With Ukraine's hopes for Nato membership dashed and its Western allies unlikely to provide binding security guarantees that would commit countries like Britain or France to deploying troops in Ukraine, President Volodymyr Zelenskiy is relying on the one security guarantee he can trust: the Armed Forces of Ukraine (AFU).

US special envoy to Ukraine, retired Lieutenant General Keith Kellogg, finally admitted that Ukraine was “never promised Nato membership” during a question and answer session at the Munich Security Conference (MSC). Separately, US Secretary for Defence Pete Hegseth said that the earliest Ukraine’s membership in Nato could be considered was in 25 years.

“If the doors of the alliance remain closed to Ukraine, we must build Nato on our territory by strengthening the AFU,” Zelenskiy said in an interview with The Economist last week. "If Ukraine is not in Nato, then this means that Ukraine will build Nato on its territory. Therefore, we need an army as large as the Russians have today. And for all this, we need weapons and money.” 

Ukraine has about 1mn men in the field, but Zelenskiy says this will have to be increased to 1.5mn, and that without Nato membership or further US aid he will be looking to Europe to pay for it. According to recent estimates released before the start of the MSC, a standing of that size would cost some $30bn a year and in addition the EU would have to invest a total of $3 trillion over the next five years to upgrade its own defences.

The increase in the size of the AFU is needed as Russia is seriously outgunning both Ukraine and the EU. Zelenskiy noted that the EU has a total of 82 brigades, and Ukraine 110, while Russia fields a total of 220 brigades – more than Ukraine and the EU combined.

Europe needs to substantially expand its defence spending to deter and contain the Russian threat, Zelenskiy said. The Ukrainian president has also called for an “armed forces of Europe” to shore up European security as it becomes apparent that US President Donald Trump is likely to limit Nato’s security promises for those counties that don’t increase their defence spending.

“Even together, we cannot compare with the Russian army. Therefore, if we are talking about security guarantees, we must find money for a larger army in Ukraine, and we must find ways to increase the production of arms and also expand the army in Europe,” Zelenskiy said in his MSC speech.

As bne IntelliNews reported, Europe has been very slow to invest in military procurement contracts. The US has similarly shied away from signing these contracts that would commit the Pentagon to years of large orders for shells it doesn’t need; pre-war the US was only producing around 100,000 shells a year, mostly used for target practice.

Europe’s defence industry is in a sorry state, as highlighted in the recent report by former Italian prime minister and ex-European Central Bank boss Mario Draghi. Germany has the biggest defence sector in Europe, but it has already run its stockpiles down to the point where they will take decades to rebuild. Britain, which also has a large defence sector, is in a similar position; the UK would run out of ammo in less than two months if it went to war with Russia, Tory defence committee member Mark Francois said last year. And that is not to mention that all three of Europe’s biggest military powers – Germany, France and the UK – are currently facing budget crises.

Arms depots in Europe and Ukraine are empty due to high demand on the continent, said Armin Papperger, executive director of the German defence company Rheinmetall. "The Europeans and Ukrainians have nothing in the [weapons] storages," he told the Financial Times on February 18. He added that demand for weapons in the region will remain high even after the end of the conflict in Ukraine amid promises by Trump to cut military support for Europe.  

Europe’s tardy investments were made clear when the EU missed the deadline to provide Ukraine with 1mn shells by March 2023, delivering them nine months later. Since then, Czechia has led a drive to source more shells from outside Nato, and reported last week that it had delivered 1.6mn shells to Kyiv.

As the ceasefire talks between Russia and the US get underway in Riyadh, one of the key topics being discussed is the deployment of peacekeeping forces to oversee a proposed demilitarised zone (DMZ). The US has made it clear that Russia will continue to hold the approximately 20% of the country it currently controls. The White House sent out a questionnaire to the EU member states a week earlier asking how many troops they could commit to a blue helmet force; at the time of writing only France and the UK said they were willing and could provide a total of 25,000 troops.

