Can Ukraine become an arsenal of democracy?
Recently, Ukrainian media were stirred by the news that our Air Force will be reinforced with new modern aircraft — Swedish Gripens, and in significant numbers. According to plans, 150 planes are expected to arrive over the next 10-15 years, with the first ones slated for delivery as early as 2026.
So, this will be the third Western aircraft added to the American F-16s and French Mirage. One can only sympathize with our aviation technicians — they are in for a tough job. The sheer number of units and the delivery timelines lead to another interesting thought: could this be a hint at the potential localization of some component of the production process within Ukraine? Of course, the threat of Russian missiles cannot be ignored, but should we completely rule out the possibility of Ukraine becoming a hub for joint European military-industrial complex development? I don’t think so, and here’s why.
Ukraine as a Manufacturing Partner on the Eastern Flank
Let’s take a look at what we have right now. By the end of 2025, Ukraine’s integration into the European military-industrial complex will have moved from mere political statements to pragmatic manufacturing cooperation, stepping away from just political rhetoric. The experience of prolonged warfare, as well as significant state investments in the defense industry, are transforming Ukraine from a consumer of aid into a strategic manufacturing partner.
The primary goal of integrating into the European military-industrial complex for Ukraine is to ensure the resilience of supply chains and operational efficiency of weapons under conditions of high-intensity combat. For Ukraine, this means securing long-term access to modern technologies, as well as accelerating army standardization according to NATO models. The financial foundation for this process is significant: in 2025, at least 739 billion UAH will be allocated directly for the purchase and production of weapons and military equipment (WME). These investments are directed toward long-term contracts, which serve as a key incentive for European companies to localize production in Ukraine.
Foundations of Cooperation: Regulation, Financing, and Step-by-Step Approach
Localization of military production in Ukraine is based on a gradual strategy that includes legal incentives, technology transfer, and the construction of new production capacities.
Ukraine has implemented a localization policy that requires a certain portion of the procurement value to be formed within the country. For machinery goods purchased with state funds, a minimum localization share is required — 25% in 2025 and 30% in 2026. While these requirements do not directly apply to lethal weapons, the "Made in Ukraine" policy encourages European companies to voluntarily increase the level of localization in order to enhance their chances of securing long-term contracts. Once the fighting ceases, it would be sensible to extend the localization policy to military-industrial goods, as this could serve as an additional incentive for returning production facilities that had been relocated from Ukraine.
Joint projects are often financed through the so-called Danish model, which involves attracting international funds for the production of military equipment specifically in Ukraine. However, once the active phase of the war ends, these foreign investments are expected to decrease steadily. Therefore, we should already start thinking about opening up military goods exports to inject currency into the industry.
Ukraine’s integration into the European military-industrial complex is based on a consistent strategy, starting with repair capacities and gradually moving toward full-scale production. Essentially, we are currently following the usual path for countries aiming to stimulate the development of their own military-industrial complex.
The initial stage of cooperation focuses on maintenance and repair (MRO) of the equipment supplied to Ukraine. This not only speeds up the return of damaged vehicles to service but also ensures the transfer of technological expertise. The German defence giant Rheinmetall AG began its operations in Ukraine precisely by setting up repair facilities in partnership with Ukroboronprom.
The next stage involves the creation of joint ventures (JVs), the number of which exceeded 40 by the end of 2025. At this stage, the production process goes beyond minor repair works to include component assembly and critical technologies. For instance, the French company Thales has established a JV with Ukroboronprom focusing on air defence, electronic warfare (EW) and communications systems. Meanwhile, the Franco-German group KNDS has launched production of spare parts and ammunition for Leopard tanks and Caesar howitzers.
Only after completing all these stages does full-scale localisation of production within the country become possible.
What we already know on the ground…
One of the key localisation projects is the production of the German infantry fighting vehicle KF41 Lynx by Rheinmetall. Recently, Ukraine chose the Lynx as the baseline next-generation IFV for its Defence Forces. Rheinmetall plans to launch its first plant in Ukraine for final (most likely modular) assembly of the Lynx by the end of 2025. Earlier, the company also announced its intention to manufacture Fuchs armoured personnel carriers in Ukraine — a move that reinforces its strategy of covering the entire range of modern German equipment, from MRO to production. Overall, Rheinmetall’s persistence and systematic approach in its work with Kyiv deserve particular attention.
