{"id":9286,"date":"2025-06-20T16:55:33","date_gmt":"2025-06-20T14:55:33","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=9286"},"modified":"2025-06-20T16:55:33","modified_gmt":"2025-06-20T14:55:33","slug":"kyiv-europes-military-capital","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2025\/06\/20\/kyiv-europes-military-capital\/","title":{"rendered":"Kyiv: Europe\u2019s Military Capital?"},"content":{"rendered":"

The European Union is now called upon to ensure Ukraine\u2019s capacity to withstand the Russian invasion\u2014even without U.S. military and intelligence support. At the same time, it must fund a rearmament that raises serious concerns for national budgets and adherence to EU fiscal rules. In the three years of war, Ukraine\u2019s military industry\u2014drawing on expertise dating back to the Soviet Union\u2014has grown significantly and can now produce weapons and equipment at far lower costs than the West. Consider drones: Kyiv manufactures them for $500 each, while those sent by European allies cost at least $1,800 and American ones up to $78,000. Even after the war ends, Ukraine could remain a reliable and cost-effective supplier of the arms Europe needs to ensure its security.<\/em><\/p>\n

 <\/p>\n

In early March 2025, the Trump administration decided to reduce its support for Ukraine. This shift by the United States has placed the European Union, the rest of Europe, and even some other democracies around the world in front of an urgent and previously unthinkable task: rearm to confront\u2014and hopefully deter\u2014Russia from a military attack, now that U.S. protection may disappear.<\/p>\n

Mutual Dependence Between the EU and Ukraine<\/strong><\/h3>\n

As U.S. military supplies and intelligence diminish, Ukraine becomes increasingly dependent on European financial and military support. In parallel, Kyiv\u2019s role as the first military deterrent against Russia becomes ever more crucial for Europe.<\/p>\n

European leaders appear to have recognized the gravity of the situation, as evidenced by the recent European Commission proposals in the “Readiness 2030” program. It is likely that several member states will invoke the national safeguard clause to exempt defense expenditures from the Stability and Growth Pact.<\/p>\n

Ensuring the Union\u2019s security now means addressing a dual challenge. On one hand, it requires supporting Ukraine\u2019s ability to resist the Russian invasion, even without U.S. military and intelligence aid. This implies providing Kyiv with more weapons and information services\u2014currently happening mainly through bilateral agreements between the Ukrainian government and individual EU states.<\/p>\n

On the other hand, it is essential to strengthen Ukraine\u2019s own defense production capacity. A major step in this direction was achieved through the so-called \u201cDanish model,\u201d which allows Copenhagen to support Kyiv not only by sending weapons but also by financing local military production.<\/p>\n

Unlike other approaches, the Danish model allocates funds not to purchase arms from third countries for shipment to Ukraine, but to invest directly in the Ukrainian defense industry to produce weapons, ammunition, and equipment locally. However, this model is not yet fully operational: according to Ukrainian estimates, an additional \u20ac15 to \u20ac18 billion will be needed in 2025.<\/p>\n

Rearmament and Budget Challenges<\/strong><\/h3>\n

Ukraine\u2019s importance for European security becomes even clearer when viewed from another angle: how to finance long-term rearmament in a continent that is aging and where social spending is steadily rising.<\/p>\n

Today\u2019s Russia is a weaker economic and military adversary than the former Soviet Union, making it plausible that defense spending will not return to Cold War levels.<\/p>\n

Nevertheless, even much more modest targets represent a significant challenge for many EU member states. If we accept NATO Secretary General Mark Rutte\u2019s target of allocating 3.7% of GDP to defense, EU countries within the Alliance would essentially need to double their average primary deficit (the gap between revenue and expenditure, excluding interest on debt).<\/p>\n

Currently, only three EU states\u2014Denmark, Greece, and Portugal\u2014could reach that threshold without incurring a primary deficit. Poland is a special case, showing how political choices\u2014and perhaps a long border with Russia\u2014can enable a country to exceed this target, at least in a context of rapid economic growth and low public debt.<\/p>\n

Regardless of any new proposals the European Commission may put forward in the coming months regarding \u201cadditional EU-level funding sources,\u201d many European capitals will still face a difficult choice: let debt rise, raise taxes, or cut spending in other sectors.<\/p>\n

