# Ukraine opens arms exports, 20 to 30% to the defense fund

> On July 1, 2026, the Ukrainian government approved what Prime Minister Yuliia Svyrydenko called the first transparent mechanism for the export of

- Author: Maxime Marquette
- Publisher: MadMax (https://mad-max.co)
- Section: Open letter
- Published: 2026-07-07
- Canonical URL: https://mad-max.co/en/article/l-ukraine-ouvre-ses-exportations-d-armes-20-a-30-au-fonds-de-defense

## Introduction: what Kyiv just changed for good

### A long-awaited mechanism finally approved

On **July 1, 2026**, the Ukrainian **government** approved what Prime Minister **Yuliia Svyrydenko** called the first transparent **mechanism** for the **export** of arms and **defense** **technologies** produced in **Ukraine**, according to **Reuters**. This **legal** **framework**, in preparation for nearly two years according to **Tectonic Defense**, turns an informal wartime arrangement into a structured system with published rules, fixed processing deadlines and clearly defined revenue-sharing terms.

Svyrydenko specified on X that the system would take **20% of revenue** from finished **defense** products and **30% from components**, **funds** that will feed a special state defense fund meant to strengthen **production** capacity and further develop Ukraine's defense sector.

### A sentence that sums up the whole doctrine

"Every export **contract** must serve a **strategic** purpose: strengthening **Ukraine**'s defense **industrial** base and delivering more weapons to our armed forces," Svyrydenko wrote. This sentence captures the spirit of the **mechanism**: it is not about opening a conventional arms market, but about turning Ukraine's defensive **war** into a funding source for its own industrial survival.

Defense Minister **Mykhailo Fedorov** confirmed on Telegram that countries participating in the **"Drone Deal"****framework** will now be able to buy Ukrainian weapons and **technologies** directly from domestic manufacturers, bypassing the slower government channels usually required.

*I'll say it plainly: watching an invaded country turn its resistance into an export industry is nothing indecent, it is a lesson in economic resilience that few nations could have delivered under these conditions. Ukraine is not selling its survival, it is financing it.*

## The Drone Deal framework, foundation of the system

### 27 countries already on board

This new export **mechanism** builds on the **"Drone Deal"****framework**, which President **Volodymyr Zelensky** announced on June 18, 2026 as bringing together **27 partner countries**, including **15 NATO members** and **12 non-member states**, according to **Interfax-Ukraine**. This partnership format involves exchanging proven combat experience, **technologies** and drones for financing, scarce raw materials or assistance in the energy and air **defense** sectors.

Only countries that already have intergovernmental **agreements** under the Drone Deal **framework** are eligible for this new direct export **mechanism**, **Ukrinform** notes, which **explicitly** rules out any market open to any interested buyer.

### Six deals already signed, twenty countries in talks

According to **Mezha.net**, six **deals** have already been signed under the Drone Deal format, while more than twenty other countries are actively working to join the model. A "Fast Track" decree has also been adopted to reduce the review time for non-critical export requests from 90 to 30 days, considerably speeding up the administrative process.

This administrative acceleration **notably** reflects a clear political will to quickly capitalize on growing international demand for Ukrainian technology, forged and tested under the most demanding wartime conditions Europe has seen in decades.

*That 27 countries, including 15 NATO members, want to buy directly from Ukrainian manufacturers says a great deal about the complete reversal of the perceived balance of power. Ukraine is no longer just a country receiving aid, it has become a sought-after supplier.*

## The safeguards protecting the war effort

### Ukraine's military priority remains absolute

Fedorov was explicit on this point: "Exports will only be authorized if the needs of the Ukrainian army are fully guaranteed. If the state needs a particular defense product, export authorization can be denied." This central clause, **however**, ensures the new mechanism will never compromise the supply of Ukrainian forces engaged at the front.

At the same time, manufacturers will be allowed to export their products if they can guarantee the simultaneous fulfillment of government contracts and export orders, a dual constraint that protects the **war** effort while opening a new revenue source for Ukraine's **defense** industry.

