Ukraine Expects to Raise $1 Billion for Ukrainian Defense Industry Through Danish Model

Kyiv says it expects to attract over $1 billion for Ukraine’s defense this year through the “Danish Model,” where, rather than trying to send the Ukrainian military weapons, allies purchase materiel for the Ukrainian military from Ukraine’s own defense industry.

The Danish model is meant to help ensure that funds go toward building the weapons that are optimally useful, that they’re both produced and distributed more quickly, and that the domestic defense industry can expand and efficiencies that come with that expansion can compound.   

“By 2025, we expect to attract over $1 billion,” Prime Minister Denys Shmyhal said in a Jan. 3 post.

Ukraine’s domestic defense manufacturing plans this year are ambitious. 

President Volodymyr Zelensky has ordered some 30,000 long-range drones from Ukraine’s domestic defense industry.

Also, Kyiv plans to build some 3,000 of its own cruise missiles and hybrid “drone-missiles.”

Direct investment in Ukrainian industry was pioneered by Denmark, which, in July 2024, financed 18 Ukraine-made Bohdana wheeled self-propelled howitzers. 

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“I hope that more countries will follow the Danish model for procurement in Ukraine,” Danish Deputy Prime Minister Lund Poulsen said at the time. 

“The Ukrainians’ opportunities to produce equipment are greater than the funding they have right now. Therefore, there is a great potential for similar agreements to produce more equipment in Ukraine and at the same time help build the defense industry in Ukraine.”

Efforts to bolster Europe’s military-industrial sector are often thwarted by bureaucratic inefficiencies, delaying the needed acceleration to counter Russia’s growing military. As a result, Ukrainian forces are left with ongoing shortages of weapons.

But hopes are high that the Danish model will bypass red tape.   

On Tuesday, Jan. 7, Foreign Minister Andrii Sybiha announced that Iceland had provided more than $2 million for Ukrainian weapons production.

Meanwhile, the Finnish government has agreed to work with Ukrainian companies to construct bomb shelters, Ukrainian Prime Minister Denys Shmyhal wrote in October 2023.

“This public-private partnership provides for a large network of reliable shelters,” Shmyhal wrote. “In peacetime, these shelters will have different purposes.” 

Ukraine’s Ministry of Strategic Industries launched an initiative, proposed to the EU in May of last year which has raised $750 million from partner countries to buy Ukrainian-made arms, Rubryka reported.

The “Zbroyari (weaponsmith): Manufacturing Freedom” initiative has received $67 million from the UK, $18.7 million from the Netherlands, $16.5 million from Denmark, $11.1 million from Lithuania, and  $2.1 million from the Netherlands.

Ukraine’s defense industry has grown approximately sixfold over the last couple of years, which was made possible largely thanks to foreign investments, US Secretary of State Antony Blinken said during a briefing in Kyiv in September 2024.

Foreign defense companies are also setting up shop in Ukraine.

In an interview with TSN published on Oct. 26, Germany’s Rheinmetall CEO Armin Papperger, announced that his company’s first Ukrainian production facility, which up to now has been mainly used to repair battle-damaged vehicles, has begun to build the KF 41 version of the Lynx infantry fighting vehicle (IFV). 

Papperger told the news outlet that a second factory was nearing completion and that planning for two more facilities intended for ammunition production and propellant manufacturing were well advanced.

Meanwhile, the French-German defense company KNDS announced in October 2024 that it registered its 100% foreign-owned company in Kyiv (KNDS Ukraine LLC) to carry out the domestic maintenance and repair of Ukrainian land systems and to produce artillery ammunition. 

“We would be more than happy to make joint ventures with you, to co-invest with you, because we want to become … partners and allies of the free world,” The Washington Post quotes Ukrainian Defense Minister Rustem Umerov saying.