KSE Institute has published a new study in its series on European security, From Words to Action: Barriers to Defense Industrial Collaboration between Ukraine and Europe. The authors examine why defense industrial cooperation between Ukraine and its European partners has fallen short of expectations, and offer low-cost, high-leverage policy recommendations to unlock mutually beneficial investment.

Bridging the gap between rhetoric to results. Since 2022, political leaders have frequently promised deep defense industrial cooperation with Ukraine, yet tangible progress lags behind these goals. While Ukraine has developed a world-class ecosystem for unmanned systems (UxS) and counter-UxS, much of its industrial capacity remains idle due to limited capital. Meanwhile, European nations are rearming but struggle with defense industrial deficiencies. Ukraine’s defense industrial base is strongest in areas where Europe has struggled to keep up, making Ukraine’s integration into the broader European security architecture critical for the continent’s security.

This report, based on 14 interviews with stakeholders from the public and private sectors in the EU and Ukraine, identifies foreign perceptions of sticking points that prevent Ukrainian innovations from scaling through European partnerships.

Key findings on barriers to collaboration include:

• De facto export ban: The top barrier to cooperation has been Ukraine’s effective prohibition on defense exports. A limited number of joint ventures have emerged through government-to-government negotiations but these are inherently difficult to scale. The Ukrainian government has begun loosening these restrictions in 2026, however.

• Misaligned incentives: European stakeholders view Ukrainian policymakers as wary of losing a comparative advantage or the optics of exporting weapons during a war, while European firms require procurement guarantees or certain returns that are currently unrealistic.

• Intellectual property concerns: Concerns regarding the protection of technological innovations and trade secrets remain a major deterrent for Ukrainian defense tech firms.

• Regulatory and bureaucratic hurdles: Burdensome permitting processes in Europe slow down project implementation, while a lack of standardized business practices in Ukraine increase due diligence costs for potential partners.
• G2G limitations: Current successes are largely driven by government-to-government (G2G) negotiations, which are difficult to scale and often less efficient than market-driven outcomes. Denmark has created a pipeline to facilitate joint ventures through dedicated legislation, while other European partners process joint ventures on a case-by-case basis.

Policy recommendations. To establish a sustainable path for joint defense production, the report proposes the following actions:

For Ukraine:

• Replace the de facto export ban with a transparent and stable path to export approval, allowing private firms to enter joint ventures in practice. Defence City is a promising framework in this regard, but it must be consistently supported.

• Educate firms on legal methods for IP protection and harmonize regulations with EU standards to reduce the fear of technology loss.

• Assist defense firms in standardizing their financial planning and ownership structures to reduce due diligence costs for potential European partners.

For Ukraine’s European partners:

• Streamline regulatory approvals (e.g., for production and exports of military goods to Ukraine) for partnerships with Ukrainian defense firms—following Denmark’s model of pre-vetting and approving specific companies for cooperation.

• Provide financial incentives for partnerships, including insurance backstops, procurement guarantees, and tax breaks to shift some of the public benefit of defense capability to the private sector.

• Support firms’ due diligence efforts—with on-the-ground knowledge of the Ukrainian business and legal environments, and verification of ownership structures—through embassies, chambers of commerce, and industry groups.