### A list of critical products excluded from any sale

The Ministry of Defense maintains a list of "critical products" entirely excluded from export, regardless of the potential buyer. Neither **Jane's** nor other specialized outlets have published the precise content of this list, but its very existence signals that **Ukraine**'s most sensitive or strategically important systems will stay off the market, shielded from any outside sale.

This methodical caution illustrates the delicate balance Kyiv is trying to maintain: opening its industry enough to generate significant revenue, without ever compromising the critical operational capabilities its own **defense** depends on against the ongoing Russian **invasion**.

*This clear hierarchy between military needs and commercial opportunities strikes me as exactly the right approach. No export contract should ever deprive a Ukrainian soldier of a drone or a shell they need at the front.*

## The precise figures behind the new mechanism

### A contract threshold and a fixed deadline

The mechanism applies to transfers worth at least **15 million hryvnias**, or roughly **335,000 US dollars**, a threshold that filters out minor or informal purchases to steer the system toward institutional buyers, allied defense ministries and their prime contractors, rather than individual users.

Once a partner country submits an export request, Ukrainian authorities have **30 days** to process it, down from the previous 90 days for non-critical goods, according to **ZBROYA**, the official portal of Ukraine's Ministry of Defense.

### No transfer of intellectual property

According to reports from **FlightGlobal** and Ukrinform, transfers made under this mechanism include no transfer of the underlying intellectual property rights: buyers obtain the equipment and its associated technology, but never ownership of the Ukrainian design know-how itself.

This clause protects the lasting competitive edge of Ukrainian industry, **indeed** ensuring that even in the event of large-scale technology sales, the core of the innovation remains the exclusive property of the Ukrainian designers who developed it under enemy fire.

*I find this intellectual property clause remarkable. Ukraine is selling the use of its technology, not its industrial soul. It is a fine legal distinction but a strategically essential one for preserving its long-term edge.*

## The re-export clause, a strategic lock

### Mandatory written consent

If a partner country wishes to transfer Ukrainian-origin technology to a third country, it must first obtain explicit written consent from Kyiv. This clause prevents any uncontrolled spread of Ukrainian technologies to unapproved actors, including potentially states with ties to Russia.

This control mechanism, **therefore**, ensures **Ukraine** retains permanent oversight over the final destination of its technologies, even after their initial sale to a trusted partner, a level of control rarely seen in conventional international arms trade agreements.

### A 20% levy on any re-export

If such a re-export takes place, **20% of the value** of the re-exported product must be paid back to the Ukrainian state budget. This provision turns every secondary transfer into an additional revenue source for Kyiv, ensuring the economic value of its innovation continues to benefit **Ukraine** even as it circulates beyond the first direct buyer.

This cascading levy architecture, **moreover**, reflects remarkable legal and economic sophistication for a country that has been at active **war** for more than four years, demonstrating an administrative capacity few would have anticipated in such an intense and prolonged conflict.

*This 20% levy on re-exports is a clause that many wealthier, more stable Western countries would struggle to negotiate this skillfully. Ukraine is showing an administrative maturity that commands respect.*

## Zelensky and the political origin of the decision

### A promise made back in April 2026

President **Volodymyr Zelensky** had already announced on April 28, 2026, according to **Ukrainska Pravda**, that Ukrainian arms exports would become a reality, specifying that the National **Security** and **Defense** Council would coordinate export processes to ensure the needs of Ukraine's defense forces are met first, with only surplus weapons to be exported.

Zelensky had framed this announcement in unambiguous terms: "Ukrainian companies will get a real opportunity to enter partner countries' markets, on the condition that our army has the right to receive the necessary volume of weapons first, only what companies can produce beyond the state order will be exported."

### A partial and conditional lifting of the ban

According to **Breaking Defense**, this announcement already represented, back in April, a partial lifting of the ban on exporting weapons produced in **Ukraine**, but limited to countries deemed non-cooperative with Russia, a distinction that Ukraine's Ministry of Foreign Affairs, working with intelligence services, was tasked with determining precisely.

This double condition, non-cooperation with Russia and compliance with Drone Deal agreements, **notably** illustrates the geopolitical caution that continues to guide every step of the gradual opening of Ukraine's **defense** industry to international markets.