That is far too little. Military experts estimate that the peacekeeping force would need to be about 120,000 strong as the line of contact is over 1,000km long. Zelenskiy has called for a Nato-backed force numbering 200,000 men. Europe will not be able to muster that many men even if it wanted to, according to the head of the Polish National Security Bureau, Dariusz Lukowski.

"If we are discussing a 100,000-strong contingent, we’re talking about an entire army corps, a very large corps. Europe does not have such forces prepared for deployment," Lukowski said on Radio Zet on February 17. "Europe lacks such troops. Take Germany for instance - it most likely has only one division that could be fully mobilised, and even that would require considerable effort.”

At the same time Ukraine will struggle to add another 500,000 to the AFU. The Rada passed a new tougher conscription law in April last year, but is suffering from an acute manpower shortage, due the high number of men killed or wounded in action – even if this is lower than the estimated Russian losses – and rising desertion rates from the front line.

A less critical, but still large, problem is supplying both the expanded Ukraine and EU armed forces if US supplies are cut off.

"We will need money and also weapons. Also, the package of weapons and missiles that we have written out in our victory plan. And if Putin launches a new invasion, we could use such weapons," Zelenskiy said in his MSC speech.

Russian vs Ukrainian and European arms production

Russia, Ukraine and the European Union (EU) have vastly different military and industrial capacities. Three years of war in Ukraine have led to major shifts in arms production, stockpiles and overall defence strategies. Ukraine saw domestic production of arms go from next to nothing in 2022 and expanded by 500% y/y in 2024 thanks to the “Danish model” of cooperating with international arms producers. At a conference in 2023 Zelenskiy proposed to make Ukraine a military production hub and that programme has made a lot of progress, but Kyiv still only produces about 40% of what it uses in its own factories, relying on imports for the rest.

The US has largely stopped supplying Ukraine with arms from its own stockpiles and money allocated to arms supplies as part of last year’s $61bn aid package are in the form of orders for new weapons and ammo with US arms manufacturers. The EU has been digging into its own stockpiles to arm Ukraine, but it too is starting to scrape the bottom of the barrel. The EU has been particularly slow to sign off on the military procurement contract with EU arms producers, which is crucial for enabling them to make the necessary investments to increase production. This delay is significant, as their output remains modest in comparison to Russia's rapidly growing production capacity.

As reported by bne IntelliNews, one of Russia’s often-overlooked strengths is its position as the manufacturing powerhouse of Europe, out producing even Germany. Russia has leveraged this considerable might to manufacturing weapons.

Spending

Russia has ramped up spending on defence every year since the start of the war and increased spending this year again to 7.5% of GDP from around 6% last year – spending about three-times more than Ukraine, or $122bn in 2024. That is still a third of what the EU spent that year ($350bn), but in PPP (purchase power parity) price adjusted terms Russia’s spend is roughly equivalent to the EU’s entire defence budget. A 155mm shell costs about $1,000 each to make in Russia, but between $5,000 and $10,000 in the West. In general, Russia gets a lot more bang for its buck.

Defence Budgets (2021-2024)
Year	Russia ($bn)	Ukraine ($bn)	EU Total ($bn)	Nato ($bn)
2021	$65.9bn	$5.9bn	$225bn	$1.09tn
2022	$86.4bn	$29bn (with aid)	$300bn	$1.15tn
2023	$109.6bn	$34bn (with aid)	$335bn	$1.2tn
2024 (est)	$122bn	$37bn (with aid)	$350bn+	$1.3tn
Source: OSINT and Western defence analysts reports

Russia has nearly doubled its defence budget since 2021, investing heavily in arms production and has just boosted spending again this January, up a whopping 73.6% to RUB4.4 trillion ($48bn) or around 7.5% of GDP.

Ukraine is spending even more on defence in relative terms, at about 20% of GDP. That is unsustainable, with 60-70% of the inevitable budget deficit covered by international grants and loans, totalling around $40bn annually. As the war is about to go into its fourth year, Ukraine’s allies have been gradually transitioning from grants (that don’t have to be repaid) to loans (which do). As a result, Ukraine’s debt-to-GDP ratio has risen from around 35% pre-war to a few percentage points shy of 100% of GDP now. Institutions like the European Investment Bank (EIB) are increasingly taking up the weight of funding Ukraine’s investment projects and ongoing reconstruction work.

