Investing in Ukraine: The Key to Solving Europe’s Arms Deficit

One of the most effective ways for Europe to address its current arms shortage is to invest in Ukraine’s defense industry.

Since the beginning of the full-scale war, Ukraine’s defense production capacity has increased 35-fold. The country has demonstrated significant industrial potential and the ability to manufacture weapons up to three times faster and at a third of the cost compared to Western producers.

Despite this rapid growth, the Ukrainian government lacks sufficient funding to fully utilize these expanded production capacities. In this context, foreign investment could play a crucial role in further developing the sector while also helping European nations meet their own defense needs more efficiently.

A clear example is the situation with manufacturers of electronic warfare (EW) and signals intelligence (SIGINT) systems. Although the number of such companies has increased by 40%, reaching over 300, only 17 have received direct state orders in 2025. The Ukrainian Defense Procurement Agency signed contracts for EW/SIGINT systems worth ₴8.5 billion in 2024 and ₴8.7 billion in the first half of 2025.

By comparison, the drone manufacturing sector shows more activity: around 50 companies have received contracts. This highlights the need for a more balanced and strategic approach to state procurement, especially in high-priority areas such as electronic warfare.

Investing in Ukraine’s defense industry is not only beneficial for the country itself but also strategically advantageous for Europe. It strengthens collective defense capabilities, speeds up production timelines, reduces costs, and improves the overall efficiency of the response to evolving security threats.