[Joint House and Senate Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
119th Congress Printed for the use of the
1st Session Commission on Security and Cooperation in Europe
________________________________________________________________________
From Production to Procurement: How
Europe and Ukraine Are Transforming
Defense Supply Chains
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
DECEMBER 10, 2025
Briefing of the
Commission on Security and Cooperation in Europe
Washington: 2026
Commission on Security and Cooperation in Europe
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Legislative Branch Commissioners
SENATE HOUSE
ROGER F. WICKER, Mississippi Chairman JOE WILSON, South Carolina
SHELDON WHITEHOUSE, Rhode Island Co-Chairman
Ranking Member STEVE COHEN, Tennessee Ranking Member
JOHN BOOZMAN, Arkansas ROBERT ADERHOLT, Alabama
KATIE BRITT, Alabama EMMANUEL CLEAVER, Missouri
JOHN FETTERMAN, Pennsylvania LLOYD DOGGETT, Texas
RUBEN GALLEGO, Arizona JAKE ELLZEY, Texas
JEANNE SHAHEEN, New Hampshire RICHARD HUDSON, North Carolina
THOM TILLIS, North Carolina GREG MURPHY, North Carolina
MIKE ROUNDS, South Dakota MARC VEASEY, Texas
Executive Branch Commissioners
DEPARTMENT OF STATE, to be appointed
DEPARTMENT OF DEFENSE, to be appointed
DEPARTMENT OF COMMERCE, to be appointed
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From Production to Procurement: How Europe and Ukraine Are Transforming
Defense Supply Chains
December 10, 2025
Page
COMMISSION STAFF PRESENT
Viktor Olah Sallai, Policy Fellow, Commission on Security and
Cooperation in Europe ........................................... 1
PARTICIPANTS
Major General Karsten F. Jensen, Defense Attache, Royal Danish
Embassy in the United States .................................... 2
Kateryna Bondar, Fellow, Wadhwani AI Center at the Center for
Strategic and International Studies ............................. 4
Sophia Besch, Senior Fellow, Europe Program at the Carnegie
Endowment for International Peace ............................... 6
From Production to Procurement: How Europe and Ukraine Are Transforming
Defense Supply Chains
----------
December 10, 2025
Commission on Security and Cooperation in Europe
Washington, DC
The briefing was held from 2 p.m. to 3:07 p.m., Room 2358-C,
Rayburn House Office Building, Viktor Olah Sallai, Policy Fellow,
Commission on Security and Cooperation in Europe, presiding.
Mr. Sallai: Good afternoon, everyone. My name is Viktor Olah, and I
am a policy fellow at the U.S. Helsinki Commission. I want to thank
everyone for joining us for today's briefing on how Europe and Ukraine
are transforming defense supply chains.
As Russia's full-scale war against Ukraine enters its fifth year,
Kyiv faces an increasingly stark challenge. Ukraine's armed forces are
struggling to supply their troops and push back against the relentless
violence and destruction inflicted by Moscow.
Yet, at the very same time, Ukraine is home to one of the most
innovative and adaptive defense industrial sectors in Europe, an
ecosystem that has demonstrated remarkable ingenuity under fire but
continues to operate far below its full capacity. Through my
colleagues' and I's discussions with Ukrainians, we have learned that
what they lack is not ideas or talent but capital, predictability, and
scalability.
Over the past years, Europeans, led by Denmark, have pioneered new
responses to that challenge. Rather than relying on ad hoc donations
and purchases from national stockpiles, the Danish model identified new
ways to invest directly in Ukrainian firms. The mechanism empowered
Ukrainians to expedite procurement and production of urgently needed
systems, from artillery and ammunition to drones and electronic warfare
equipment. Many European nations followed suit, including through
variations that include joint production with Ukrainian companies.
Today's panel will help us understand how these mechanisms work,
what is required to scale them, and how they can be adapted by other
allies, including the United States, and what role they might play in
securing a peace that lasts.
We have the great pleasure of hearing from three panelists whose
expertise spans the operational, industrial, and strategic dimensions
of this challenge. Their testimonies illuminate not only how Europe and
Ukraine are transforming defense supply chains today but also how these
innovations can shape the future security architecture of the
continent.
After I introduce them, they will deliver their remarks, and we
will continue with questions.
Speaking first, we will have Major General Karsten F. Jensen. Major
General Jensen assumed the position of Danish defense attache to the
United States in 2025. He has previously served as a national deputy in
the F-35 Joint Program Office and as a branch head for Allied Command
Transformation in Norfolk. In addition to his service abroad, Major
General Jensen has a distinguished service history in the Danish air
command and in the Danish joint defense command. He has been deployed
to Cyprus, Kyrgyzstan, Afghanistan, Kuwait, and Iraq.
He will be followed by Dr. Sophia Besch. Dr. Sophia Besch is a
senior fellow in the Europe program at the Carnegie Endowment for
International Peace, her area of expertise being European defense
policy. Prior to joining Carnegie, Sophia was a senior research fellow
at the Center for European Reform in London and Berlin. She has also
spent time at the American German Institute researching transatlantic
defense industrial relations. Earlier in her career, she worked as a
Carlo Schmid Fellow in NATO's policy planning unit and as a researcher
for the NATO Parliamentary Assembly. She holds a doctorate in European
studies from King's College London and degrees in international
relations and international security from Sciences Po Paris and the
London School of Economics.
Rounding out the panel, we have Kateryna Bondar. Kateryna Bondar is
a fellow with the Wadhwani AI Center at the Center for Strategic and
International Studies. Before joining CSIS, she was an advisor to the
government of Ukraine, where she was responsible for the implementation
of reforms in defense, the financial sector, and the innovation
ecosystem. Prior to that, she also managed technical assistance
projects implemented in the Ministry of Defense of Ukraine and worked
in the National Reforms Council under the president of Ukraine. She has
a bachelor's and master's degree in international relations from Taras
Shevchenko National University of Kyiv.
Now I will turn it over to Major General Jensen to give his opening
statement. Once everyone has had the opportunity to give remarks, I
will ask a round of questions, and then we will open it up to the
audience.
