Ukraine wants to raise $20 billion to increase weapons production

22 January 16:56

To counter Russia, Ukraine needs to raise $20 billion to increase the production of weapons, including long-range missiles, air defense systems, and drones. This was stated by Ukraine’s Minister of Strategic Industries Herman Smetanin in an interview with Bloomberg News on the sidelines of the World Economic Forum in Davos, reports Komersant ukrainskyi.

According to the minister, Ukraine’s defense industry has made significant progress, but funding remains the main bottleneck to further growth.

Mr. Smetanin admitted that Ukraine’s economy, which is heavily dependent on external support, can only finance half of the military production needs.

“In most aspects, we have more opportunities than funding. And we need to find 15 to 20 billion dollars worldwide to increase production,” the minister emphasized. He mentioned, first of all, the expansion of production of missiles, anti-missile and anti-aircraft systems.

Bloomberg reminds that Ukraine is looking for military funding through direct purchases through the so-called “Danish model,” according to which allied governments pay for ammunition produced at Ukrainian enterprises. Ukraine also establishes joint ventures for the production of weapons with Western companies, including Germany’s Rheinmetall AG and the UK’s BAE Systems.

As you know, with the participation of Rheinmetall, an armored vehicle repair and production shop was launched last June, which became the first project implemented under the partnership between Ukroboronprom and the German defense concern, and in November, production of Lynx combat vehicles began in Ukraine. Rheinmetall CEO Armin Papperger has announced plans to open at least four plants in Ukraine.

At the end of last year, BAE System, a company that produces weapons and military equipment, announced plans to set up repairs in Ukraine and later manufacture M777 trailer artillery systems.

The day before, Ukraine’s Minister of Strategic Industries Herman Smetanin said that Germany’s KNDS Deutschland, a manufacturer of Leopard 2 tanks, had officially opened a joint venture with one of Ukraine’s defense companies. [Kommersant]reported. The newly created joint venture will specialize in the maintenance and repair of military equipment supplied by the German company to the Ukrainian Defense Forces.

What is the “Danish model” of support for Ukraine’s defense industry?

In 2024, Ukraine and Denmark launched a new mechanism for financing arms procurement for the Armed Forces of Ukraine, which was called the “Danish model”. Thanks to this mechanism of support for the Ukrainian defense industry, in 2024, the Armed Forces of Ukraine received weapons worth almost 538 million euros. As explained by the Ministry of Defense of Ukraine, these funds are the result of agreements concluded in 2024 with the Danish Ministry of Defense to finance arms procurement projects from Ukrainian manufacturers. Sources of funding include the governments of Denmark (€125 million through the Danish national Ukraine Fund), Sweden (€20 million), Iceland (€2.7 million), and interest from frozen Russian assets (€390 million).

At the first stage of the Danish model, Ukraine received Bohdan self-propelled artillery systems. Subsequently, the production of long-range drones, anti-tank and anti-ship missiles was financed.

What are the results of the Ukrainian defense industry?

Ukraine’s defense industry grew 6 times last year. This was announced by the Minister of Strategic Industries of Ukraine Herman Smetanin during a recent speech in parliament.

According to the official, the number of products has increased – in particular, about 2.5 million mortar and artillery rounds and the same amount of ammunition for UAVs were produced. Existing developments have been improved to become more technologically advanced and efficient, and new products have been introduced. The capacity of Ukrainian enterprises is currently about $30 billion a year.

According to the minister, currently a third of the weapons used by the Defense Forces are Ukrainian-made, and there are plans to increase the volume. This includes the production of 3,000 missiles and 30,000 long-range drones.

Василевич Сергій
Editor