Ukraine will be permitted to use part of a European Union defence loan to purchase Chinese drone components after securing a special exemption from procurement rules, according to a Financial Times report, highlighting Europe’s continued dependence on China for critical defence technology despite efforts to strengthen its own industrial capacity.
The Financial Times reported that Ukraine obtained approval to spend part of a €6 billion defence funding tranche on drone components sourced from China. According to two people familiar with the decision cited by the publication, the allocation represents the first distribution from a broader €60 billion EU support programme dedicated to defence procurement for Ukraine.
The decision underscores the limitations facing Europe’s defence manufacturing sector as Brussels seeks to expand domestic production while linking financial assistance for Ukraine to purchases made within the European Union and approved partner countries.
According to the Financial Times, the exemption also illustrates China’s continuing role in supplying components used by both sides in the conflict. The European Union has previously described Beijing as “the key enabler of Russia’s war” by supplying Russia’s military-industrial sector. At the same time, European officials acknowledge that Ukraine’s rapidly expanding defence industry also depends on Chinese-made components for key military equipment.
The report noted that Ukraine has developed one of Europe’s most advanced defence manufacturing sectors during the war with Russia, with domestic companies outperforming many traditional European defence manufacturers in several areas. However, Ukrainian production capacity and that of its allies remain insufficient to meet demand for certain drone components as unmanned aerial systems continue to dominate battlefield operations.
Ukrainian officials have stated that drones now account for approximately 80 per cent of Russian battlefield casualties, according to the Financial Times, making continued access to drone production materials a critical military requirement.
Under the terms of the EU defence loan programme, weapons and defence equipment purchased using European Union funds must largely originate from EU member states, Ukraine or approved partner countries such as Canada. The Financial Times reported that other countries can become eligible by signing a security partnership with the European Union, contributing to the programme and providing substantial support for Ukraine. The United Kingdom formally joined the scheme on Monday.
The programme also limits the use of components from suppliers outside approved countries. According to the Financial Times, no more than 35 per cent of the value of a defence contract can normally consist of parts sourced from non-approved countries, while procurement rules also state that purchases must not conflict with the European Union’s security and defence interests.
However, the regulations contain an exemption allowing Ukraine to seek permission from Brussels when required products cannot be sourced from approved suppliers within the necessary timeframe or in sufficient quantities.
According to the Financial Times, Ukraine requested and received such an exemption for the first €5.9 billion defence allocation, which is dedicated to drone procurement. The approval enables Kyiv to purchase specific Chinese-made drone components that are currently unavailable in adequate quantities from European suppliers.
The Financial Times reported that the European Commission and Ukraine’s Ministry of Defence did not respond to requests for comment regarding the exemption. The decision nevertheless highlights the continuing supply chain challenges facing Europe’s defence sector as the bloc seeks to increase domestic manufacturing while maintaining military support for Ukraine amid ongoing demand for battlefield equipment.