Mr. Jensen: Thank you, Viktor. Thank you for the introduction, and
good afternoon, everybody.
I would like to thank you for hosting and inviting me to this
briefing on a matter which is very important to Ukraine, to Europe, to
the alliance, and to Denmark. Since the beginning of the Russian full-
scale invasion, the Danish government and the Danish people have been
steadfast in their support for Ukraine.
As such, Denmark is one of the countries with the highest monetary
level of donations per capita. We consider a robust Ukrainian defense
to be integral to Danish security. Therefore, while increasing our own
military spending to reach the five percent pledge, we simultaneously
support the Ukrainian defense.
From a Danish perspective, strengthening our own defense and
supporting Ukraine is not mutually exclusive but part of the same
solution to strengthen European defense and security. In support of and
in cooperation with Ukraine, last year, we initiated the so-called
Danish model for procurements. The model has proved to be a defense
industrial success, delivering capabilities to the Ukrainian defense
effectively, in time, and boosting the Ukrainian defense industry at
the same time.
This model is, in large, successful due to its novel approach to
procurements and its combination of solidarity with long-term strategic
thinking. Through the model, Denmark donates directly to the Ukrainian
defense industry instead of relying solely on purchasing military
equipment from third countries or donating from national stockpiles.
The model can finance either existing contracts, reimburse expenses
held by the Ukrainian authorities, or new contracts entered by the
Ukrainian Defense Procurement Agency. This allows Denmark to support
Ukraine with donations based on the priorities and needs of Ukrainian
security and defense forces.
The model is based on a government-to-government-to-business
framework. Such a framework enables the Ukrainian Defense Procurement
Agency to use Danish donations and acquisitions directly from the
Ukrainian industry. This does more than deliver weapons and
capabilities here now. It helps build an industrial foundation that
Ukraine can rely on for many years to come, while it keeps the
Ukrainian society going during the war.
The result-based model proved successful in its pilot project,
which delivered 18 Bohdana artillery pieces solely funded by Denmark.
The order was placed in July 2024, and all pieces were battle-ready in
September of the same year.
In 2024, the model supported Ukraine with approximately six hundred
twenty seven million, and in 2025, we expect the level of support to
reach close to two billion. However, the success of the model is not
measured by its amount of funding, but the fact that all provided
donations were delivered and integrated at the expected cost and on
time.
The model leads to faster and more targeted deliveries while
strengthening Ukraine's industrial capacity. At the same time, the
model ensures appropriate levels of transparency with Danish
authorities closely monitoring each project, ensuring traceability,
documentation, and robust anti-corruption mechanisms.
These include validation processes, Danish authorities verifying
deliveries, and audit procedures. To underscore the Danish approach
regarding concerns for potential corruption in our donations, let me be
frank.
Yes, with respect to approving the Danish model in the Danish
parliament, corruption has been a concern. Nevertheless, our parliament
approved the model unanimously, not accepting corruption but accepting
risk, realizing that doing nothing is not an option.
As highlighted by the NATO Secretary General Mark Rutte last week,
the continuous flow of weapons and support to Ukraine is important. To
this end, the Secretary General highlighted the Danish model as a
useful approach to address the needs of the Ukrainian defense forces.
While this model is called the Danish model, our allies have
supported Ukraine through the same framework. This includes donations
from the European Union, from Canada, Sweden, Norway, and Iceland, all
of which were donated through the mechanisms and procedures of the
Danish model. We will continuously encourage other allies and partners,
nations, to join and improve the existing model.
In conclusion, I will reiterate the Danish model is not just
military support; it is a partnership, a partnership in which Denmark,
along with allies and the EU, invests in Ukraine's ability to defend
itself, strengthen its economy, and build a more resilient future.
It demonstrates how targeted support can be both principled and
practical, and how partners can help Ukraine while also preparing for
the security challenges of tomorrow. I look forward to your questions,
and thank you again for the opportunity to speak.
Mr. Sallai: Thank you very much, General.
Sophia?
Ms. Besch: Thank you very much, Viktor, and thank you for the
invitation to this briefing.
Let me take a step back. In its support of Ukraine, I do see Europe
now moving beyond emergency assistance and toward the long-term
integration of Ukraine into its defense industrial ecosystem. Early on
in the war, European governments were focused on rapid response, on
keeping Ukraine supplied from national stocks or emergency procurement.
What began in 2022 as a set of reactive crisis instruments is now
starting to evolve into something more strategic.
Defense industrial partnership with Ukraine offers a path to move
from episodic aid to structured rearmament of both Ukraine and Europe.
Collaboration can create predictable and scalable ways of rebuilding
Ukrainian military capacity while embedding the country more deeply in
European supply chains and its broader innovation ecosystem.
The strategic logic behind this is fairly straightforward. A
capable and rearmed Ukraine is Europe's first line of defense and
strengthens deterrence against Russia, and industrial capacity is
central to that goal. A Ukraine that can equip, repair, and sustain its
own forces offers the most credible security guarantee.
Collaboration also aligns closely with Europe's industrial self-
interest. Working with Ukrainian defense players provides Western firms
with operational insight and access to a combat learning environment
that is not available anywhere else in NATO right now.
All this remains relevant beyond a potential cease-fire. Ukraine is
set to remain a military and defense industrial powerhouse and first
line of defense against Russia, and creating robust industrial
cooperation pathways now will serve European security for years to
come.
European MODs and EU institutions absolutely recognize the value of
closer industrial ties with Ukraine, and the political will for greater
integration is strong. On the ground, however, firms do still face
regulatory ambiguity, financial constraints, administrative burdens,
and, of course, security risks, and these frictions have all slowed
progress and have so far prevented Europe and Ukraine from realizing
the full strategic payoff of cooperation.
That said, it is my sense that 2025 has been a breakthrough year
that began to unlock many of the most persistent restrictions to
Europe-Ukraine defense industrial cooperation and that there is real
momentum building behind this effort now.
Governments and firms in Europe are experimenting with several
pathways for industrial cooperation. The most prominent model of
industrial support has been the direct financing model, or the Danish
model, which you have already heard about in detail, so I will not go
into it too much.
