"Technologies in exchange for money": why Ukraine is stalling defense partnerships and what to do about it
Drone Industry
Ukraine’s partnerships with the United Kingdom, Denmark, the Netherlands, Sweden, and the Baltic states have already cemented a new cooperation model — "funding in exchange for technologies." This is not a classic barter deal but a modern logic of co-development and data sharing: EU countries gain access to Ukrainian know-how, while Ukraine gains access to markets, funding, and a manufacturing base. Yet behind this politically neat picture lies a systemic problem: Ukrainian laws and bureaucracy often block exactly what partners are ready to finance.
The UK has already launched a joint program to produce Octopus interceptors and an FPV drone coalition with Latvia. Denmark has opened its production facilities to Ukrainian solutions, Sweden has doubled its investments in innovations for Ukraine, and Lithuania has committed assistance worth a quarter of a percent of GDP.
These examples show that Ukraine can be not only a frontline, but also a laboratory for Europe’s defense technologies. But when it comes to formalizing agreements, "the brakes" come on.
If Ukraine wants to be a leader in Europe’s defense, it must start with policy.
Ukraine has a law in force that effectively bans the transfer of military technologies without complex assessments and approvals. As Audrius Butkevičius, the first defense minister of independent Lithuania and now a military-technology expert, explains, even political will does not move the process forward.
"Ukraine has a law that prohibits the transfer of military technologies. And despite the political cooperation documents signed between Lithuania and Ukraine, once it comes to practice, everything stops," Butkevičius says.
According to him, Lithuanian companies are ready to invest, set up joint production, and even provide funding, but Ukrainian partners fear breaking the law. "Your manufacturers are afraid they’ll fall under this law, and for that reason, the projects simply don’t start," the expert explains.
The former minister acknowledges that interest in Ukraine across Europe is huge but working with it is hard. "We are not among those who think they can teach you better. On the contrary, we understand Ukraine has combat experience that Europe does not have. But when it comes to real action, bureaucracy and fear stop everything."
Butkevičius says Lithuania is trying to create "safe production sites" for Ukrainian companies to bypass the risks posed by Ukrainian legislation while preserving cooperation. But for now these are only isolated initiatives, not state policy. "Right now Ukraine has no policy of its own in this area. Enthusiasts like me come to you and find the advantages of your technologies on our own. But the state is not using this potential," he stresses.
In the expert’s view, after 2014, Ukraine built a unique body of combat-driven developments, from drones to EW systems but did not build a policy for exporting and promoting those technologies.
"You have experience no European country has. You could become a leader in military technologies, but you don’t even have a basic policy to promote them," Butkevičius says.
He notes that in Europe, they often do not even understand what some Ukrainian developments are for. "Sometimes it’s simply impossible to explain to Europeans why this is needed — they have never seen how it works on the front line." This is the core of the problem: Ukraine’s experience is unique, but there is no system to communicate it.
"Working is impossible even because people are afraid of being accused of ‘technology transfer,’" Butkevičius notes. "The war has been going on for eleven years, yet there is no state policy in this field."
The former minister compares the situation to 2014. Back then, he says, "Ukrainian engineers worked with enthusiasm and chaos, but at least with faith." Now it is the opposite: the system has become heavy, but trust is gone. For the "technology-for-funding" model to work, the state needs to change not people, but the architecture of processes. This is not about selling blueprints, but about participation in production: the partner gets controlled access to data, and Ukraine gets a share in the joint IP.
Butkevičius stresses that even in the EU this works through special security corridors, where documentation, know-how, and prototypes are shared within a consortium. Ukraine needs to create the same procedures. "If Ukraine wants to be a leader in Europe’s defense, it has to start with policy. Not with wars, but with decisions," the Lithuanian expert concludes.
Brain drain and resource outflow
On the other hand, a Ukrainian specialist — President of the Tech Force in UA and CEO of FRDM Vadym Yunyk — sees the situation from a different angle:
"There are many states that still believe Ukrainians are ‘exaggerating’ or ‘don’t fully understand the picture,’ and that outsiders see it better. That is exactly why so many countries move so slowly: they still think they know how to fight wars, even though reality has long since changed. The Baltics are the exception here. Now, regarding Ukrainian legislation that he mentioned, that processes are stuck even though laws have been adopted. There are so many regulations that moving forward is extremely difficult. This is a fundamental inconvenience for foreign partners: to work with technologies, you don’t just have to ‘give birth’ to them, you also have to study them, refine them, and adapt them. And it’s important to understand this: even if the entire team of Ukrainian engineers moved to another country tomorrow, technologies would not appear there instantly. Ukraine would lose human capital, and the new country would spend a year or more just learning."
Yunyk argues that this is fundamentally disadvantageous for Ukraine. In his view, it makes more sense not to relocate turnkey production abroad, but to export specific finished products and the technologies to manufacture those exact products.
But many countries want it differently. They want production to move to them permanently. "The Danes said it outright: they don’t believe Ukraine will win the war, and they fear the equipment could ‘end up in Russia.’ Under that cover, they want to take the intellectual and technological base for themselves. On the surface it looks like peacekeeping logic, but in essence it is a classic brain drain and resource outflow."
This raises the question: can these interests be aligned? After all, they have their own requirements, we have ours, and that slows the process down. Yes, it is possible, Yunik says. The simplest way is to create transparent and fast rules for exporting finished products. For example, the state guarantees the purchase of a thousand units per year. Then a manufacturer can plan production and sign international contracts without bureaucratic chaos.
Read more: Arms exports "for our own"? What lies behind president’s statements and what industry really expects
The problem now is that getting export permits approved can drag on for a year. But war moves on a different timeline. In two years, the product we are trying to export may already be obsolete. And even if someone wanted to bring this equipment back to Ukraine later, we would no longer need it. That is why the export mechanism has to work fast and predictably, the way it does in Europe. For instance, in Estonia, a manufacturer can formalize a sale to Latvia in a month. They have a minimal number of approval loops, and everyone knows what tomorrow will look like, the expert notes.
For a Ukrainian manufacturer, the ideal model is to stay in Ukraine and sell directly to foreign markets. Business survives on profit. As for the export law, the mechanism already exists here — it is simply blocked. The export commission needs to be brought back to life, a head appointed, and the process relaunched at least in the form that already exists.
The stalling of the process has already done a lot of damage to domestic manufacturers. "The thing is, European countries’ requirements for weapons are very strict, and Ukrainian ‘combat proven’ alone will not be enough. Getting through the testing system and the procedure for adoption into service will take long months, if not years," DEVIRO says. The company has been developing, designing, and manufacturing UAVs and related software since 2014.
The company is convinced that the path toward bringing Ukrainian weapons closer to Europe should have started much earlier: providing a roadmap for integrating Ukrainian arms makers into state programs with European investment, aligning the defense sectors, and maintaining a constant dialogue with partners through defense associations. "We are losing time, while the enemy hunts our production sites and warehouses every day. Weapons exports are not so much about money as about strengthening Ukraine on the international stage, enabling technological development, and surviving the hardest period of our statehood."
As Vadym Yunyk stressed, "We Ukrainians need to understand the main thing: we have to protect the country’s future. Sure, Lithuania can offer money, citizenship, medals, comfort. But if all engineers and designers simply leave, it will be a blow not to business, but to Ukraine’s future. So the first priority is to create conditions for business to operate here, and to do everything possible to ensure Ukraine stands firm. Without that, any other development loses its meaning."
