Before Russia invaded Ukraine, a manufacturer who goes by Pyotr Ivanenko, using a pseudonym to protect his business and his family, produced sports equipment in Ukraine’s second largest city, Kharkiv. When Russian troops surrounded the city, bombarding it relentlessly and prompting three-quarters of the population to flee, Ivanenko, a fit man with a shaved head and ice green eyes, made a decision. “I needed to change what I was doing,” he told me an interview, “to switch to making what the country needs.”

By 2023, he was churning out homegrown armored vehicles—his company makes everything but the engines—and angling for a contract with the defense ministry. By 2025, he had developed two types of unmanned ground vehicles that can transport supplies to remote military positions, evacuate wounded soldiers, and carry a mounted gun into hostile territory, allowing a gunner in the rear to fire at the enemy from close range.

Now, like almost all Ukrainian arms manufacturers, Ivanenko has a problem. His defense ministry contract is coming to an end. And, although he sells personnel carriers and robotized vehicles to fighting units all along the front line, he says he could make 10 times as many if the government had the money to buy them. But the 2025 Ukrainian budget allocates just $17.5 billion to purchase weapons, exactly half the $35 billon in equipment the domestic arms industry says it can produce. Virtually all manufacturers, large and small, are clamoring for some kind of relief.

Legislation passed in parliament last week will begin to address this problem. The Defense City initiative promises deregulation and tax exemptions for qualified manufacturers, complementing a related government push to launch joint ventures with European companies. Under the Build With Ukraine program, joint production can take place either in Ukraine or in the partner country, and the ministry says dozens of projects are already in the pipeline.

Estimates suggest that, together, Defense City and Build With Ukraine could boost the country’s defense production by tens of billions of dollars. President Volodymyr Zelensky has set an ambitious target—that by early 2026, domestic manufacturers will be producing half of what the country uses on the battlefield. That would be a significant increase from the current 40% share, as Zelensky publicly estimated.

The question Ivanenko and other manufacturers are now asking themselves: will this be enough? Will it enable them to realize their potential and reduce Ukraine’s need for security guarantees from Europe and the U.S.?

Much like Ivanenko’s armored vehicle production, still housed in a cluster of hastily built sheds, the Ukrainian defense industry is largely new and expanding exponentially. Ukraine was at the heart of the Soviet military industrial base, leaving a bounty of

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