In the artillery sector, alongside MRO (maintenance, repair, and overhaul) for French CAESAR, German PzH 2000, RCH 155, and Eastern European systems such as Poland’s AHS Krab and Slovakia’s Zuzana, a major focus is placed on ammunition production.
Although the joint production of 155 mm shells with the Czech Czechoslovak Group (CSG) — which planned to manufacture 100,000 shells in 2025 — stumbled due to the absence of a contract from the Defence Procurement Agency, the American company Northrop Grumman had no such hesitation and signed an agreement on joint ammunition production.
Will European tanks be made in Ukraine? Not yet. The localisation project for the KF51 Panther main battle tank, developed by the familiar German manufacturer, remains at the discussion and planning stage. This is due both to the greater complexity of tank production and to the current priority of boosting the number of infantry fighting vehicles (IFVs) rather than tanks for Ukraine’s Defence Forces.
...And in the skies
The modernisation of the Air Force envisions a fleet of 250 modern combat aircraft. Here it’s worth mentioning the Swedish Saab JAS 39 Gripen fighter, which will soon join Ukraine’s Air Force alongside other Western jets. Why did Kyiv prefer the Gripen over the F-16? The reasons are both political and technical.
The Gripen (particularly the E/F modification) is a light, single-engine, multirole fighter of the 4++ generation, designed for operational flexibility and dispersed basing — a core principle of Sweden’s defence doctrine, which happens to fit Ukraine’s wartime realities perfectly.
It can take off and land on short, unprepared road sections or airstrips (under 800 metres). The aircraft can be serviced by a small team of five or six technicians using only basic equipment — a vital advantage under constant missile threats to Ukraine’s major air bases.
The aircraft is fully NATO-compatible and capable of carrying MBDA Meteor beyond-visual-range air-to-air missiles (with a range of over 200 kilometres), which significantly enhances its combat potential.
Moreover, Saab has expressed its readiness to open a final assembly plant for Gripen fighters in Ukraine. Thus, the idea that some of the 150 ordered aircraft could be manufactured in Ukraine has every chance of becoming reality — provided the right circumstances align.
At the same time, the French Dassault Rafale remains under consideration as a potential heavier twin-engine platform to complement Ukraine’s future air fleet.
A horizon of opportunities: challenges and ways forward
Ukraine’s integration into the European defence-industrial complex is a high-risk path, where every successful localisation effort lives under the shadow of missile strikes, and behind every promised plant lurks a bureaucratic labyrinth.
It’s no secret that our greatest challenge on the road to establishing military production is the high probability of missile attacks on new manufacturing facilities — a factor that makes investments both costly and risky.
Another obstacle lies within the system itself, accustomed to quick, short-term imports rather than committing to long-term localisation contracts. The case of the unfinalised 155 mm shell production shows that domestic regulatory issues can be no less dangerous than the external enemy. Insufficient transparency continues to foster corruption risks, eroding investor confidence at a critical moment when Ukraine’s defence industry needs it most.
And only by successfully overcoming — or at least minimising — these challenges can Ukraine transform from a frontline importer of military equipment into a producer. So, what options do we have?
1. Maximum decentralisation of production. To reduce risks, Ukraine must move away from large, centralised factories toward a network of small, dispersed, camouflaged or underground production modules. This approach, already tested in the drone sector, should be extended to the manufacture of components for the Lynx, Gripen and ammunition. It would make targets less attractive to the enemy and increase the resilience of the defence industry.
2. Simplifying legislative regulation. This means adopting Western-style long-term contracting (for 5–10 years), which would allow companies to plan their investments. Permit procedures and certification for foreign systems should be simplified, while tightening responsibility and quality control in production.
3. Fighting corruption and ensuring transparency. No foreign manufacturer will come to a country where bribes or kickbacks are expected. Building a fully transparent defence contracting system and strengthening anti-corruption bodies — particularly in procurement — is essential to establish trust. Without fair play, European partners will not be able to integrate fully into our market.