Let me just reiterate that this approach has become an extremely
effective way to arm Ukraine while strengthening its defense industrial
base. We have seen variations of the Danish model emerge recently, such
as the Dutch model, which channels payments directly to Ukrainian
manufacturers and is more focused on startups, whereas the Danish
initiative has focused more on heavy equipment.
Direct financing is highly valued in Ukraine because it gives Kyiv
maximum flexibility and is responsive to the immediate operational
needs of the military, and in Europe, it is highly valued, especially
by those governments without a strong domestic defense industrial base
at home.
The main caveat, aside from intense accountability burdens, is that
this remains a government-financed wartime emergency instrument. Unless
the direct financing models evolve into longer-term defense industrial
partnerships, they could, in theory, end fairly abruptly, which makes
sustainable planning more difficult.
A second pathway of collaboration is production and co-production
inside Ukraine. We have seen some initiatives here, particularly in
ammunition production and in maintenance, repair, and overhaul of
European-donated equipment. The benefits are clear. Production in
Ukraine can lower costs, it can build up local knowledge and expertise,
and, crucially, it brings capabilities much closer to the front.
Overall, however, collaboration inside Ukraine has fallen short of
wartime requirements because European firms, particularly in the
ammunition space, face financial constraints. Ukraine often cannot
sustain higher volume production.
They also have to contend with persistent security challenges from
Russian strikes on industrial facilities to the practical hazards of
moving personnel and material in a war zone, and the cost of war risk
insurance for European employees.
Then added to this are significant bureaucratic hurdles, a highly
decentralized Ukrainian defense ecosystem, and frequently shifting
capability requirements, which all complicate long-term planning.
That said, there are examples of smaller, innovative European firms
successfully navigating this, especially in the one sector that stands
out as the most dynamic segment of defense-industrial partnership
between Europe and Ukraine. I am referring, of course, to uncrewed
platforms--drones--but also the broader electromagnetic warfare
ecosystem.
As you know, battlefield learning cycles in Ukraine, the speed of
iteration is extraordinarily fast, and European firms that fail to do
the learning on the ground increasingly find themselves unable to meet
the emerging standards that are set by Ukrainian certification
procedures, and so collaboration in this area is essential for European
firms if they want to remain competitive. It is telling that military
leaders from NATO frontline states will now routinely ask whether
systems have been tested and proven in Ukraine rather than taking
industry claims at face value.
For that reason, Ukraine has become a magnet for technology firms,
drone firms, and those providing enabling capabilities that are keen to
learn more from Ukraine's extremely successful model of civil-military
integration.
Some European early mover firms have already successfully built
plants in Ukraine, hired a local workforce, and acquired stakes in
Ukrainian tech startups, often on their own initiative. Ukrainian drone
companies, for their part, are extraordinarily capable but heavily
capital-constrained.
Many of them are operating far below capacity, and to support them,
Ukraine is now opening export facilitation offices in Berlin and
Copenhagen. The idea is to encourage not just the export of products
but also investment in Ukrainian production and joint facilities
abroad.
That leads me to the third and last pathway for collaboration that
I wanted to discuss today, and potentially, this is the most scalable.
That is joint production/joint ventures on NATO soil. Collaboration
inside Europe provides far safer operating conditions and the ability
for Ukrainian firms to scale in ways that might not be possible inside
Ukraine during wartime.
This pathway is still fairly new, but several Western partners have
initiated first joint ventures. Denmark, again, stands out as the first
mover under the ``Build with Ukraine'' initiative. They have recently
helped a Ukrainian rocket and drone fuel firm establish operations
domestically. The U.K. has recently launched a licensing deal for
interceptor drones that will become the first Ukrainian combat system
licensed for production in a NATO country, but others, I believe, are
set to follow.
One last point to make before I close on a very recent EU
development, and that is on the EU's new defense loan facility, SAFE.
SAFE is designed to mobilize large-scale investment in European defense
production, and it explicitly allows and encourages participation by
Ukrainian firms.
Most of the recently published member states' plans for SAFE
already include provisions for the involvement of Ukrainian firms, and
if it is implemented effectively, SAFE could accelerate defense
industrial integration, but it will require navigating significant
structural regulatory barriers to the European market.
Let me end with this. We are now facing another inflection point
for the war in Ukraine, with negotiations both over a potential cease-
fire and over the reparations loan based on Russian frozen assets
ongoing. Quite apart from the results of these processes, for Europe,
the logic is clear. Ukraine is its forward line of defense, and
integrating Ukraine into Europe's defense industrial base is an
investment in the continent's long-term security.
This is a long-term project. It will require years of commitment
and resources, but strengthening defense industrial partnerships with
Ukraine is how Europe turns today's crisis response into a lasting
strategic advantage.
Thank you, and I look forward to your questions.
Mr. Sallai: Thank you, Sophia.
Kateryna?
Ms. Bondar: Dear Chair, members of the Commission, thank you so
much for the opportunity to testify today. The views I express here are
my own, and they do not reflect the views of CSIS or the Ukrainian
government.
Over the past four years of Russia's full-scale invasion, the
Danish model has become one of the main innovations in sustaining
Ukraine's military readiness. Let me dig deeper a little bit on the
problem that the Danish model was designed to solve.
Ukraine's defense industry has expanded at a pace few have
anticipated. Ukraine's annual defense production capacity skyrocketed
from about one billion [dollars] in 2022 to over thirty-five billion
[dollars] by mid-2025, meaning that the country can now produce thirty-
five times more weapons and equipment each year.
Production capacity does not matter if the government does not have
funds to buy that equipment. Just to give you an example, by early
2024, Ukraine could afford to procure only six billion [dollars] worth
of equipment despite having closer to twenty billion [dollars] of
available capacity.
In other words, two-thirds of possible production sat idle because
the State simply did not have funding to procure that equipment. At the
same time, partner nations were running out of equipment they could
transfer from their stockpiles, and their industrial bases could not
scale quickly enough to meet Ukraine's growing operational needs.
It was in this context that the Danish government pioneered a new
approach. Denmark began paying Ukrainian manufacturers directly to
build systems for the Ukrainian armed forces. The effect has been
transformative.
