Ukraine has significantly increased the output of its domestic defense industry, reaching an estimated production potential of $35 billion by 2025. To unlock this full capacity, the country is drawing on a broad range of international financing tools, including European Union programs, bilateral support from partner states, and revenues derived from frozen Russian assets.
Since the start of Russia’s full-scale invasion in 2022, Ukraine’s defense manufacturing sector has shown consistent growth. In 2025 alone, external financial support for the industry amounted to $6.1 billion — a tenfold increase compared to roughly $600 million received in 2024.
Defense Minister Denys Shmyhal emphasized the broader significance of this cooperation, stating:
“We are grateful to all our partners for supporting Ukraine’s defense capabilities and the development of our defense industry, as this is a contribution to strengthening the security of all of Europe.”
Financial contributions came from a wide coalition of allies, including the United Kingdom, Denmark, Lithuania, Canada, Iceland, Ireland, the Netherlands, Germany, Norway, the United States, and Sweden.
One of the key mechanisms supporting Ukraine’s defense production has been the so-called “Danish model,” launched in 2024. Through this framework, nearly $1.8 billion was directed toward the manufacture of domestically produced weapons.
Another major portion of funding — more than $4.3 billion — was secured through direct purchases by partner governments from Ukrainian defense companies. Within this amount, close to $900 million was earmarked for equipping military units as part of the presidential “Drone Line” initiative.
An increasingly important source of financing in 2025 has been income generated from frozen Russian assets, which provided over $1.1 billion to Ukraine’s defense sector.
Ukraine has also submitted a series of national defense-industrial projects under the EU’s SAFE mechanism, with expected funding reaching up to $5 billion. These joint initiatives with European partners are seen as concrete steps toward deeper integration of Ukraine’s defense industry into Europe’s broader security and industrial framework.