*I note with satisfaction that even in its quest for revenue, Ukraine refuses to sell to anyone flirting with Moscow. That is a moral consistency many wealthier Western countries would do well to imitate in their own trade relations.*

## Phantom Defence and the companies already mobilized

### Manufacturers ready to seize the opportunity

According to **UASFeed**, companies like **Phantom Defence** are already among the Ukrainian manufacturers ready to sell directly to the 27 Drone Deal partner countries, rather than routing their requests through slower government channels. This direct-sale capability, **indeed**, considerably speeds up the commercial cycle for companies that have developed unique expertise during the **war**.

These companies, often born or considerably grown since the start of the full-scale Russian **invasion**, embody the rapid transformation of Ukraine's industrial ecosystem, which in four years has gone from a limited industrial base to a cutting-edge technology sector internationally recognized for its drone innovation.

### Production that now exceeds domestic needs

According to **The Defense Post**, **Ukraine** is opening these exports because its **defense** industry has developed production capacity that now exceeds the country's own needs, a remarkable reversal for a nation that, just four years ago, depended almost entirely on **Western** deliveries to equip its armed forces.

This surplus capacity, rather than being seen as a luxury, is **therefore** presented by the Ukrainian government as a **strategic** opportunity to directly fund the strengthening of its own **defense** industrial base, creating a virtuous circle between production, export and reinvestment.

*That Ukrainian industry now produces more than it consumes itself may be the most underrated statistic of this war. It fundamentally changes the nature of the relationship between Ukraine and its Western partners.*

## What this means for future Western aid

### A shift toward partial financial autonomy

This export mechanism does not replace the continued Western **military** aid **Ukraine** still needs to repel the Russian **invasion**, but it introduces a complementary funding source that could, over time, reduce Kyiv's exclusive reliance on aid budgets voted by Western parliaments, often subject to the vagaries of electoral cycles and domestic politics.

This diversification of Ukraine's **defense** industry funding sources could, **moreover**, prove strategically valuable at a time when uncertainty persists over the long-term commitment of certain Western partners, notably the United States under the **Trump** administration.

### A model that could inspire other reforms

This mechanism could also serve as a model for other structural reforms within Ukraine's **war** economy, illustrating an administrative and legal innovation capacity that contrasts with the sometimes widespread image of a warring state necessarily paralyzed by the daily urgency of conflict.

This institutional innovation capacity, in the middle of a **war**, deserves to be highlighted as an indicator of **resilience** that goes well beyond the purely **military** sphere to touch the country's broader economic and industrial governance.

*I believe this financial diversification is vital. No democracy should depend 100% on the shifting political goodwill of foreign parliaments to fund its survival, however supportive its allies may be today.*

## The risks and limits of the new system

### A bureaucracy that could slow things down despite good intentions

Despite the announced acceleration in processing times, some observers question whether the Ukrainian administration, already stretched by the daily management of the **war**, can effectively handle a potentially growing volume of export requests within the announced 30-day deadline.

This concern, while legitimate, must **however** be weighed against the Ukrainian government's clear political will to make this system work quickly, as shown by the adoption of the "Fast Track" decree specifically designed to avoid administrative bottlenecks that could discourage international partners.

### The risk of diversion to unwanted actors

Despite the legal safeguards in place, including the ban on re-export without written consent, some **security** experts point to the residual risk that Ukrainian technologies could end up, through indirect routes, in hostile hands, a risk inherent to any export of sensitive **military** technology, regardless of country of origin.

This risk, documented throughout the history of the international arms trade, **notably** justifies the methodical caution with which Kyiv has built this mechanism, favoring strict control over rapid, unregulated commercial opening.

*I remain clear-eyed about these residual risks: no control system is perfect, and the history of the arms trade is littered with examples of diverted technology. But Ukraine's current caution limits this risk as much as possible.*

## Comparison with other wartime defense industries

### A rare historical precedent

Few nations in modern history have developed a significant arms export industry while themselves engaged in an active existential conflict on their own territory. This situation places **Ukraine** in an almost unique category, where the necessity of survival has paradoxically accelerated industrial innovation that now exceeds its own immediate needs.