In 2024, partners spent about $400 million through a family of
mechanisms, which were called the Danish model. I will expand on this a
little bit later, and it was mentioned before already.
In 2025, the number rose to six billion [dollars]. To put that in
context, Ukraine's entire weapon procurement budget this year is ten
billion. The Danish model and its variants added another six
billion[dollars] on top of that.
The mechanism works because it is fast, structured, and highly
accountable. The process begins with battlefield need. The Ukrainian
general staff identifies operational gaps, and the minister of defense
vets domestic manufacturers based on product maturity, codification
according to NATO standards, combat performance, ownership,
transparency, and delivery history.
The proposed portfolio is then reviewed by joint counsel within the
Ministry of Defense, after which partner governments conduct their own
due diligence, including onsite inspections of factories in Ukraine.
Once approved, the contracts function almost like government-to-
government and business-to-business agreements. Finally, the funds flow
into dedicated accounts on Ukraine's UNITED24 platform, where companies
are paid directly from these accounts.
Denmark physically verifies every batch delivered and the
documentation accompanying those deliveries. Such details as serial
numbers, quality certificates, and delivery logs are shared with
partner governments in real time. The entire system was recently
audited by Deloitte Denmark and Ukraine's minister of defense's
internal audit and successfully passed it.
Importantly, the Danish model has now evolved into a broader family
of mechanisms. As was mentioned before, the Netherlands, for example,
signs contracts directly with Ukrainian companies, starting with the
one-billion [dollars] procurement of Ukrainian drones.
Norway is adopting the same approach right now. Germany uses a
version in which the Ukrainian Defense Procurement Agency signs a
contract with a company, but the German government pays the invoice.
The variant is especially valuable for the Ukrainian government because
it strengthens Ukraine's own procurement institutions and reinforces a
transparent and rules-based procurement system.
Taken together, these mechanisms are reshaping Ukraine's defense
ecosystem in several critical ways. First, they unlock Ukraine's
manufacturing capacity at scale. Ukrainian companies can expand their
production, hire workers, invest in new technologies, and increase
output systems for the armed forces, which they actually and urgently
need.
Second, they support Ukraine's economy under wartime conditions.
Direct foreign procurement helps maintain industrial activity, tax
revenues, and employment, creating resilience well beyond the defense
sector.
Third, they reduce corruption risks. This mechanism embeds multiple
layers of oversight. As I mentioned before, internal Ukrainian review,
partner government scrutiny, physical inspections, and independent
audits--these are all mechanisms helping to control corruption issues
related to government procurement in Ukraine.
The result is a procurement system where decisions are based on
battlefield priorities and verifiable performance, not personal
networks and political pressure.
Finally, they create a sustainable foundation for long-term
European and transatlantic security architecture. As partners exhaust
their own stockpiles, financing Ukrainian production directly is
becoming the only scalable path to ensuring a continuing flow of
systems Ukraine needs.
In conclusion, the Danish model is not just a funding instrument.
It is a structural innovation in how international partners can support
the country at war while simultaneously building a more resilient,
transparent, and modern defense industrial ecosystem. It is one of the
most effective mechanisms we have for strengthening Ukraine's military
readiness and ensuring it can sustain its defense in years to come.
Thank you so much, and happy to answer your questions.
Mr. Sallai: Thank you very much, everyone, for your remarks.
My first question will be for General Jensen. Could you briefly
walk us through the selection, verification, and procurement process of
the Danish model and explain how the specific anti-corruption
mechanisms function in practice, particularly how Denmark balances the
need for accountability with speedy weapon production?
Mr. Jensen: Thank you for that question. I can try.
I think my colleague here, Kateryna, just pretty well explained the
mechanisms to make sure that we have a good oversight of how the money
is spent. The practical way of selecting candidates for this system is
that it is built on the needs from Ukraine, so that it is the Ukrainian
MOD who recommends companies and systems built by that company--same
system weapons, et cetera. Denmark has a setup where we review, screen,
and validate these companies and procurement proposals and the prices
related to that; compare that with market prices and stuff; and after
contracts are made, weapons delivered, as mentioned before by Kateryna,
we perform physical inspections, review delivery certificates, and
verify that everything is delivered as agreed.
Afterwards, there is even an audit on top of that, an external
audit with external auditors that audit the audit of the whole thing,
so I think we are trying to have safeguards and ways to protect that.
With regard to the balance between speed and accountability, we try
not to make those two compete. We should not impact accountability
because of speed, and vice versa. It is built upon the requirement for
speed, but at the same time, ensuring a maximum level of accountability
and transparency.
Even though you could argue that you cannot have speed and good
oversight, we try to do both at the same time.
Mr. Sallai: Thank you very much.
Sophia, my next question is for you. You touched upon this in your
testimony, but could you expand on how the different defense industrial
capabilities of European governments shape their approach to
cooperation with Ukraine when it comes to procurement?
Ms. Besch: Yes, absolutely.
As I mentioned in my testimony, there are all these different
pathways for collaboration that are emerging, and you might wonder why
certain European governments stick to one, and others stick to another,
and I think the starting point here is to just look at countries' own
industrial base and stock depth.
For example, the Danish model is particularly attractive for
European countries that do not host their own major defense firms and
that may have limited stocks to draw from. Germany, at the beginning of
the war, looked at its own strong defense industry and instead chose a
model where the German MOD finances contracts--facilitates contracts
with German firms. That reduces the accountability burden for Germany,
and it also benefits German defense companies.
Finland, which entered this war with particularly deep stocks
because the Finns have been preparing for the exact war that Ukraine
has been fighting for years, was able to draw from their own stockpiles
for a long time. Incidentally, both Germany and Finland are now hitting
the limits of their own domestic production capacity and also of their
stocks, and so now are eyeing deeper integration with Ukraine as well.
I will also say that this has implications beyond just which model
you choose. If you are a small European defense firm right now, there
are a lot of advantages, and it is potentially lucrative to align
yourself with Ukrainian firms and align, you know, yourself with these
kinds of projects that integrate Ukrainian defense firms more closely
in European defense industrial bases because it positions you well to
possibly access future EU funding, for instance.