EU defence spending has increased and long since overtaken US funding, according to the Kiel Institute’s support tracker (chart), but is still fragmented, with Germany, France and Poland leading military expenditures.

However, the spending is contained as aid to Ukraine and limited. In the event of a broader war, NATO's combined spending would far exceed Russia's, but it is currently spread across various global commitments, not just focused on Ukraine. Reallocating those resources solely to counter Russia would require significant increases in spending.

Workers

Defence Industry Workforce (2024 Estimates)
Country/Region	Defence Industry Workers
Russia	~3mn (direct + indirect)
Ukraine	~250,000
EU (Total)	~1.3mn
Nato (Total)	~3.5mn
Source: OSINT and Western defence analysts reports

Russia has a vast defence industry workforce – larger than that of the entire EU – but the demand for manpower at the frontline has also caused a chronic labour shortage. Russia’s poorest regions in the remote hinterland have been the biggest winners from the war as that is where most of the defence sector factories were located during the Cold War, and these are now working three-shifts 24/7 to meet the Armed Forces of Russia's (AFR's) insatiable demand for arms.

Ukraine’s pre-war defence sector was much smaller and dominated by Ukroboronprom, which has been rebranded as the Ukrainian Defence Industry after a long campaign to root out entrenched corruption at the company. Its workforce has been expanded and the government has backed a flourishing private sector of arms manufactures, largely drone-makers, that has appeared since the war. However, money remains short and Kyiv still relies heavily on foreign arms imports.

The EU’s workforce is highly fragmented across different countries thanks to massive underinvestment over the last two decades and the sector is still awaiting root and branch reforms.

Guns and shells

Small Arms Production
Category	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Assault Rifles (units)	500,000	1.2mn	20,000	200,000	700,000	1mn+
Machine Guns (units)	50,000	120,000	2,500	20,000	100,000	150,000
Source: OSINT and Western defence analysts reports

Russia has always had a large small arms production sector but ramped up production significantly since the war started, focusing on producing the legendary Kalashnikov AK-12 rifles.

The Kalashnikov Concern, renowned for producing the AK-47 assault rifle, continues to manufacture a surplus. In 2024, the company reported record-breaking revenues posting a 14.5% increase in sales and its highest earnings in a decade. Ironically, 40% of Kalashnikov exports went to the US pre-war.

Ukraine has increased local production of rifles and machine guns tenfold, but still lags well behind Russia and relies on imports from the EU and the US.

The EU’s production of small arms was slightly ahead of Russia’s pre-war but Russia has since overtaken Europe and is now on a par with the EU plus Ukraine’s combined production. EU production is led by Germany (Heckler & Koch), Czechia (CZ) and Belgium (FN Herstal).

Europe’s leading arms producers like Germany’s Rheinmetall have promised to set up factories in Ukraine to accelerate the development of its domestic defence sector, but work is still in the early stages. Rheinmetall has set up a factory to make and repair APCs, but basic things like a planned gunpowder factory will appear only next year at the earliest.

Ammunition Production (Small Arms + Artillery)
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Small Arms Rounds (million)	1,500	3,500	50	500	2,000	3,000
Artillery Shells (million)	2.5	6	0.1	1	0.5	1.5
Source: OSINT and Western defence analysts reports

Russia is outproducing the EU in crucial artillery shells as well, since the war in Ukraine quickly turned into an artillery duel. Russia makes the 152mm Soviet bore shells whereas Ukraine has become heavily reliant on the 155mm Nato standard.

As bne IntelliNews reported as early as January 2023, a shortage of shells has been one of Ukraine’s main disadvantages in countering the Russian offensive, which Kyiv has made up for by massively expanding its drone production. At various stages of the war, Russia was firing between five and 10 shells for every one shell the AFU shot back. The AFU was put in the ridiculous position of having to ration shell usage in the midst of intense campaigns for cities like Bakhmut in 2024, simply as it didn’t have enough. Bakhmut eventually fell to the Wagner mercenaries after eight months of fighting.

