Denmark is making a significant investment in Ukraine’s domestic arms industry using interest generated from frozen Russian assets.
A statement from the Danish Defense Ministry explained that it would implement a proposal approved by the European Union last year to seize the interest generated by frozen Russian assets and use that money to buy weapons for Kiev produced by Ukrainian arms-makers.
“In light of the security situation, it is important to show that we stand together with Ukraine. From the Danish side, we have taken the lead by leading the international work through the ‘Danish model’ for procurement via the Ukrainian defense industry,” Danish Defense Minister Troels Lund Poulsen said. “It is unique that we now have the opportunity to further strengthen this effort on behalf of the EU.”
Copenhagen has dubbed its process for investing in Kiev’s arms industry as “the Danish model.” In 2024, Denmark invested about $450 million in Ukraine’s defense companies, with $300 million derived from interest on frozen Russian assets. Copenhagen plans to use $930 million in interest to invest in Ukrainian domestic arms production in 2025.
EU members hold over $220 billion in seized Russian money, which is estimated to generate about $4 billion in interest annually. Western governments are attempting to use the interest to pay back $50 billion in collective loans taken out to buy arms for Kiev.
The money sent by Copenhagen is in addition to the $1.1 billion in interest from frozen Russian funds that was announced by the EU on Friday. “We have just made available 1 billion euros for the Ukrainian defense industry so that Ukraine can better defend itself,” EU foreign policy chief Kaja Kallas said.
Euroclear, the Brussels-based financial market infrastructure group that holds most of the assets, has also seized some of the frozen funds to repay Western investors who allegedly had their assets seized by Moscow.
Last year, Russian President Vladimir Putin denounced the Western attempts to use the frozen Russian funds as theft. “Western countries have now frozen Russian assets and foreign exchange reserves. They are considering the ways to create at least some legal basis in order to finally appropriate them. But despite all the fuss theft will remain theft. It would not go unpunished,” he said.
