Wars in Ukraine and Iran have unleashed a new gold rush in global defense spending. And, as Ukraine’s President Zelensky travels the world to showcase Ukraine’s defense innovation in drones, many countries from the Middle East to Europe and the Indo-Pacific are finding themselves playing catch up.
Historic defense budgets are in the works with a focus on unmanned aircraft systems (or drones): President Trump’s record $1.5 trillion defense budget request includes nearly $75 billion for drone and counter-drone technologies — the largest US government investment in the sector to date. Germany, Europe’s largest defense spender, approved a roughly $124 billion core defense budget in 2027 with nearly $12 billion dedicated to drones “over the next few years.”
But there is a gap between finances and scale. For example, one US government program seeks to procure 300,000 drones by 2027. The US Army aims to buy “at least 1 million drones in the next two to three years.” Ukraine, however, is on pace to build 7 million drones in 2026 alone — up from 4 million in 2025 — with a $65 billion defense budget.
The interconnectedness and innovation speed of modern warfare has shown that mass matters. The side that can replace its losses fastest, adapt its systems quickest, and sustain pressure over time holds the strategic advantage. High-end platforms remain essential, but superiority without sustainability is brittle.
New Ways to Win Wars — Proposals for the West
For decades, Western defense strategy assumed that technological superiority ensured victory. That assumption proves false in modern conflict.
And while it’s true that Ukraine has had to focus on drones and air defense in a way that US and other militaries have not had to do, the capacity and capability gap points to a fundamental question: can investment alone build a future capable allied defense force?
For the first time in decades, political will and financial capital on both sides of the Atlantic are pointing in the same direction. The US and Europe are pouring resources into their defense industrial bases at levels unseen since the Cold War. The task at hand is now channeling that investment wisely into the interoperable, future-capable force that modern conflict demands. Without a clear investment strategy oriented toward the realities of today’s battlefield, this historic influx of funding risks entrenching outdated force structures rather than delivering real transformation of the defense industrial base.
As a new strategic framework from CEPA’s advisory group makes clear: the future of transatlantic security will depend on “sustained production, [integrating] private capital at scale, and [building] a joint multidomain interoperable capability that will deter and, if necessary, defeat adversaries in conflict.”
Ukraine has had to learn these hard lessons faster than anyone. Kyiv’s defense industrial base has grown 50-fold to an annual production capacity of $50 billion since Russia’s full-scale invasion, producing not just drones but battle management software, electronic warfare systems, and naval autonomous platforms that are now attracting investment from the Gulf to East Asia. President Zelenskyy’s recent Middle East tour — signing 10-year defense deals with Saudi Arabia, the UAE, and Qatar — demonstrated in stark terms the potential for Ukraine’s future as a defense innovation exporter.
Zelenskyy’s Drone Diplomacy Wins New Arab Friends
Behind the headlines of his Middle Eastern trip, Ukraine’s leader has underlined Ukraine’s nimble and quick-witted diplomacy.
The frontline in Ukraine will define defense and deterrence for the next generation — and this is true for Western allies just as much as for the authoritarian states, cohered by the China-Russia nexus, who are working to undo the US led global order. The global race for innovation is not just confined to the frontier AI space — where China is rapidly catching up — it is also taking shape in the military domain. As the CEOs of Airbus, ASML, Ericsson, Mistral AI, Nokia, SAP, and Siemens argued in a recent joint letter, “the future of innovation will be defined by how digital capabilities are applied in the real world … and breaking down cFor the first time in decades, political will and financial capital on both sides of the Atlantic are pointing in the same direction.ivil-military silos to accelerate dual-use innovation.”
We Must Copy Ukraine’s Public-Private Air Defense
Ukraine is allowing private sector companies to install air defense systems to protect critical infrastructure. The West should follow suit.
The upside for the Western alliance is clear: an adaptable, scalable, and conflict ready defense industrial base is within reach, but it will not be seized by spending alone. It requires joint procurement frameworks and common technical standards so that allied platforms can communicate and share data from day one. It requires investment in the interoperable digital infrastructure that makes real-time battlefield awareness possible across borders. And it requires unlocking private capital — venture investment, public-private partnerships, and reformed regulatory frameworks that treat defense tech as the strategic priority it is. Above all, it means integrating defense innovation from Ukraine as the foundation for NATO’s future force.
The money is moving. The question is whether the strategy — and the private sector — will follow.
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Dr. Alina Polyakova serves as the President and CEO of the Center for European Policy Analysis (CEPA) and is the Donald Marron Senior Fellow at the Henry A. Kissinger Center for Global Affairs at the Johns Hopkins University’s School of Advanced International Studies (SAIS).