Europe’s reluctance to invest began to change in spring 2024 when more EU investment started to appear, but that was already two years into the war, whereas Russia made this change on almost day one of the conflict. However, at the start of this year, the Czech initiative to find more shell supplies outside of Europe paid off and Ukraine reached shell fire equity with Russia for the first time since the start of the war.

Despite the progress in shell production, if Trump withdraws US support for Ukraine, Europe alone will be “unable to fill the gap”, Zelenskiy warned.

Tanks

Tank Production
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Tanks (annual)	200	1,000+	10	100	150	500
Source: OSINT and Western defence analysts reports

 

Armoured Personnel Carriers (APCs)
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
APCs	500	2,000+	50	500	600	1,500
Source: OSINT and Western defence analysts reports

Tanks have played a less important role in the conflict than they traditionally do in large set-piece military conflicts as neither side has control of the air. Tanks are most effective when they are supported by aircover, but the lack of fighter jets exposes Ukraine’s tanks – even the Western-made modern battle tanks – to the “swarms of Russian drones”, while Russia’s tanks have been defenceless against the US supplied Javelin missiles.

Nevertheless, Russia’s tank production has surged, building and restoring a reported 1,000 tanks annually (T-90, T-72B3M), although actual production figures remain unclear. These figures are based on OSINT sources and Western defence analysts reports.

Russia’s production of new tanks is far lower at around 400 a year and its flagship new Armata T-14, designed to counter Germany’s Leopard 2 and the US Abrams tank, has surprisingly played almost no role in the conflict. Most of Russia’s increases in tank numbers come from restoring or upgrading its Soviet-era stockpiled old tanks like the T-62s and T-55s from storage. Newly manufactured tanks (T-90M, T-72B3M, and possibly T-14 Armata) are far fewer.

Among Russia’s tank fleet the most important include:

• T-90M Proryv: The most modern variant in production, heavily upgraded with Relikt ERA (Explosive Reactive Armour) and modern fire control systems.
• T-72B3M: The mainstay of Russian forces, continuously upgraded with new optics, armour packages and electronics.
• T-80BVM: A gas-turbine-powered variant being modernised.
• Older Soviet Tanks (T-62, T-55): Being refurbished and sent to the front due to high losses.

Western sanctions on Russia have stymied tank production thanks to the limited access to high-tech components, especially microelectronics for fire control and targeting systems. Production is also suffering from manpower shortages. The Russian Uralvagonzavod factory is working in three-shift cycles, but the quality of tanks is reportedly low due to material and labour shortages. Production of the Armata T-14 is reported minimal, with likely fewer than two dozen units operational due to cost and complexity. When the Kremlin showcased the Armata during a Victory Day parade two years ago, it broke down on Tverskaya, the main Moscow drag, after its engine caught fire.

Ukraine’s tank production is tiny in comparison, focusing on modernising existing T-64s. Ukraine has received a handful of tanks from the west – Leopards and Abrams – which were supposed to be a game changer, but they quickly got bogged down on the field and proved to be vulnerable to drone attacks. Russia destroyed and captured one German Leopard which is now on display on Red Square.

The EU could make a difference, but so far has been unwilling to commit to sending the 300-400 modern tanks that could make a difference on the battlefield. Germany’s Krauss-Maffei Wegmann and France’s Nexter are both planning increases in production of Leopard 2 and Leclerc tanks.

Planes

One of the surprises of the Ukraine war is that Russia didn’t take control of the skies in the first days of the invasion. Zelenskiy was clearly well aware of Ukraine’s massive disadvantage in airpower and called desperately in the first week of the war for Nato to “close the skies” over Ukraine and lambasted Nato for ignoring the suffering, deaths and destruction that Russia was inflicting on Ukraine and its people.

He also asked for just 1% of Nato’s tank fleet to “unblock the cities”. It took over two years for the first tanks and planes to arrive and even then in such small numbers to make no difference to the conflict.

