€130 million in guarantees for investors in the Ukrainian defense industry: how Denmark is implementing the security agreement
25 March 12:39
Denmark has announced the introduction of a new mechanism of state guarantees to support its companies that are ready to invest in Ukraine’s defense industry. This was announced by the First Vice Prime Minister and Minister of Economy of Ukraine Yulia Svyrydenko, Komersant ukrainskyi reports.
“The Danish government has announced the introduction of a new state guarantee, under which the state, through the Danish Export Investment Fund, covers a total of DKK 1 billion (€130 million) or up to 70% of investments by Danish companies in Ukrainian defense companies,”
– Svyrydenko wrote on social media.
According to the minister, this is how Denmark mitigates risks for its companies that want to invest in the development of the Ukrainian defense industry. At the same time, this opens up opportunities for Danish manufacturers to attract Ukrainian experience and innovations, as well as to test weapons in real combat conditions.
The Danish Export Investment Fund (EIFO) is well known to Danish businesses, as they have been actively supporting both their own and Ukrainian businesses through this instrument. The Fund provides support through the following mechanisms:
- Export credit guarantees – this helps reduce the risks of exporting to Ukraine by covering possible payment defaults.
- Direct lending – providing loans to Ukrainian buyers of Danish goods and services.
- Investment capital – to help Danish companies expand their operations in Ukraine.
Now these instruments have been extended to the defense industry, which opens up new opportunities for cooperation between Ukraine and Denmark in the field of military-industrial production. This is definitely a positive decision for Ukraine, as it improves the conditions for Danish companies to invest in the Ukrainian defense industry.
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Security agreement between Ukraine and Denmark
on February 23, 2024, President of Ukraine Volodymyr Zelenskyy and Prime Minister of Denmark Mette Frederiksen signed a security agreement between Denmark and Ukraine in Lviv.
The agreement is valid for 10 years, during which Denmark undertakes to provide Ukraine with comprehensive military, financial and humanitarian assistance.
Danish military assistance specializes in air force and air defense, maritime security, demining, technology, and drones. Particular attention is paid to F-16 aircraft and everything related to them: training, simulators, ammunition, repairs, etc.
Denmark is also helping to counter Russian cyber aggression, overseeing the restoration of Mykolaiv and Mykolaiv region, and actively assisting Ukraine in its accession to NATO and the EU.
One of the sections of the agreement provides for cooperation in the defense industry:
21. Denmark will promote the development of Ukraine’s defense industry and identify opportunities for closer partnership. Particular attention will be paid to preserving Ukraine’s military superiority necessary for self-defense against a full-scale aggressive war by Russia. Participants will jointly identify priority areas for investment, strengthen efforts to reduce existing barriers to cooperation, eliminate restrictions in the supply chain of military materials, and encourage and support investment.
22. Ukraine and Denmark will cooperate in the development of defense technologies, especially in the field of new technologies. Denmark will support the development of Ukraine’s defense industry, in particular through investment, information exchange, joint research and development, and production.
23. Participants will work to identify sources of funding necessary for the development of Ukraine’s defense industrial base, including investments and financial assistance, including during war and post-war reconstruction.
The full text of the document is available here:
So, a year after the agreement was signed, it is clear that it is working, and the parties are filling it with real content.