The SAFE mechanism, which I mentioned explicitly, wants to fund
projects that include Ukraine. If you have those pathways set up, if
you are a smaller company, that might be lucrative for you.
Whereas for the larger primes, some of them are wary of opening the
European market to competition from Ukrainian defense firms right now.
What I will say, though, is that talking to European MODs, they are
looking forward to some competition because we are currently in a
moment where European MODs, lots of them have a lot of money to spend
and they have to spend it very quickly, and that means that a lot of
that money is getting spent on domestic primes right now, which that is
not great for production time lines. It is not great for price points.
A little bit more competition from Ukrainian firms that could
potentially do things faster and more cheaply, I think, will restore
European competition and, in the end, improve the projects, too.
Mr. Sallai: Thank you very much.
Kate, we have discussed these various models cooperating with the
Ukrainian government and Ukrainian businesses. How do these models
interact with Ukraine's own internal domestic procurement frameworks?
This is really both when it comes to their export control regulations,
as well as any type of bottlenecks that have been created when
integrating foreign financing and co-production with Ukrainian domestic
production pipelines.
What policy adjustments have been made to mitigate these issues,
and what potential options do we have to alleviate these issues in the
long run?
Ms. Bondar: Yes. On the Ukrainian side and its procurement system,
the Danish model and its variations exist as a parallel system, I would
say, so they do not replace or substitute the Ukrainian procurement
system. What they do is add a kind of additional layer on top of it,
and it started with the Danish model.
Now we have around five to six different variations, and it creates
a little bit of difficulty in managing these projects, basically,
because there is a lot of paperwork, there is a lot of communication
with foreign procurement agencies and ministers of defense. Basically,
what could be done and what is the bottleneck is this project
management and accountability.
The Ukrainian government would suggest, and that is kind of the
vision for 2026, to standardize this, all procedures, probably direct
them more to the Defense Procurement Agency, because this is what it
was created for. It was one of the demands within collaboration with
NATO, and that is the best practice of defense procurement.
Streamlining all these procedures through the Defense Procurement
Agency of the Ministry of Defense, standardizing approaches, and that
would probably create more transparency for our partners, an easier
process of traction and monitoring procurement procedures, and
basically streamlining the process when everyone's aligned, and
everyone knows the rules of the game.
Mr. Sallai: Thank you very much.
General Jensen, the next question is yours. You have highlighted
that countless nations have joined the Danish model and various
variations of it. As the volume of partner contributions and demand for
these models to collaborate with Ukraine increases, what adaptations
would the Danish model need to be scaled up for greater production as
well as multilateral collaboration?
Mr. Jensen: None, but maybe I should elaborate. [Laughter.]
Ukraine needs funding, not production capabilities. As we just
heard, there is plenty of production capacity, and we have already, or
Ukraine has already, scaled production, so few adaptations are needed
for the increased multilateral support through the model. Other nations
are already participating and transferring funds through it, so we have
the model. It can also work with other nations, and we can easily
include donations from more nations.
Of course, if it becomes really big and a lot of procurements
through that system, we probably need to just scale the model, but not
change it, is the idea. None.
Mr. Sallai: Thank you very much.
Sophia, given how Ukrainian firms must navigate both wartime
pressures as well as European regulations when it comes to interacting
through these procurement processes, how can Europe, the European
Union, and European national governments ensure that their own defense
regulations do not shut and bar Ukrainian industry out of their
collaboration opportunities both now and in the long run?
Ms. Besch: Yes, there is a real regulatory burden challenge now
that Ukrainian defense firms are looking to enter and integrate with
the European market more. When I say regulations, those are broader ESG
regulations, EU regulations, anti-corruption and governance standards,
of course, but also sustainability and labor protections, strict supply
chain integrity rules, and human rights compliance.
These rules are hard to meet for any defense firm in Europe right
now, but wartime due diligence and site checks for Ukrainian defense
firms are, obviously, particularly hard. The good news is that there is
a broad recognition in Europe of this challenge, of this problem, and
there is real momentum right now to reduce unnecessary regulatory
barriers.
We see this shift in all European MODs toward spiral development
rate, good enough systems, fast iterations, rather than these artisanal
NATO standard systems of the past, and so there is a real will and
drive to get the regulatory burden down.
The Commission has been in the lead on this. They have published
their--it is called the defense omnibus package that tries to
streamline procedures, accelerate production. It is also important to
say that while European MODs will be quick to blame Brussels, a lot of
these bottlenecks are national bottlenecks that come from national
procurement systems, and often it is not just a question of, you know,
a bonfire of regulations; it is also a question of increasing
administrative capacity.
For instance, if you need many security clearances, and that is one
of the reasons that processes are being slowed down, the solution might
not be to get rid of the requirement for security clearances, but to
hire more people who can give you those security clearances.
That is currently also a learning process that is happening in
European MODs, and, ultimately, this is in Europe's own interest. I
think Ukraine's integration can serve as a catalyst and accelerator
here.
Mr. Sallai: Thank you very much.
Kate, as we know, these new, fast-evolving technologies tend to
have much faster innovation cycles than traditional procurement
timelines, especially when it comes to drones and electronic warfare
systems.
How can governments, both the Ukrainian government and European and
American governments, ensure that safety and accountability standards
are maintained while also innovating their procurement mechanisms to
accommodate these fast-evolving technologies?
Ms. Bondar: Yes, that is a very good question, and it's really hard
to find this balance, and we are still trying to figure it out on the
Ukrainian level, and with European governments, it is even harder
because we have multiple opinions and legal systems and procurement
systems.
My general recommendation would be to lower the level of risk
aversion, to accept risks related to adopting and using systems that
are not tested, like, according to all usual acquisition procedures, so
basically to shorten the cycles of testing and evaluation and adoption
into service, and usually, what happens in Ukraine, the battlefield
shows what works, what is not. It helps to refine systems and to pick
the best ones and to select the best ones.
Cutting the red tape in procurement process that would also be
helpful so basically what happened in Ukraine is that the minister of
defense and the government sat and analyzed what are the critical and
crucial points in acquisition and procurement process and which stages
can be basically skipped, so leaving only the most necessary and
crucial stages and accepting more risk in procurement and acquiring
systems that are new and not known to the military yet. Those would be
my two recommendations that could be done.
