Key facts
- Ukraine has 180 confirmed defense tech partnerships in manufacturing, R&D, and maintenance.
- German companies have the most partnerships with 36, followed by Denmark (18) and the U.S. (16).
- Unmanned systems are the most common focus, making up 26% of partnerships.
- 22% of defense tech deals have stalled due to export restrictions and regulatory hurdles.
- Private-sector partnerships are more active (96%) than those involving state-owned companies (62%).
- Ukraine's Defense Ministry has launched 'Build with Ukraine' and 'Build in Ukraine' initiatives.
International joint ventures in Ukraine's defense technology sector are expanding, with a new report from the Kyiv School of Economics Institute (KSE Institute) identifying 180 confirmed partnerships in areas such as manufacturing, research and development, and maintenance. A significant portion, one-third of these collaborations, were established in the past year, reflecting the maturation and consolidation of Ukraine's defense industry amid ongoing conflict. German companies are at the forefront, participating in 36 partnerships, followed by Denmark with 18 and the United States with 16. The ventures are heavily concentrated in unmanned systems (26%), air defense (17%), and artillery (10%), driven by the evolving nature of modern warfare.
These joint ventures aim to position Ukraine as a key player in the global defense landscape, moving beyond its role as solely an aid recipient. They facilitate the repair, production, and enhancement of Ukraine's defensive capabilities while providing international partners with access to critical wartime data and technology in an increasingly volatile geopolitical climate. However, the report highlights significant challenges, with at least 22% of deals and memorandums of understanding stalled due to complex export legislation and opaque regulatory processes involving multiple government agencies.
Olena Bilousova, co-lead of KSE Institute’s defense research center, noted that partners are seeking a streamlined process, but currently face numerous bureaucratic hurdles. "We still don't have this straightforward path from the memorandum to the working entity. Someone has to take their hands and guide them through each stage," she told the Kyiv Independent.
Partnerships involving state-owned companies are more prone to stalling (62% active) compared to those between private entities (96% active), attributed to greater bureaucracy and less flexibility in state firms. Marta Bukhtiiarova, also a co-lead at the KSE Institute's defense research center, pointed out that the Defense Ministry, facing a substantial funding shortfall, is struggling to manage the oversight of numerous partnerships. Germany's leading role is partly due to strong government support for its companies in navigating bureaucracy and a clear focus on specific technologies like deep-strike capabilities and intelligence.
Some international partners, lacking a full understanding of the wartime context, have set impractical conditions, such as requesting facilities far from the front lines. Export restrictions remain a major bottleneck, despite recent easing of rules for dual-use goods. Obtaining an export license is still a convoluted process, hindering companies' ability to grow, attract investment, and reduce costs by accessing global markets.
Ukraine's Defense Ministry has introduced initiatives like 'Build with Ukraine' (41 partnerships, including drone production in Germany) and 'Build in Ukraine' (61 companies across 60 partnerships, including BAE Systems' MRO facilities). These programs aim to enable Ukrainian companies to establish operations abroad and attract foreign investment, while offering international firms access to Ukrainian technology and front-line data. However, challenges persist, including a lack of clear infrastructure for guiding joint ventures, unresolved intellectual property rights frameworks, and foreign currency rules limiting Ukrainian companies' overseas investments and profit repatriation.