KSE Institute presented a study on how Ukraine and its partners can move from separate military support formats to a more systemic model of defence-industrial cooperation.

The study analyses how the main models of this cooperation work. Building on bilateral intergovernmental agreements, they envisage  joint manufacture and maintenance of equipment in Ukraine under the Build in Ukraine framework, as well as bringing Ukrainian technologies into production facilities in partner countries, provided by the Build with Ukraine track. It pays particular attention to business-to-business partnerships between Ukrainian and foreign companies, partner-state funding for Ukraine’s defence industry, technology transfer, export restrictions, and the barriers that prevent some agreements from turning into practical projects.

Sustaining Ukraine’s Defence Forces can no longer depend mostly on military aid deliveries from allies. Ukraine needs a more viable system that can produce more, repair equipment faster, replenish weapons stocks more reliably, and better connect battlefield needs with industrial output. This cooperation is mutually beneficial if underpinned, among others, by actual frontline demand, a sustainable financial mechanism and an institutional backbone. In such a case, Ukraine brings combat experience, battle-tested technologies, and the ability to rapidly adapt solutions based on frontline use, while partners bring financing, production scale, more advanced technologies, and access to wider industrial networks.

The study describes several key cooperation formats. Build in Ukraine brings foreign companies to produce, repair, maintain, or co-develop systems directly on Ukrainian territory. As of June 2026, this track involved around 41 foreign companies and 60 partnerships with Ukrainian manufacturers. The most developed part of this model is the maintenance and repair of Western-supplied equipment used by Ukraine’s Defence Forces. Localised production is most advanced in ammunition, components, unmanned systems, and artillery.

Build with Ukraine works in the opposite direction. It brings Ukrainian technologies into partner countries for joint production, usually under intergovernmental agreements and with funding from partner states. This track now covers around 41 partnerships in unmanned systems, ground robotics, missiles, naval systems, electronic warfare, components, and air defence. Initial output is expected to go to Ukraine’s needs, while later outputs can also strengthen the defence capabilities of partner countries.

A separate track is the Drone Deal. It can be seen as the next stage of the Build with Ukraine approach, especially in drones, electronic warfare, air defence support, and military software. The model provides for a 50/50 split of production output. Half goes to Ukraine’s frontline needs, and half goes to partner states for their own armed forces and reserves. The format is now in an active scaling phase and involves around 20 countries at different stages of engagement.

KSE Institute analysed overall trends in business-to-business partnerships between Ukrainian and foreign companies. As of June 2026, at least 180 such partnerships had been initiated since the start of the full-scale invasion, while the real figure is likely higher, as companies often do not disclose cooperation details for security reasons. The most active partners are companies from Germany, Denmark, and the United States. Germany accounts for 20% of such partnerships, Denmark for 10%, and the United States for 9%.

Around 22% of partnerships have not progressed to practical implementation. This most often happens at an early stage, when companies sign letters of intent or memoranda of understanding but do not move on to working projects. In some cases, such documents serve visibility purposes and help publicly signal interest in cooperation, but they do not, in themselves, guarantee the successful launch of joint contracts. At the same time, 45% of all identified partnerships were agreed in Q4 2025 or later, so it is still too early to assess their actual progress.

Unmanned systems remain the most popular segment, accounting for 26% of all partnerships. They are followed by air defence at 17% and artillery and GMLRS at 10%. In drones, cooperation more often focuses on R&D and production, while in air defence and artillery, it is more often linked to maintenance, repair, and support for equipment supplied to Ukraine by its allies.

The study also shows a difference between private and state-owned Ukrainian companies. Partnerships involving private Ukrainian manufacturers move to practical steps more often — around 96%, compared with 62% among partnerships involving state-owned enterprises. Private companies are especially visible in unmanned systems, while state-owned enterprises dominate in more complex and capital-intensive areas, including air defence, but more often face bureaucratic constraints and slower approval procedures.

Partner states also finance Ukraine’s defence production directly. The most structured format is the coordinated model (often referred as Danish model), under which a partner state funds the procurement of Ukrainian products through a clear channel, in coordination with Ukraine’s Defence Procurement Agency and with additional control procedures. In 2025, around €1.4 billion was directed to Ukraine’s defence industry through this mechanism. This approach gives producers a more predictable order book, shortens delivery times for the military, and reduces pressure on the state budget.

The key conclusion of the study is that Ukraine and its partners already have many tools for defence cooperation, but these tools do not yet work as a coherent, clear, and scalable system. The main obstacles include a lack of funding, the absence of a single entry point for partners, unclear rules, limited administrative capacity, complex export procedures, dependence on imported components, and an excessive reliance on manual effort to move individual agreements forward.

KSE Institute recommends that partners build financing around verified frontline needs, make end-user feedback mandatory before scaling products, simplify companies’ entry into Ukraine through dedicated contact points, and strengthen insurance, guarantee, and risk-sharing instruments. For Ukraine, priorities should include clearer rules, stronger coordination between institutions, faster procedures, more transparent export mechanisms, and greater capacity to support partnerships from political announcement to actual production.