Aircraft Production
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Fighter Jets	30	80	0	0	40	100
Bombers	10	20	0	0	5	20
Source: OSINT and Western defence analysts reports

Aviation is one of Russia’s few technological fortes and its best fifth-generation fighter jets are as good, or better, than anything the US produces. However, even these highly sophisticated weapons have largely been negated by the AFU’s SAM defences supplied weapons systems and the Russian military remains reluctant to fly their jets over Ukrainian territory, as several have been shot down. The story is similar with helicopters, after the AFU shot down its first Russian helicopter using a drone at the end of last year. Nevertheless, Russia has maintained strong aircraft production, mainly of its advanced Su-35, Su-57 and Tu-160 bombers.

Ukraine no longer has indigenous aircraft production, relying entirely on Western-supplied Soviet era MiGs supplied by its former Warsaw pact allies in Central Europe and a handful of US-made F-16s. The F-16s were, like the Leopard tanks, supposed to be a game changer, but only ten F-16s have been sent to Ukraine so far and one was immediately shot down due to “over-cautiousness”, according to reports. Ukraine has so few F-16s it dare not engage in dogfights with Russia’s Sukhoi jets, which are flown by veterans, while most Ukrainian pilots have had little more than a crash course in how to operate them.

Indeed, the US deliberately dragged its heels over training more Ukrainian pilots and currently there are no plans to send more of the jets to Ukraine. When US F-16 pilots joined Israel’s IDF in the air to shoot down Iranian missiles last April, Zelenskiy sourly commented that he would like “Israeli-level” air defences in his struggle against Russia.

Drones and EW

2.5 Drone Production
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Drones (total)	500	20,000+	200	1,000,000	2,000	100,000
Source: OSINT and Western defence analysts reports

The drone war has been the star of the Ukrainian conflict, and while the advantage has swung back and forth Ukraine currently has the upper hand in both drone production and electronic warfare (EW) to counter drone attacks.

The use of cheap low-tech drones to make up for the lack of artillery shells and hold Russian infantry advances at bay has changed the way that wars will be fought in the future. The drone as a remotely controlled weapon appeared under US president Bill Clinton and was expanded by Barack Obama, but were largely used as a tool of assassination. It was the Azeri’s that pioneered drones as an offensive weapon to devastating effect in its short war with Armenia in 2020 using Turkish made Bayraktar TB2 drones.

Military drone technology has come a long way since then, with Ukraine driving rapid innovation to the point where the first AI controlled drones that are impervious to EW countermeasures are arriving on the battlefield. The world is looking on, fascinated, as drones have made no man’s land on the line of contact a killing zone so that Russia is unable to follow up with infantry advances when it wins an artillery duel. As a result, assaults on cities like Bakhmut, Avdiivka and the current struggle for control of Pokrovsk drag on for months at an enormous cost in human lives when in the past their fall would have taken a matter of weeks, if not days.

A real arms race in drone production and development has emerged, with Ukraine currently leading the way after surpassing the one million drone mark last year.

Russia has also dramatically expanded drone production, especially Shahed-136 (Iranian) and Lancet loitering munitions, but still lags behind Ukraine’s rapid expansion. Putin claimed that Russia was building 1.7mn drones a year in a speech last year, but there is little evidence to support that and Russia remains heavily dependent on imported drones, especially from Iran.

Russia overtook Ukraine’s early lead in the drone wars in the first year of the war and quickly developed effective EW countermeasures, but last year Ukraine took back the lead in both drone technology and EW countermeasures, which has greatly contributed to its ability to hold back AFR forces.

In September 2024, Putin announced plans to increase drone production nearly tenfold, aiming for approximately 1.4mn units in 2024, but it appears that Russia continues to lag far behind Ukraine and remains heavily dependent on Iranian imports. Western sanctions have severely limited Russia's access to critical components, particularly advanced microelectronics essential for modern drone systems, all of which are freely available to Ukraine.

However, despite the successes, Ukraine’s drone capacity remains severely restricted due to the lack of funds. Drone manufacturers complain that they are only 20% of what the sector is capable of churning out, due to the lack of investment capital. Ukraine is aiming to further increase its fleet of drones this year, focusing specifically on the First Person View (FPV) attack drones.