A Growing Military Industry<\/strong><\/h3>\n

Here Ukraine comes into play again. It was once one of the main arms production centers in the Soviet Union. Today, with nearly depleted military stockpiles, Kyiv has had to quickly rebuild its defense industry\u2014both to compensate for insufficient Western aid and to bypass restrictions imposed by some allies on striking targets inside Russian territory. Nonetheless, it has achieved surprising results, especially in drone production.<\/p>\n

Beginning in late 2023, with the Brave1 initiative, Ukraine launched a program to finance and logistically support its defense startups. In 2024, it domestically produced 96% of the drones deployed on the battlefield\u2014over 1.5 million. In 2025, it is expected to manufacture another 4.5 million, including small FPV (First-Person View) and kamikaze drones. Production is also planned for 30,000 long-range attack drones and 3,000 missile drones and cruise missiles.<\/p>\n

The production cost of a Ukrainian FPV drone is about $500\u2014a remarkably low figure by Western standards. Consider that the 30,000 FPV drones the Drone Capability Coalition (composed of the UK, Denmark, the Netherlands, Latvia, and Sweden) plans to send to Ukraine cost around \u20ac1,800 each, totaling \u20ac54 million. But even this is a major saving compared to U.S. drones: in 2024, the Pentagon estimated the cost of each Switchblade 300 drone sent to Ukraine at $78,369.<\/p>\n

This ability to produce drones and other arms cheaply depends partly on technological innovation but mainly on Ukraine\u2019s choice to use low-cost, yet equally effective, components and materials.<\/p>\n

Drones are undoubtedly the military revolution of our time. But on the battlefield, conventional weapons like artillery remain critical\u2014especially when guided in real-time by drones.<\/p>\n

Unsurprisingly, several NATO countries are showing growing interest in Ukrainian military production. Denmark, Norway, Sweden, Lithuania, Iceland, and the European Union\u2014on a bilateral basis and in line with the \u201cDanish model\u201d\u2014have allocated part of their financial aid (including proceeds from frozen Russian assets) to purchasing arms made in Ukraine and transferring them directly to Ukrainian forces. This scheme was initially applied to the production of 155 mm 2S22 Bohdana self-propelled howitzers (SPH). The model allows for rapid delivery, low costs, and logistical support close to the front lines. Currently, Ukraine produces about 16 Bohdana 2S22 units per month\u2014nearly 200 per year\u2014at a unit cost of about \u20ac2.3 million. It is the cheapest long-range self-propelled artillery system among those produced in Western countries, and even competes with the Russian 2S19 Msta-S, which is less advanced and has a shorter range.<\/p>\n

Although several EU states continue to produce SPHs independently, the Ukrainian offering stands out for its highly competitive price. And the signs of deepening integration between the Ukrainian and European military industries are already visible. Despite the war, major European defense companies\u2014such as KNDS and Rheinmetall\u2014are building weapon maintenance and production facilities directly in Ukraine.<\/p>\n

Meanwhile, French company Thales has launched a joint venture with Ukrainian firm Ukroboronprom to develop and manufacture air defense systems, radar, electronic warfare technologies, tactical communications, and electro-optical sensors. German company Diehl Defense has also announced plans to produce air defense systems in Ukraine. In other words, the expansion of Ukraine\u2019s military industry\u2014and its integration into Europe\u2019s industrial system\u2014is already well underway.<\/p>\n

Will Europe\u2019s Weapons Be Built in Ukraine?<\/strong><\/h3>\n

It remains difficult to predict how the war in Ukraine will end. However, if the country survives as a fully independent state and retains control of most of its 1991 territory, it is highly likely to remain Europe\u2019s main arms producer.<\/p>\n

Even after the conflict ends, Ukraine\u2019s geographic proximity to Russia will make it necessary to maintain a large army, creating constant demand for military supplies.<\/p>\n

If we also assume Ukraine\u2019s gradual integration into the European Union\u2014possibly leading to full membership\u2014Kyiv\u2019s role as Europe\u2019s defense industry hub can only grow. This is especially true given its ability to produce military equipment at competitive prices, which Europe will increasingly need to ensure its security.<\/p>\n

 <\/p>\n

This analysis was developed in the Institute for European Policymaking Policy Brief \u201cIncreasing European Productivity, Resiliency and Defence Production (and how to pay for it).\u201d<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The European Union is now called upon to ensure Ukraine\u2019s capacity to withstand the Russian invasion\u2014even without U.S. military and intelligence support. 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