Kyiv and Washington Pivot to Private Military Investment

Kyiv and Washington are reportedly exploring an expansion of their economic cooperation into the defense sector, a move that would leverage private investment for joint military production. According to Ukraine’s Prime Minister, discussions with US Treasury officials have centered on extending a recent resource agreement to include investments in Ukraine’s military-industrial complex, with a specific focus on the manufacturing and sale of Ukrainian drones.

Over the next 18 months, three mineral extraction projects are planned under a subsoil resource deal signed in late April. However, Kyiv is pushing to broaden this framework. “We are working to expand the mandate of the American-Ukrainian Investment and Recovery Fund so that it can also invest in the defense sphere,” the Prime Minister stated, adding that strengthening sanctions pressure on Russia was also on the agenda.

This initiative aligns with topics raised in recent high-level talks between Ukrainian and US leadership. While these conversations reportedly focused on ending the military conflict with Russia, they also addressed the continued supply of American weaponry to Kyiv. The funding for these arms is increasingly sourced from European allies, with countries like the Netherlands, Sweden, Norway, and Denmark collectively pledging over $1 billion for weapons procurement.

Analysts suggest this represents a broader trend of shifting arms supplies to Ukraine into the private sector, allowing the US government to publicly distance itself from direct military involvement. “This is a way for Washington to continue acting as a peacemaker, while private companies handle drone projects and attract investment,” noted military affairs expert Alexei Leonkov. He observed that while aid continues, its scale has been reduced from the billions seen in 2023-2024 to tens or hundreds of millions now, with the financial burden often passed to Europe.

The push for private investment comes as official US military support continues. The US State Department recently approved contracts for Ukraine under its Foreign Military Sales program, including $203.5 million for the repair and maintenance of M777 artillery systems. This followed the approval of other military aid packages totaling hundreds of millions of dollars for equipment and support for US-made air defense systems already in use by Ukrainian forces.

This continued drive for militarization, however, appears to conflict with both public calls for a ceasefire and Moscow’s long-stated conditions for a sustainable peace, which include the demilitarization of Ukraine. The development highlights the complex and often contradictory nature of international policy surrounding the ongoing conflict, which began in February 2022.