The EU is far behind, despite Baykar’s TB2 factory in Poland, and has yet to invest heavily in drone development or production. The EU’s role in boosting Ukraine’s drone fleet will be simply to fund the expansion of Ukraine’s existing drone production, but this could be done quickly, to great effect and at relatively low cost.

Missiles and glide bombs

Ukraine’s drones can hold Russia at bay, but it is defenceless against Russia’s powerful FAB glide bombs that carry as much as 1,400kg of explosives, vs the 50kg typical of a drone, and can destroy most of Ukraine’s fixed defences as soon as they are built.

The glide bombs are another low tech innovation that has come out of the Ukraine conflict. They are basically Soviet-era gravity bombs on which Russia has strapped some wings and installed a crude navigation system. They have to be dropped from a fighter jet and have a limited range of only about 100km but because they fall more than fly, they are almost impossible to shoot down. And Russia has tens of thousands of these in its Cold War-era stockpile.

Ukraine also has glide bombs supplied by Western allies, including the US Joint Direct Attack Munition (JDAM) and Ground-Launched Small Diameter Bombs (GLSDB). These are more accurate and sophisticated than Russia's FAB glide bombs, but Ukraine’s arsenal is much more limited and Russia quickly nullified their effectiveness with EW countermeasures that have yet to be overcome.

Missile Production
Type	Russia (2021)	Russia (2024 est)	Ukraine (2021)	Ukraine (2024 est)	EU (2021)	EU (2024 est)
Cruise Missiles	200	600	0	50	150	300
Ballistic Missiles	50	150	0	20	80	150
Source: OSINT and Western defence analysts reports

In addition, Russia has increased production of its much more effective Kalibr, Iskander and Kinzhal missiles that include the new hypersonic cruise missiles that are also very hard to defend against. The Ukrainian Defence Ministry revealed for the first its interception rates for the various kinds of Russian missile last August, and admitted that it was shooting down less than 5% of some missiles like the Iskander or Tochka, while more than 99% of the Kh-22 and Kh-32 Missiles reach their targets.

However, as these bombs can cost at least a million dollars each, Russia has limited the use of them as it simply can’t afford to fire a lot of them. The newest addition to this class of bomb is the Oreshnik ICBM missile that has a range of 5,000km and was fired for the first time in November after the US authorised Ukraine to use Nato-made long-range weapons on targets inside Russia proper. The Oreshnik test was widely taken as a warning to Europe as the missile puts most European capitals into Russia’s range.

Ukraine is also developing and producing cruise missiles to counter the Russian arsenal. Zelenskiy announced in September last year that it has developed and tested its own cruise missile, Palyanytsia. It was first deployed in August, and it has a range of approximately 600-700 km, allowing it to target Russian military airfields and Bankova doesn’t need US permission to use it. The Palyanytsia is a hybrid between a missile and a drone, which makes it unique and hard for Russian defences to counter. While this missile is now in production, Kyiv doesn’t have more than a handful of them.

Ukraine’s homemade Neptune missile has been far more effective. Originally designed as a shore-to-sea warship killer, Kyiv has used it to devastating-effect and managed to push Russia’s Black Sea fleet out of its home bases in the Crimea – one of Ukraine’s biggest military successes of the war, especially given that Ukraine doesn’t have a navy of its own.

For the meantime, Ukraine will have to rely on the EU (France and Germany), which have a large array of very powerful missiles and are increasing production to a limited degree. France and the UK have already sent their Storm Shadow missiles to Kyiv which have been used on targets inside Russia. However, these weapons rely on US satellite systems to navigate.

Getting Europe on board to increase supplies of cruise missiles remains hard. German Chancellor Olaf Scholz has persistently refused to send Ukraine Germany’s famed Tartus missiles that could, for example, destroy the Kerch bridge, as he remains afraid of Russia taking such an attack as a direct attack on Russia by a Nato member and launching a continent-wide conflict.