Opinion: Why Denmark Is Betting on Ukraine’s Defense Industry

In early December, reports surfaced that Denmark plans to cut its military assistance to Ukraine dramatically – from DKK 16.5 billion ($2.3 billion) in 2025 to DKK 9.4 billion ($1.3 billion) the following year. At first glance, this appears to signal waning commitment from one of Ukraine’s most reliable allies. 

But what if there is an alternative viewpoint? Direct aid might be replaced by a more durable approach, such as a high-stakes bet on integrating with the Ukrainian defense industry into its own survival strategy? Especially when the “Greenland question” is back on the table.

That logic became clearer in November, when the MITS Capital executive team spent several weeks in Denmark and neighboring European countries, holding dozens of back-to-back meetings with private and institutional investors, government officials, local authorities, and industry leaders. Needless to say, we had a very warm reception.

We followed three tracks: manufacturing and R&D partnerships, dialogue on potential procurement of Ukrainian defense products, and investment. These are the core, most viable models for Denmark and Ukraine to cooperate on defense, grounded not in political agreements but in long-term state strategy and professional execution. 

The outcome? Taken together, these negotiations shed light on why Denmark is so heavily involved in supporting Ukraine’s defense sector.

Among the Nordic countries – and across Europe – Denmark stands out for its clear-eyed assessment of the threat posed by Russia. From Ukraine, the headlines often focused on reports of “unidentified” drones appearing near Danish military sites and other sensitive facilities. Inside Denmark, however, the picture looked much more alarming.

In November, a wave of massive cyberattacks targeting government systems, defense companies, and political parties dominated the national news agenda. Soon after, the Danish Defence Intelligence Service (FE) explicitly stated that Russia’s military threat to NATO will increase, even though there is currently no imminent risk of a conventional military attack on the country.

Denmark’s strategic position will be decisive for the global security architecture in the years ahead. The logic is simple: if Russia were to establish control over the Baltic region, the next target would not be Sweden or Finland, but Denmark itself. The critical factor is the island of Bornholm: whoever controls it controls access to the straits leading out of the Baltic Sea and, by extension, the regional balance of power.

And last but not least, Greenland. President Donald Trump revived plans for it immediately after the Venezuelan campaign. Denmark, through its prime minister, Mette Frederiksen, takes these statements extremely seriously, not only when they come from the United States, but also from other countries. A single look at the map of exclusive economic zones in the Arctic Ocean, which could become largely ice-free in 15 to 20 years, makes clear why. Climate change is opening new maritime routes and, simultaneously, a new strategic contest.

Only five countries have direct access to the Arctic Ocean: the United States, Russia, Canada, Norway, and Denmark, through Greenland. Denmark controls the world’s third-largest exclusive economic zone and operates one of the largest civilian shipping fleets globally – a vital backbone of international supply chains.

As access expands, control over sea lanes and logistics will become a central factor in the next redistribution of global security and economic power. Those who control the routes will set the rules.

This, in turn, necessitates rearmament. It is therefore unsurprising that Danes seek cooperation with those who have the most up-to-date experience in developing cost-effective weapons for technology-driven warfare.

We’re aware of at least two dozen Ukrainian defense technology startups and mature manufacturers – including MITS Industries’ founding companies – that are currently working on establishing production partnerships in Denmark. It is critical to recognize that no one wants to relocate manufacturing from Ukraine. More importantly, there is no single good reason to do this.

Unlike France, Germany, the United Kingdom, or the United States, which tend to engage only after complete relocation, Denmark follows a different model. It is a small country with expensive industrial production, no large-scale defense manufacturing base, and little motivation to build one from scratch.

Denmark does, of course, have plants. But they are concentrated in clearly defined sectors, above all, renewable energy. Component manufacturing is also well-developed, while large-scale assembly and heavy engineering remain relatively limited. A great example here is shipbuilding. Much of the physical production has moved abroad, while Denmark has retained the highest value-added segments: advanced R&D, engineering, and core technological expertise.

In Copenhagen, it is widely comprehended that it is strategically advantageous for Ukraine not to lose the war and that its core defense production remains in Ukraine. Investing in modernizing and scaling the existing Ukrainian facilities is far more efficient than replicating them in full, including infrastructure, logistics, and supply chains, in Europe.

On the other hand, Danes are true masters of industrial automation. We visited a factory with only five workers that produces output to satisfy customers globally. 

At the same time, Denmark has spent decades making sustained investments in fundamental research, building three major technology clusters around its leading universities. The Copenhagen cluster focuses on sensors, applied mathematics, and quantum computing. Around the University of Southern Denmark, the emphasis is on industrial automation and robotics. The cluster centered at Aalborg University has developed strong capabilities in space technologies.

Taken together, these clusters have generated a substantial body of intellectual property with clear defense potential. Yet given the limited scale of the domestic defense industry, much of this IP has few meaningful deployment options.

The point of synergy is clear: combining Denmark’s industrial expertise and intellectual property with Ukraine’s experience in military innovation and its capacity for urgent execution.

The final component is capital. Ukrainian defense companies need to scale production in Ukraine and export to Europe. To do so, they must first obtain NATO certifications and bring their facilities into compliance with European industrial standards, a process that requires significant resources.

The good news is that investors tend to think ahead and understand that Europe is slowly (or rapidly) preparing for war. This is precisely why defense investment is rising sharply. The problem lies elsewhere: there are few high-quality avenues for deploying that capital.

Formally, investors can turn to large European stocks, and that is precisely what is happening today. Since the beginning of 2025, the Stoxx Europe Aerospace and Defense index has surged by more than 50%.

At the same time, the pool of high-quality European private defense deals remains limited. All names are widely cited: Helsing, Quantum Systems, Stark, and some others. In practice, this is a narrow circle: roughly a dozen companies competing for capital from the same group of investors, primarily because they have already built momentum and visibility.

There is no shortage of investors or of interest. But what matters fundamentally is working with investors who can unlock production partnerships and support go-to-market execution. Those who can help package a product in a way that makes it genuinely purchasable by European defense agencies.

Denmark has a substantial pool of capital that can and should be deployed. According to European Commission projections, the country’s budget surplus is expected to reach 2.3% of GDP in 2025. This creates room not only to increase defense spending, but to act on a rare alignment of interests: Denmark needs advanced products to defend itself, and Ukraine already produces them.

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.