Mr. Sallai: Thank you very much. I have one last question for all
the witnesses, and then if anyone else has questions, feel free to walk
over to the podium.
I have a question for anyone or whoever would like to answer this.
With the recent peace negotiations between Ukraine and Russia
continuing to struggle, how do you see these procurement mechanisms
contributing to a future, durable peace in Europe?
What aspects of these mechanisms are essential to ensuring that the
West is negotiating from a position of strength, as well as acting as a
deterrent against future Russian aggressions?
Anyone? Yes, sorry.
Ms. Besch: Now, I am really glad that you are asking this question
because, in a way, it is sort of the main message of my testimony
today. I think as the peace negotiations are going on, these emerging
procurement and co-production models are central to a durable peace
because any settlement is going to have to rest on real military
resilience.
Europe and Ukraine are now building the industrial depth that
underpins credible deterrence through direct financing, through joint
manufacturing, through co-production. We do see this shift from ad hoc
to predictable and scalable rearmament. The effects of that are so
enormous, with Europe gaining a forward defense line that is integrated
into European supply chains and integrated into our own defense
industrial ecosystem. That gives us negotiating leverage as well,
right? Russia takes talks seriously only if Ukraine's capability and
Europe's support appear non-exhaustible.
There is a long-term deterrent value here. Ukraine is not going to
return to a position of industrial vulnerability if we commit to a
defense industrial partnership. Its defense sector is going to be tied
into Europe's. Its production is going to be diversified across Europe
and Ukraine.
That also allows a broader integration of Europe into the--of
Ukraine into the EU sector by sector--defense is just one of them--and
Ukrainian battlefield learning is going to continue to shape European
capability development, which is going to empower European rearmament
efforts, too.
To me, the bottom line really is that industrial cooperation is a
foundation for any sustainable peace.
Ms. Bondar: I will probably add to that that I also do research on
Russia a lot, and I am trying to understand what their leverage is and
what they are better at, and what they are better at is at scale--scale
of production and mass deployment of new systems.
Unfortunately, none of the European countries can counterbalance
Russia alone. Only working together, European countries and Ukraine can
offer something against Russia, and I think that will be the biggest
leverage in any negotiations.
Second, this process of approach in the Ukrainian industry and
European industry is crucial and important because when we get into the
weeds of the process, when we get into details, we see things like
differences in doing business practices, for example, why the Dutch
model faced many obstacles in the beginning. Just because the Dutch
were not prepared to do advancement payment in the beginning, the
amount of 50 [percent] to 70 percent to Ukrainian companies. It is
unknown practice in Europe, which is pretty common for Ukrainians.
If we start integration on this practical level, very tangible
integration, I think it will be easier to build up later political and
other types of integration. You know, to be strong in negotiations, we
need to integrate Ukraine into the European security architecture and
community first, and then we will be able to counterbalance Russia in
terms of its scale.
Mr. Sallai: Thank you.
General?
Mr. Jensen: Agree. Maybe I should add, anyway, since I pressed the
button here, that we went from initially lots of nations donated
weapons and systems and material, partly because Ukraine needed it, but
partly because that is what we could spare.
Ukraine ended up with a myriad of systems and weapons and stuff,
and some of it was really good and useful, and some of it is still in
its boxes because nobody could train it or you could not sustain it or
anything, and that is not a way of helping Ukraine that will last past
any peace agreement. That will die out the day there is a peace
agreement.
By this system, the Danish model, we facilitate processes as well
as industry, as well as society, to continue, no matter where the money
comes from, internally from tax revenue in Ukraine or from donations
from allies. This is a more durable and sustainable model, war or
peace.
Thank you.
Mr. Sallai: Thank you very much, everyone.
With that, we can turn to questions from our audience. If you would
like to ask a question, please walk over to the podium and introduce
yourself.
Question: Hi. I am Maggie. I work for the U.S. Helsinki Commission
as an intern.
My question for anyone who wants to answer it is, as we watch
Europe utilize these models and sort of perfect them, what should the
U.S. be learning from this, and what role could or should the U.S. play
now and in the future?
Ms. Bondar: Okay. I can start.
Basically U.S. can leverage the experience of working with the
Ukrainian defense industry either by financing or co-developing
military systems because what is happening in Ukraine will have its
effects across the globe.
In every conflict, in every theater, we need to learn the lessons,
we need to analyze the patterns that are present there. By involving
into Ukrainian defense industry and working with Ukrainian companies
that have firsthand access to the battlefield and constantly
communicate with warfighters on the frontline and with the Ukrainian
Special Forces and intelligence, they can gain what is most valuable,
experience, and then integrate this experience into the U.S. military.
Co-production/collaboration with the defense industry is one of the
ways to do that.
My suggestion would be to look a little bit broader, so to still
look into joint training, joint exercises, just to practice and to see
how Ukrainians fight--what patterns are on the battlefield, what
tactics they use, what doctrine. Because Ukrainians also have a very
deep knowledge of Russian tactics and doctrine, that should also be
integrated into the U.S. TTPs and doctrine, et cetera.
Because China is learning from Russia. Because Putin went to India
just recently and established military collaboration with India. These
are big powers, and the U.S. should be prepared, and Ukraine is the
entry point--is this starting point where they can--where the U.S.
military can have a look and glance into what is happening on the enemy
side, basically.
Ms. Besch: Let me just add to that, because I think I agree with
everything that was just said. I think looking across the various
European initiatives that we discuss here today, there are a few
practices that stand out as relevant for the U.S., but I would also say
that not all of them are directly transferable, right?
Europe's mantra, ``if the Ukrainians are not using it, we are not
interested''--that is the mantra of defense planners right now--that is
really rooted in Russia-focused defense and deterrence planning, and
the U.S., as you all know, faces a broader set of contingencies and is
not going to adapt the European way of warfare wholesale.
Similarly, you know, Europe's political goal of integrating Ukraine
into the EU's single market sector by sector, it seems to me from what
I hear from this administration, that the U.S. posture currently is
shaped more by industrial onshoring and a desire to end the war
quickly, which, you know, also limits the depth of U.S.-Ukraine defense
industrial ties.
