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BRUSSELS — EU countries should use funds from the bloc to place arms orders with Ukrainian companies that can then be used to supply Kyiv, Minister for Strategic Industries Oleksandr Kamyshin told POLITICO.
Kamishin was speaking during Monday’s EU-Ukraine Defence Industries Forum in Brussels, designed to boost support for Ukraine’s arms industry.
Buying weapons and ammunition for Ukraine from Ukrainian companies, he argued, is “the best, the fastest and the most cost efficient way to help us on the frontline.”
The same idea was also put forward by the EU’s top diplomat, Josep Borrell.
“We have to be more creative and exploring new ways to delivering military assistance to Ukraine,” Borrell said in his opening speech at the forum. “Purchasing equipment from Ukrainian companies, or from European and Ukrainian joint ventures established in Ukraine, is an option that we will explore.”
Ukraine has historically had a large export-oriented arms industry, but under the pressure of its existential war against Russia is now producing for itself. Making weapons at home also liberates Kyiv from the political pressure and delays associated with relying on its allies for everything from artillery ammunition to advanced weapons like missiles and drones.
The country’s cash-strapped government, however, doesn’t have enough money on hand to sign procurement contracts with its own arms companies.
That reality led to an idea — to have Ukraine’s allies buy weapons from Ukrainian companies and then donate them to Kyiv, thereby both arming Ukraine and growing its independent military-industrial complex.
Kamyshin told the forum that “the gap between the capability of our defense industry and the funds available for weapon procurement amounts to $10 billion this year only.”
Kamyshin said his country’s arms industry can produce about $20 billion worth of weapons. The Ukrainian government plans to issue contracts for $6 billion, while another $4 billion would come from local partners; Ukraine’s allies could supply the missing $10 billion.
Denmark is leading the way, announcing last month that it will allocate 200 million krone (€27 million) to buy kit from Ukrainian businesses. Canada also promised to donate C$3 million (€1.1 million) to Ukraine for the production of drones by Ukraine’s domestic defense industry.
Now the idea is to expand those efforts by tapping into more aid money for Ukraine to sign procurement contracts.
“Our main task is to find additional funding for the defense forces in Ukraine. My task is to get this financing for production in Ukraine since we are already capable,” Kamyshin said. “We have additional non-contracted capacities, and we want them to be financed at the expense of European funds.”
Kamyshin said he had discussed with Borrell the idea of using the EU’s European Peace Facility, an off-budget fund that partially reimburses countries for the arms they send to Ukraine. The EU recently agreed to provide the Peace Facility’s Ukraine Assistance Fund with €5 billion for this year, with further annual cash injections expected until 2027.
“That’s short term, that’s a fast solution that could be really a good solution,” Kamyshin said on the sidelines of the conference, attended by about 40 companies from Ukraine and about 100 from the EU.
A second option would be to use windfall profits from the billions in frozen Russian assets held in the EU. Kamyshin estimated that could generate up to €3 billion a year, “and that could work as well. ”
The third, longer-term option could be to use the European Defence Industrial Strategy, which provides €1.5 billion from the EU budget over the 2025-2027 period, to boost the availability and supply of defense products and to increase cooperation with Ukraine.
European companies would then have an incentive to team up with Ukrainian partners and get their weapons “best-in-class battlefield tested,” Kamyshin said.
