Ukraine’s defense industry has undergone a remarkable transformation, with domestic production now accounting for about a third of the country’s military equipment, Defense News reports. According to President Volodymyr Zelenskyy, this is up from less than 10% at the start of Russia’s invasion. This dramatic shift has been supported by innovative funding approaches, particularly the “Danish model” of military aid.
Denmark, better known for LEGO bricks and wind energy than military might, has pioneered an initiative that directs Western military aid to fund locally produced Ukrainian weapons rather than foreign equipment. The model has proven highly successful, delivering approximately €590 million worth of locally manufactured weapons to Ukraine in 2024.
The results have been striking. Ukraine’s artillery and mortar round production increased 25-fold in the first half of 2024 compared to all of 2022, while drone production capacity surged to 4 million units in 2024 from roughly 300,000 the previous year. The country’s defense firms now employ around 300,000 people, nearly half the size of the entire European defense industry’s workforce.
“Ukraine, including its defense industry, is in war conditions, so we’re thinking differently,” says Mykhailo Samus, director of Kyiv-based think tank New Geopolitics Research Network. “We have a motivation that’s not only financial, like profit for a normal business, we have the main task of giving everything we can to our armed forces, to stop Russians.”
The Danish model has proven particularly effective in accelerating production. Defense News notes that when Denmark ordered 18 locally made Bohdana howitzers in July last year, the entire order was delivered by mid-September—a timeline that would have taken years if ordered from European manufacturers.
The Bohdana also offers significant cost advantages, priced at around $2.5 million compared to the French Caesar howitzer, which is priced at approximately €4.2 million.
Looking ahead, Ukraine has set ambitious goals. Prime Minister Denys Shmyhal told parliament on 10 January that the country expects to raise at least $1 billion via the Danish initiative in 2025. The success has attracted attention from other nations, with France, Norway, and other allies exploring similar cooperation models.
“If budgets overall are limited, it should be in everybody’s interest, both the donor and, of course, Ukraine as the recipient, to have it produced in a more cost-efficient manner,” says Jacob Funk Kirkegaard, a senior fellow at Brussels-based think tank Bruegel.
The transformation of Ukraine’s defense industry could have lasting implications for European security. With lower production costs, battle-tested equipment, and growing industrial capacity, Ukraine is positioning itself to become what Kirkegaard calls “the arsenal of the EU” – provided it survives as an independent state and achieves its goal of EU membership.
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