg Defence & Aerospace, which produces NASAMS air defense systems, is currently setting up a company to manufacture missiles for its complexes.
• French Thales plans to establish a joint venture with Ukroboronprom to develop innovative technologies for air defense, radar systems, and electronic warfare.

Ukrainian Armor had joint projects even before the full-scale invasion. In 2023, in collaboration with Western partners, ammunition production was launched in several NATO countries. In 2024, the company signed an agreement with the Czech Czechoslovak Group to co-produce NATO-caliber shells.

Ammunition production will be expanded in Ukraine at new facilities, some of which are already operational. The goal is to produce and supply around 100,000 shells this year and over 300,000 by 2026.

Some projects remain undisclosed due to security risks and partner conditions.

Joint ventures initially operate as repair hubs, but this is only the first stage, according to the Ministry of Strategic Industries. Eventually, they will move to full-scale production. Besides, Ukrainian manufacturers gain access to partner technologies. In the long run, this strengthens ties between the Ukrainian and European defense industries and between Ukrainian manufacturers and partner governments.

"After our victory, Ukraine will have a powerful defense industry with large-scale production – and it will need buyers. Right now, the necessary partnerships are being set. Partners are getting used to purchasing Ukrainian weaponry, tested in real combat and modified according to battlefield requirements," the ministry told RBC-Ukraine.

Ammunition production of BAE Systems (photo: Getty Images)

There is also growing interest in Ukraine’s private defense sector, which is often easier to work with due to its flexibility and adaptability compared to state enterprises.

"Private manufacturers are market leaders in drones, electronic warfare, armored vehicles, and beyond. They are scaling up, launching new production lines, and mastering new competencies," said Ukrainian Armor representatives.

Every player entering the market gathers information, assesses risks, and seeks partners with the necessary production capabilities. If a private manufacturer meets the requirements, they can become a partner for joint production.

These mechanisms are already in action. The main issue is funding for orders, which is not always sufficient. On March 4, European Commission President Ursula von der Leyen presented a long-term EU rearmament plan with an €800 billion budget. This includes €150 billion in loans for air defense within the EU and weapons production for Ukraine.

According to Politico, von der Leyen's plan initially included an additional €20 billion in military aid for Ukraine, but Hungary vetoed it. Further discussions on Ukraine aid are expected at the March 6 EU summit.

Overall, a series of joint projects between Ukraine and the EU could greatly mitigate the negative effects of potential US restrictions under Trump and give Ukraine more leverage in negotiations.

Sources: RBC-Ukraine inquiries to the European Commission, Ukraine’s Ministry of Strategic Industries, Ukrainian Armor, comments from Fedir Venislavskyi, Taras Yemchura, and Illia Neskhodovskyi, and articles by Politico, Bloomberg, and Reuters.