What is the Dutch Model of Financing Military Assistance and how does it Work?

The Netherlands' strategy to help Ukraine, motivated by the arms shortage on the global market and Kyiv's urgent needs, has already yielded results, such as the accelerated disbursement of billions of euros and orders for drones. However, limited production capacity remains a challenge and requires a flexible position of partners.

For a long time, the Netherlands has been a prominent player among European countries supporting Ukraine in countering Russian aggression. Initially, this was in the form of targeted assistance from warehouses, including equipment and ammunition. Later, the Netherlands expanded its contribution: it provided Ukraine with Patriot launchers, initiated large-scale investment programs in the defense industry. 

It declared its readiness to allocate a total of 10.4 billion euros for military assistance in the future. This approach is often referred to as the “Dutch model” - an attempt to combine the allocation of money with direct support for arms production, as well as the purchase of additional systems from manufacturers around the world.

How the Netherlands has helped Ukraine since Russia’s full-scale invasion in 2022

The origins of the Netherlands' new financial policy lie in the surge in demand for arms that followed the outbreak of a full-scale war in Ukraine. Allied countries are simultaneously looking for weapons for their modernization and for transfer to the Ukrainian Defense Forces. This situation has led to a shortage of available weapons on the global market and, as a result, to the disruption or postponement of some contracts. The Netherlands, in particular, failed to use €750 million in 2024 because suppliers couldn’t produce the necessary systems fast enough. Meanwhile, Kyiv desperately needs this equipment — it was needed yesterday, and long waits for production cycles often become a critical factor.

That is why the Dutch government has decided not only to purchase weapons from international manufacturers already overloaded with orders, but also to establish direct cooperation with Ukrainian defense companies. At the same time, the Netherlands is also betting on stimulating its own military-industrial complex, which also receives additional investments from the state budget.

What is the Dutch model of supporting Ukraine? 

The essence of the “Dutch model” is the accumulation of large funds in the defense budget with the simultaneous flexible allocation of these resources: when the necessary weapons cannot be purchased promptly on the international market, part of the money is proposed to be invested in production lines at Ukrainian enterprises. We are talking primarily about drones, air defense systems, and other developments that can have an immediate effect on the battlefield.

In addition, this model involves a variety of financial instruments. In addition to direct orders and contracts with private companies, the Netherlands participates in so-called “coalitions” with other European and global partners to co-finance projects. They rely on the experience of the “Danish model,” according to which the Danish government directly provides Ukrainian manufacturers with funds for the production of prototypes, drones, and individual weapons systems.

The Netherlands is also moving in this direction, as evidenced by the statement of intent to create a mechanism for financial support for the Ukrainian defense industry, signed by the Ministry of Defense of the Netherlands and the Ministry of Strategic Industries of Ukraine.

Practical Steps and Achievements

The first evidence of the effectiveness of the Dutch approach was the accelerated allocation of 3.5 billion euros (about $3.78 billion in total) to support Ukraine, of which the state promised to transfer two billion in 2025 instead of 2026. The government plans to use part of these funds - about 700 million euros - to invest in the production of drones, including Ukrainian developments. Such an initiative fits the logic that money should be used locally rather than waiting in budget reserves.

At the same time, to compensate for the transfer of part of the Patriot radars and launchers to Ukraine, the Netherlands signed a $529 million contract with the American company RTX (Raytheon) to purchase additional elements of these air defense systems. Significantly, the government has allocated another 2.4 billion euros in overplan defense funding, raising the total defense budget this year to 24 billion.

Investments in drones have already yielded tangible results: Ukrainian manufacturers have received orders worth at least €60 million from the Netherlands. These purchases include maritime drones that can effectively neutralize certain types of threats in the Black Sea. According to the Ministry of Strategy and Industry, part of these funds will go to the global program ZBROYARI: Manufacturing Freedom program. The goal is to develop advanced production facilities in Ukraine that can quickly and massively supply the Armed Forces with the necessary weapons with foreign assistance.

Challenges and Prospects

The main difficulty of the Dutch model is the limited production capacity. Due to the huge demand for weapons, the Ukrainian defense industry cannot always meet all expectations as quickly as the Kingdom would like.

There is also the issue of logistics: on the one hand, the Netherlands is ready to allocate large sums of money and expects accelerated delivery of finished products, but on the other hand, the construction of new plants or production lines requires time and protection from shelling.

Nevertheless, the Dutch government has already legally secured or is in the process of negotiating 9.5 billion euros of military aid, out of the 10.4 billion promised. There is a high probability that direct investment in the Ukrainian defense industry will be able to mitigate the issue of arms shortages in Western markets. Moreover, Ukrainian companies have learned how to quickly implement small-scale projects, and constant combat testing encourages them to innovate.

How the Dutch model will work in the future?

The “Dutch model” of financing military aid is an attempt to balance the interests of Ukraine's own defense, the needs of NATO allies, and the situation on the Ukrainian front. It combines direct budgetary funding for Dutch defense, accelerated support for Ukraine with money to buy weapons abroad, and a willingness to invest in Ukrainian producers.

The Netherlands is striving to become a driver of European initiatives to develop the defense industry both on its territory and directly in Ukraine. For Kyiv, this opens up additional opportunities to obtain weapons more quickly, while for the Netherlands, it helps to strengthen European collective security and simultaneously develop its own military-industrial potential. In practice, this approach has already yielded real results in the form of financial injections into the production of drones and an expansion of the range of weapons received by the Armed Forces of Ukraine.

If this model can overcome the bottlenecks of the overloaded global arms market, it has every chance of becoming another working template for NATO member states looking for effective solutions in the field of military investment.

Bohdan Popov is the Head of Digital at the United Ukraine Think Tank, as well as a communications specialist and public figure