Europe will boost its investment in the Ukrainian defense industry rather than provide direct arms supplies.

The European military assistance program for Ukraine aims to increase investment in Ukraine’s domestic weapons production. Currently, more countries are exploring the option of investing in the Ukrainian defense industry instead of supplying weapons directly, as Europe’s stockpiles have diminished after three years of military aid to Kyiv. Benefits to this approach include that it is cheaper, faster, lowers logistics costs, and supports the Ukrainian economy.

Under a large-scale rearmament plan adopted by the EU this year, the European Commission will allocate €150B in loans to facilitate rapid joint procurement and weapons production. Priority will be given to products from EU countries, Norway, and Ukraine. New financial opportunities will enable EU countries to invest in Ukrainian weapons production or collaborate with local companies, promoting the integration of the Ukrainian defense industry with its European counterparts.

Recently, the EU transferred €1B to Ukraine to produce howitzers, sourced from a loan secured by proceeds from frozen Russian assets. Production of Ukrainian Bohdana howitzers has risen to 20 units per month, with over 85% of components sourced from local enterprises.