Freyja and the making of a European defence industry

In signalling a sharper focus on common European security, European Commission President Ursula von der Leyen’s 16 September 2026 State of the Union address was unsurprising. But one sentence deserves more attention. Von der Leyen referenced Freyja, a joint Europe-Ukraine anti-ballistic missile-defence project. This could mark a positive step in a context in which Kyiv endures barrages of Russian missiles and drones, while supplies of the anti-ballistic missiles Ukraine needs to defend itself are insufficient.

Patriot interceptors from the United States are becoming harder to obtain. Buying some additional Patriots with EU money will not solve the structural supply problem. A new pan-European missile defence system is thus critical. Freyja brings together companies, innovation and technology from Ukraine, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden and the United Kingdom. At an estimated $700,000 per interceptor, Freyja – for which there could be a prototype by mid-2027 – could offer a European-produced alternative at roughly one-fifth of the cost of a Patriot missile.

Freyja is one of many defence partnerships between European and Ukrainian firms that have already been formed. Warfare is changing rapidly and rapid adaptation is both a military necessity and a necessity for the entire defence industrial base. At least 180 international business-to-business partnerships involving Ukraine have been formed, of which 20% are with German firms, 10% with Danish firms and 9% with US firms.

Further EU funding for Ukrainian security should emphasise cooperation between European and Ukrainian defence firms for three reasons.

First, it would strengthen both Ukrainian and European security. A European missile-defence system developed with Ukraine and produced in Europe will reduce dependence on the US and restore deterrence in Europe. 

Second, testing weapons in real combat in Ukraine will give European defence firms an opportunity to become world-class. The European defence industry has spent decades building advanced components, sensors, radars and guidance electronics. With Ukraine, it can integrate them into a complete, active defence system, then test and refine them against a sophisticated enemy. In Ukraine, the feedback loop between the battlefield and the factory has been compressed into weeks and months, rather than decades – and the Brave1 Test in Ukraine programme has already been established to facilitate this. 

Third, innovation that comes out of Europe-Ukraine cooperation will not stay within the defence sector. Modular, rapidly upgradable systems built under wartime cost and time pressures will push advances in manufacturing, software and hardware interaction, sensor fusion (combining data from multiple sources) and supply-chain resilience. These will have civilian applications, in the same way that defence research during the Cold War seeded decades of dual-use innovation, from satellite navigation to the internet.

However, Europe-Ukraine cooperation is not without challenges. More than one in five Europe-Ukraine industrial partnerships stalled post-launch. Partnerships led by private Ukrainian firms succeed roughly 96% of the time, against 62% for state-owned enterprises. The gap reflects how much cooperation depends on informal speed and flexibility, rather than predictable rules. Financing is similarly fragmented. Denmark’s channelling of funds directly through Ukraine’s Defence Procurement Agency with strong oversight has proved scalable. But faster bilateral deals involving other partners lack shared mechanisms for setting priorities or monitoring results.

Meanwhile, hold-ups in Ukraine on tying foreign money pledged for security to reform mean Ukraine’s 2027 draft budget risks underfunding defence expenditure because of lack of external support. From 2027, a significant share of Ukraine’s defence production will have to come from joint ventures with European firms, to replace some US systems and to confront new threats from Russia. 

In that context, EU programmes, including the European Defence Industry Programme (EDIP), Security Action for Europe (SAFE) and the Ukraine Investment Framework (UIF), are small. They also presuppose that Ukrainian companies already have significant contracts that would make them credible to partners. A cash-constrained Ukrainian procurement budget cannot guarantee such contracts.

Ramping up cooperation between Ukrainian and European defence firms will be difficult. Different models are discussed: from codifying Danish-style cooperation via multilateral mechanisms, possibly via the multilateral Defence, Security, and Resilience Bank or a Multilateral Defence Mechanism, to a new cooperation agreement between the EU and Ukraine.

Whichever is chosen, joint ventures and their financing need to grow significantly to meet Ukrainian and European defence needs, serving the Ukrainian front line and rebuilding European stocks. There should be a move from project-by-project grants to multi-year purchase commitments large enough to make joint ventures bankable in Europe. The challenge is to turn Freyja and projects like it into a functioning and scaled Europe-Ukraine defence cooperation system.