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Denmark announced it will allocate $935 million to Ukraine’s defense sector in 2025. The aid comes from windfall profits generated by frozen Russian assets and will be distributed on behalf of the European Union and allied nations.

This latest initiative builds on what is now widely referred to as the “Danish model,” an approach that prioritizes the purchase of Ukraine-produced military equipment instead of foreign alternatives. The model not only boosts Ukraine’s war economy but also ensures weapons and supplies are tailored for the unique conditions on the battlefield.

“Denmark has taken the lead in the international efforts to strengthen defense production in Ukraine,” said Danish Minister of Defense Troels Lund Poulsen in a statement issued Friday. “It is a recognition of Denmark’s efforts on this matter that the EU has decided to channel even more funds through us this year.”

The agreement, signed between the Danish Ministry of Defense and the European Commission, gives Denmark the formal role of “implementing actor” for a significant share of EU aid tied to profits from Russian assets frozen within the EU since the invasion of Ukraine in February 2022.

Denmark to allocate more than 800 million EUR to Ukraine on behalf of the EU in 2025.

Read more: https://t.co/qeLD8DMWBN pic.twitter.com/VJsmehlWAp

— Forsvarsministeriet/Danish MoD (@Forsvarsmin) May 9, 2025

A strategic shift in aid distribution

By directing aid into Ukraine’s domestic defense industry, Denmark and its partners are not just helping to arm the country; they are also investing in long-term sustainability and resilience.

“This provides obvious logistical advantages while also contributing to building Ukraine’s defense industry for the future,” said Lund Poulsen. “We are now able to do this on an even larger scale.”

In 2024, Denmark allocated about $664 million to Ukraine using this model. This funding came from various sources, including the Danish Ukraine Fund, allied countries, and the European Union. With the newly signed agreement, Denmark expects to more than double that amount in 2025.

A broader coalition

Denmark’s leadership on this initiative is not a solo act. The country will channel funds not only on behalf of the EU but also on behalf of several allied nations that have Russia’s frozen funds, including Norway, Sweden, Iceland, and Canada. This broadens the coalition backing Ukraine and highlights the increasing international preference for targeted, Ukraine-based military support.

The 2025 aid package is expected to cover a wide array of military goods: ammunition, air defense systems, and other equipment, crucially, all of it manufactured inside Ukraine. This aligns with the types of weapons acquired in 2024 under the Danish model, which included the locally-produced Bohdana howitzers, long-range drones, anti-tank weapons, and anti-ship missile systems.

The “Danish Model”

Traditionally, much of the Western military aid sent to Ukraine came in the form of equipment from donors’ existing stockpiles or purchases from third-party defense contractors in NATO countries. While this has been effective in sustaining Ukraine’s military efforts, the Danish model represents a different philosophy, one focused on empowering Ukraine’s defense economy.

The advantages are multifold. By sourcing weapons locally, Ukraine benefits from faster production and deployment timelines, cost-efficiency, and systems built with intimate knowledge of the conflict’s demands. It also reduces the country’s dependency on foreign defense firms and strengthens strategic autonomy.

The Danish Ministry of Defense emphasized this in its statement: “Buying Ukrainian strengthens the embattled country’s production capacity, ensures competitive prices, and enables faster adaptation to the Ukrainian needs.”

Symbolic move against Russia

The origin of the funds makes this initiative especially significant. The money stems from interest and other windfall profits on approximately $225 billion in Russian central bank assets frozen by EU member states and G7 nations. While legal debates continue over whether these assets themselves can be confiscated, using their profits as a funding source has become a politically palatable workaround.

By reallocating these profits to arm Ukraine, Europe sends a clear message: Russia’s aggression will be met not only with sanctions but with direct consequences that aid its adversary.

This policy shift also represents a major evolution in the West’s financial warfare tactics, turning Russia’s immobilized wealth into an engine for Ukrainian resistance and renewal.

The decision to place Denmark in the lead role for implementing this aid package reflects growing confidence in its approach and administrative capabilities. Copenhagen has been seen as both innovative and transparent in its handling of Ukraine-related defense funding, giving the EU assurance that the windfall profits will be used effectively.

The deal with the European Commission further institutionalizes the Danish model, setting a precedent for how similar aid packages may be administered in the future.

As Russia’s invasion of Ukraine grinds into its third year, Western allies are increasingly looking for ways to shift from reactive support to long-term sustainability. The move by Denmark to double its defense funding through Ukrainian channels is a powerful example of this evolution.

Beyond the military implications, the initiative bolsters Ukraine’s economy, creates jobs in wartime industries, and helps the country chart a path toward post-war reconstruction, even as the fighting continues.

With $935 million on the table for 2025 and a growing list of international backers, the Danish model may become the new blueprint for sustainable military aid in modern conflict zones. As Lund Poulsen noted, “We are now able to do this on an even larger scale.”