What lessons are transferable, I think, are the embrace of
battlefield learning and co-development, especially in drones, and
there is a strong U.S. interest in this, too. There is this line of
drones--CEO of Quantum Systems, and he said that, you know, innovation
in drones right now is coming from the Donbas, not Silicon Valley. That
is something that U.S. firms have understood, too. We are seeing early
U.S.-Ukraine industrial integration steps with joint drone production
deals, you know, the joint venture for high-speed interceptors that was
just announced. These kinds of mutually beneficial partnerships are
tied to real battlefield requirements and rapid iteration. I think that
is the best avenue for deeper U.S.-Ukrainian defense-industrial
cooperation.
Then, just to end with another lesson, I think that is relevant for
the U.S., is just the enormous number of systems that are being used up
in this war. You know, on certain phases we have had thousands and
thousands of drones being deployed by both sides in just a month and
that has to lead to considerations of how deep your stockpiles need to
be in order to sustain such an effort, not just of drones and
ammunitions but also of all the materials that it would take to build
these things--chips, sensors, batteries, all sorts of things that are
not necessarily built in the U.S. anymore.
Securing those strategic supply lines is a big challenge for
Ukrainians, Europeans, and I would think that is also a lesson that
American defense planners can adopt.
Mr. Jensen: Yes, I also agree, and I think depending on what the
strategy is for the U.S. I agree with what you have said, that it seems
like there is a slightly different, or not a slightly--there is a
different strategy from the U.S. perspective that is more global than
just the European AOR and so--and also the U.S. perspective on U.S.
defense industry needs to be part of this.
If that was not the case, just adapt the Danish model, but I think
it is the case, so to be realistic, I think it is more--in a different
arena, the U.S. could learn from this.
I think the speed of innovation in Ukraine is unique, the speedy
introduction of new capabilities, and also that, you know, the best is
good enough's worst enemy so you need to deliver at time--just enough
at time instead of, you know, the very best all the time because you
cannot afford--you do not have--you cannot afford to have enough mass
when you do that.
I think that is where we all could learn something from the war in
Ukraine.
Mr. Sallai: Thank you. Any other questions?
Question: I used to do this, so you would think I would know, but I
am Jared Smith from With Honor.
I think that the West, and especially the U.S., is starting to
learn that so much innovation can potentially be hamstrung by our
inability to diversify and secure our supply chains. You know, I am
just wondering from either the Danish or, you know, Ukrainian
perspective what are the best practices that we can do now in order to
make sure that any of these drones that we are building; the sensitive,
you know, critical minerals or magnets, are being gotten from friendly
nations as opposed to China so that we are not put in a position where,
you know, one day we are launching drones that can be turned off with a
flick of a button from Beijing.
Ms. Bondar: Again, no silver bullet solution for that--[laughs]--
unfortunately, and as Ukrainians are saying, Russians and Ukrainians
are eating from the same bucket, which means the components come from
China.
Ukraine recently, just a couple of weeks ago, launched separate
initiatives called Local Components, and for a reason. They realized
that strategically, if you want to be a leader in the industry and if
you want to be able to protect yourself, let us put it simply, you have
to be independent in supply chains.
Ukrainians took this approach, actually, as Russians did as well.
They want to localize starting with the simplest components and then
going deeper and deeper. That is the approach countries at war take.
We know that resources are not placed equally in the world. We need
to find them, basically, and we need to invest in extraction and
refinement. That is what Russia does. They analyze the whole supply
chain for Shahed drones, for example, and they start to localize with
the easiest products, and now they want to substitute Chinese batteries
with local production. They started with an investigation where they
have resources and how they can build a supply chain independently from
China or diversify the supplies, including India.
That is why I think it shows us what could be done and also what is
useful in this case to look into as a model, how these two countries
build their defense ecosystems. Ukraine is an example of a
decentralized ecosystem where we have lots of manufacturers. They
produce different types of systems. Ukraine uses 400 types of drones
monthly. It is a zoo of technology, and imagine how many manufacturers
exist.
Russia has a centralized and very different approach. They pick a
champion, so Shahed drones were a champion for long-range capability.
Now they have selected a couple of manufacturers for [FPV] First Person
View drones in Groups one and two, and Kalashnikov, their biggest
state-owned military enterprise, is investing in those companies to
scale their production, and what they do, they put all resources behind
these national champions and winners, so basically they want to grow
their own DJI, for example.
I know it is an unpopular opinion in the West, where we have free
market and competition and lots of companies, but maybe a way to solve
the issue with supply chain independence and being able to build at
least the most necessary types of systems locally is to pick those
champions and to put all resources behind them.
If we identify and we find a solution for small but local, you
know, rare earth and the whole supply chain built from there, maybe we
should give those resources to companies that are able to produce at
scale for the U.S. or European military.
That is one of the ideas. I am not saying it is the best idea, but
this is what we can see, again, from the analysis of the ongoing war.
Mr. Jensen: That is a great question, and actually, I do not have
an answer. I have another question. [Laughs.]
I think what you are mentioning is the result of globalization
through many years. We all thought that this was a God-given way to
create the best value for money, and we will all be richer in that
manner, which is correct. That is what happened.
We are paying the price now, so we need to figure out how to still
get the best value for money but still have sovereign control of
strategic resources, and those two are, you know, a contradiction
competing about the same answer. There is no one answer to those two
problems.
I do not think protectionism is the answer, but I do not have the
right answer, so sorry.
Mr. Sallai: Thank you. We have time for one or two more questions.
Question: Hello. Thank you. My name is Kyle Parker with the
Helsinki Commission.
I have a couple of questions related to the kit involved, and then
a couple of questions related to a contingency in the future of sort of
supplying, sustaining Ukraine, in the event that the United States
walks away from supporting Ukraine as has been threatened.
On the question of the kit, how much, roughly, percentage of the
kit that Ukraine is using on the battlefield is being produced by
Ukraine? Not just by Ukraine with these funds, with funds through
things like the Danish model, but just generally. Then also a very
rough estimation of how much of that kit is actually of interest to
European NATO states in terms of their own defense, something that
could be ultimately sold or transferred.