This dynamic recalls, to a lesser extent, the rapid industrial transformation observed in other nations facing prolonged existential threats, though the Ukrainian context remains distinct given the scale of international support received and the specific nature of the drone **warfare** that has largely defined this conflict.

### An industry forged by necessity rather than planning

Unlike many **Western** **defense** industries developed over decades of **strategic** planning in relative peacetime, Ukraine's drone and defense technology industry developed under absolute urgency, under bombardment, with innovation cycles accelerated by the immediate necessity of survival on the battlefield.

This particular origin gives Ukrainian technology an operational credibility that few Western competitors can claim with the same legitimacy, having been tested and refined under the most demanding combat conditions rather than in laboratories or simulated exercises.

*This battle-forged legitimacy is Ukraine's most powerful commercial argument. No Western laboratory, however sophisticated, can replicate the authenticity of operational experience gained under enemy fire for four years.*

## Negotiations underway with Washington

### A Drone Deal agreement with the United States still to be finalized

According to **Reuters**, **Ukraine** is also seeking to conclude a Drone Deal agreement with the **United States**, a negotiation that, if successful, would represent a major additional acknowledgment of the **strategic** and commercial value of Ukrainian **defense** technology by the largest Western **military** **power**.

This negotiation with Washington takes place against a broader backdrop of sometimes tense relations between Kyiv and the Trump administration over continued **military** support, making any progress toward a mutually beneficial commercial agreement in the **defense** field all the more significant.

### A signal of mutual trust despite political tensions

That a Drone Deal agreement with the United States could materialize despite occasional political tensions between Kyiv and Washington would illustrate the intrinsic value of Ukrainian technology, attractive enough to transcend momentary diplomatic ups and downs and rest on durable strategic and commercial interests on both sides.

This dynamic could also strengthen **Ukraine**'s position in its broader negotiations with Washington on other matters, defense technology becoming an additional diplomatic lever in a bilateral relationship otherwise marked by a degree of unpredictability.

*I remain measured on Trump: his administration has at times sown doubt about its commitment to Ukraine, but if Washington signs a Drone Deal, it would prove that American strategic interest always ends up outweighing passing political hesitations.*

## The potential impact on Ukraine's war economy

### A new revenue stream unrelated to international aid

This export mechanism gives Kyiv a new revenue stream not dependent on international aid, a funding source generated directly by an industry **Ukraine** built almost entirely under enemy fire. This kind of autonomous revenue could gradually strengthen the budgetary **resilience** of the Ukrainian state as the conflict enters its fifth year.

This partial financial autonomy, while not replacing indispensable direct **military** aid, contributes to a broader transformation of Ukraine's economic posture, moving from near-total dependence on outside aid toward a hybrid model combining international support with its own industrial revenue.

### Direct reinvestment in production capacity

Funds collected through this mechanism will be directly reinvested in strengthening the production capacity of Ukraine's **defense** industry, creating a virtuous circle in which every export contributes to increasing **Ukraine**'s future capacity to equip its own armed forces, beyond the immediate financial benefit alone.

This reinvestment loop illustrates the **strategic** coherence of the entire mechanism: every dollar generated by exports ultimately serves to strengthen **Ukraine**'s ability to defend itself, rather than being diverted to other budget priorities unrelated to the **war** effort.

*This virtuous circle between exports and military reinvestment is, in my view, the most concrete proof that this mechanism truly serves the Ukrainian war effort rather than mere commercial interests disconnected from the front.*

## What Western allies should take away from this

### A lesson in industrial adaptability in wartime

**Ukraine**'s Western partners, facing their own rearmament and **modernization** challenges for their **defense** industrial bases, could draw valuable lessons from the speed with which Ukrainian industry has managed to adapt, innovate and now market its technologies, despite the most unfavorable conditions imaginable.

This rapid adaptability often contrasts with the bureaucratic slowness that characterizes many traditional Western weapons programs, hampered by complex acquisition processes and development cycles sometimes spanning decades before reaching operational capability.

### A partnership that benefits both sides

Easier access for Western countries to combat-tested Ukrainian technologies, via this new export mechanism, could significantly accelerate the **modernization** of their own air **defense** and drone **warfare** capabilities, an area where Ukrainian expertise now surpasses that of many older **Western** armies less versed in this specific type of conflict.