Then my second pair of questions, and these are--and I understand
we are short on time, so these can be for whoever feels is best capable
of answering them. In the event that the U.S. walks away from
supporting Ukraine as has been threatened recently, even very recently,
and by walking away, it seems to be unclear what that means, but I
would suspect it could mean a lack of willingness on the part of the
United States to either continue selling its own kit to European states
to then transfer to Ukraine.
I assume it could also mean a lack of willingness to continue
intelligence sharing with Ukraine, and I assume it could also mean,
potentially, you know, a lack of willingness to allow U.S. assets--
bases, logistics, infrastructure in Europe--to supply this.
My question there is, you know, how reliant is Europe on U.S.
advanced weaponry to supply for Ukraine, you know, as well as how
replaceable is the intelligence component. Then I guess the other--yes,
I think the other question is lift, logistics, sustainment--how capable
is Europe in doing this itself without any U.S. involvement?
That is probably enough. Thank you.
Mr. Jensen: May I suggest that the first couple of questions will
be directed at Kate here? Then I would like to try the last part, but
if you want to start.
Okay. Because I do not know the numbers. Where is the gentleman?
Okay, sir. I do not know the numbers here, so I hope maybe you can
help with that, the ratio between Ukrainian-produced material and the
rest.
I would like to address the last question that you have: What if
the U.S. walks away, and the top--the bottom line here is that that
would be a problem. It is a big problem today. I think the problem will
maybe be less over time since we are building up in Europe, but
building up to the degree we are about to do takes not only weeks or
months; it takes decades.
That will be a problem if that happens tomorrow. I do not think it
is in the U.S. interest, though, to do so, but that is a political
decision, of course. There is a reason that the U.S. is present in
Europe because being present--you know, with that follows influence,
like now, you see, and also allowing Europeans and the Ukrainians to
buy U.S. equipment creates jobs and revenue, and tax and bonds go up,
and stuff like that.
It is in the U.S. interest to stay involved, to allow weapons and
systems to be delivered. You can say, okay, so what about the Intel
support? Also, a big problem, but I think the Ukrainians, together with
other European nations, are also upping that area with the introduction
of more and more drones and stuff. Surely, the space area is maybe the
biggest one where we in Europe are far behind, and that will take time
if we need to catch up on that.
Again, I think you should not see the Intel thing in isolation. I
think you should combine them with the other two things I mentioned. If
you want influence, if you want to earn money, and if you want to buy--
us to buy European equipment, well, we need to have a mutual trust.
We need to have businesses. We need to have operational and
strategic cooperation. That drives us to buy stuff here and work with
the U.S., and that sends money this way across the Atlantic. It would
be a problem, but also for the U.S.
Ms. Bondar: I will try to answer your question real quick.
Unfortunately, I do not have numbers just because they are
classified. It is not public information what Ukraine gets in which
amounts and from where, but a couple of numbers I still have in my
mind.
On drones, it is ninety-six percent produced locally, only four
percent delivered from abroad, and according to the minister of
defense, these are just experimental systems and, you know, small
little batches, but ninety-six percent. Both small Groups one-two long-
range capabilities, are produced in Ukraine.
Again, it is a little bit questionable because almost a hundred
percent of Ukrainian small drones have Chinese cameras. Yes, these are
locally produced drones, but they are produced from foreign components.
That is why, you know, we do not have to dig very deep into this to
keep it short.
On air defense systems, for example, Ukraine is a hundred percent
dependent on our partners. Yes, now air defense has become multilayered
and mobile groups, for example, and interceptor drones are produced in
Ukraine, but it is way bigger dependence on foreign assistance. It is
really hard to give an estimated number because part of the information
is classified, and part is questionable.
On your second question, also real quick, you mentioned--well, I
will talk about the Ukrainian side and what if the U.S. walks away.
Yes, we need weapons, and there are very sophisticated systems that
cannot be replaced by any other type of equipment, and we need to buy
them from the United States, including air defense.
You mentioned intelligence information. That is also crucial. It is
not that, you know, publicly discussed or obvious, but it is crucial
because Ukraine makes its bet on long-range strikes, trying to destroy
the Russian economy and to stop the war, if we can say so, by just
disabling the Russian economy. To conduct deep strikes, Ukraine needs
foreign intelligence, and it is impossible to replace or substitute
with only Ukrainian means. That is basically crucial, because if that
information sharing stops, Ukraine will not be able to conduct any deep
strikes. That stops the Ukrainian war effort, because on the frontline,
Russia, unfortunately, has an advantage, and we know about that.
Ukraine's best hope is deep strikes and destroying the Russian economy
first.
Ms. Besch: I will be super brief.
I think the way that you asked the question is exactly the right
way to ask that question--what does stepping away actually mean--and
that is how Europeans are currently trying to disentangle this as well.
What steps can we expect when, right?
The way that you used the term kit, I think, is--sometimes that can
be a little bit confusing because really it is not the hardware so much
that is of interest for Europeans in terms of what we are learning from
the Ukrainians. It is all the enabling capabilities of the electronic
warfare around it, and this is also where we are still the most
dependent on the United States, right?
This is, to me, how your questions interlock right now, and I will
just say, while I agree with everything that the major general has
said, I would never presume to know or to state the U.S.'s interests. I
do think that there are clear messages that Europeans are currently
getting about the U.S. being open for business, and PEARL is a good way
and a good mechanism in that general vein.
There have been some really useful negotiations happening over what
PEARL actually covers, for it to cover only those capabilities that
Europeans cannot produce or do not currently have themselves, and that
seems fairly--at least on a self-interest basis, a fairly sustainable
way of going about it.
Then equally having that kind of more sort of staged conversation
of, okay, you want us to stand on our own feet; these are the
capabilities that we are currently investing in. We are going to need X
amount of years to get there. I think that is the kind of more
constructive conversation that is happening behind the scenes right
now, and that is where Ukraine, again, plays such a crucial role as a
catalyst and as an accelerator.
Mr. Sallai: Thank you very much to everyone who has attended, and
especially to our witnesses. With that, the briefing has ended.
[Whereupon, at 3:07 p.m., the briefing ended.]
[all]
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