This two-way transfer of expertise illustrates the genuinely reciprocal nature of the partnership built between **Ukraine** and its Western allies over the course of this **war**, moving well beyond the one-sided assistance relationship of the conflict's early years.

*I believe the West has far more to learn from Ukraine, about rapid innovation in a time of crisis, than the reverse. This export mechanism is also an opportunity for our own armed forces to modernize their drone warfare doctrines.*

## The Israeli precedent and the South Korean example

### Two models of defense industries born of threat

The Israeli example, whose **defense** industry historically developed in response to a permanent existential **threat**, offers an instructive parallel for understanding Ukraine's current trajectory. South Korea, facing the North Korean threat for decades, has also turned its defensive necessity into a globally recognized arms export industry.

Both precedents suggest **Ukraine** could follow a similar trajectory over the longer term, turning an industry born of absolute necessity into a durable economic sector that will survive well beyond the eventual end of the current conflict with Russia.

### One major difference: the war is still active

Unlike Israel and South Korea, which developed their export industries in contexts of low-intensity conflict or **deterrence** rather than continuous active **war**, **Ukraine** is building this model even as it fights a full-scale **invasion** on a daily basis, a circumstance that makes its administrative success all the more remarkable.

This major contextual difference also explains why the Ukrainian mechanism includes such strict safeguards, unlike the Israeli and South Korean models, which were able to evolve gradually over several decades without the pressure of daily kinetic conflict on their own soil.

*I see in the Israeli and South Korean models further proof that Ukraine's defense industry has a future well beyond this war. This is not a temporary bubble, it is the beginning of a durable economic sector.*

## Conclusion: selling to survive, an equation openly embraced

### A decision that is not unanimous but is asserting itself

This new Ukrainian arms export mechanism, with its 20 to 30% levies to the state **defense** fund, its strict safeguards on critical products and its sophisticated legal architecture, reflects a **Ukraine** that refuses to limit itself to the role of passive beneficiary of Western aid, actively choosing to turn its industrial **resilience** into a lasting **strategic** and financial advantage.

Whether this mechanism fully achieves its financial goals remains to be seen in the months ahead, but its very existence, approved in the middle of an active **war**, testifies to an institutional and industrial capacity that contradicts any simplistic image of a country defined only by its vulnerability to Russian aggression.

### A moral and strategic equation embraced without hesitation

Selling what keeps it alive is, for **Ukraine**, another way to finance its own survival and strengthen its long-term ability to defend itself, a moral and **strategic** equation that Kyiv openly embraces, without trying to hide it behind watered-down diplomatic language.

*I'll close with one conviction: a nation that finds a way to fund its own resistance, in the middle of an invasion, deserves more than our admiration. It deserves for the West to accelerate its own deliveries too, without ever hesitating again.*

**By Maxime Marquette, columnist**

## Columnist's transparency note

### Editorial stance

I am not a journalist but a **columnist and analyst**. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. **I claim analytical clarity**, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

### Method and sources

This text keeps the basic distinction between **verified facts and interpretive analysis**. The rule never changes: a factual claim is published only when a verifiable source supports it, and the sources this article actually used are listed under **Sources**, never here.

**Primary source families** used by the publication, when the story has them: official statements from governments and international institutions, public statements by political leaders, reports from intergovernmental organisations, dispatches from recognised international news agencies.

**Secondary source families**: specialised publications, internationally recognised news media, analyses from established research institutions, reports from industry organisations.

When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under **Sources**.

### Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a **critical, contextual synthesis** based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.

## Sources

### Primary sources

- Ministry of Defense of Ukraine — official site

- Reuters — Ukraine announces framework for wartime arms exports, July 1, 2026

- Army Inform — Ukrainian defense news

### Secondary sources

- Ukraine's Arms Monitor — Arms Trends in Ukraine, June 29 to July 5, 2026

- EFE — Ukraine drone weapons exports, July 3, 2026

- Foreign Policy — geopolitical analysis

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Source: Maxime Marquette, MadMax. When citing, name the author and link https://mad-max.co/en/article/l-ukraine-ouvre-ses-exportations-d-armes-20-a-30-au-fonds-de-defense