No country in modern history has devoted 27% of its entire economy to defense. Ukraine’s 2026 budget crosses that threshold while facing a $10 billion funding shortfall, forcing Western taxpayers to fund basic government operations—from healthcare to pensions—because nearly all domestic revenue now flows to the military.

Ukraine’s government submitted this wartime budget to Parliament on 15 September, creating the most acute test yet of Western resolve to sustain Ukraine’s total war footing.

Record defense mobilization exposes Western aid limits

The proposed 4.8 trillion hryvnia ($117 billion) budget allocates 2.8 trillion hryvnias ($68 billion) to defense and security—more than the entire domestic revenue base.

Parliamentary Finance Committee Chairman Danylo Hetmantsev told RBC-Ukraine the gap represents “very big money, a very big and fundamental problem.” He explained that the National Bank and Cabinet base their calculations on assumptions of “slower return of the economy to normal operating conditions and preservation of high security risks.”

This funding crisis continues a multi-year pattern of Ukrainian budget shortfalls. Euromaidan Press reported last week that Ukraine faced a $7 billion defense gap despite surplus civilian aid, while the IMF discovered that Ukraine needs $20 billion more through 2027 than initially estimated.

Defense spending has escalated from previous levels—as Euromaidan Press pointed out, Ukraine already dedicates more of its economy to defense than any other country in modern history.

Social spending tensions emerge

Despite the funding crisis, the budget proposes major social spending increases: 50% teacher salary raises, expanded healthcare coverage, and higher pensions.

He specifically targeted programs like 100,000 hryvnia ($2,430) grants for creative industry entrepreneurs, arguing such spending “looks wild” during wartime. “We shouldn’t pretend we’re at peace,” Hetmantsev said, calling for better prioritization of limited resources.

The tension reflects a fundamental challenge: maintaining civilian morale through continued social services while dedicating nearly all domestic resources to the military. Previous Euromaidan Press analysis showed Ukraine now spends more servicing war debt than supporting elderly and vulnerable citizens.

Dependence on Western generosity deepens

Ukraine’s 2026 budget reveals total reliance on foreign financing for non-military functions. Negotiations continue for nearly half of the 2.08 trillion hryvnias ($50.5 billion) needed externally.

Germany has committed 9 billion euros ($10.6 billion) annually, while Norway has promised 8.5 billion dollars. But gaps remain large enough to threaten basic government operations.

The dependency creates structural vulnerabilities as Western political pressures mount. Aid restrictions compound the problem.

This creates a structural mismatch where civilian programs receive foreign support while military needs must rely entirely on Ukraine’s limited tax base.

War duration planning creates negotiating pressure

The budget includes a new 200 billion hryvnia ($4.9 billion) “defense reserve” allowing rapid redistribution between military branches based on battlefield needs. This reflects government assumptions about continued fighting requiring flexible resource allocation.

The budget framework assumes sustained “high security risks” and only gradual economic normalization—scenarios requiring years of continued international support.

Previous Ukrainian defense budgets have consistently proven insufficient, requiring multiple revisions. The 2024 defense budget increased by $12 billion mid-year.

Parliamentary timeline intensifies funding negotiations

Parliament will not review the budget until late November, with the first reading by 20 October and the final passage by 20 November. This timeline puts immediate pressure on international negotiations to close the $10 billion gap.

Maintaining this record requires securing the funds that are missing during ongoing negotiations with the IMF and European partners.

The 2026 budget represents Ukraine’s starkest financial reality yet: a country dedicating over a quarter of its entire economy to defense while completely dependent on foreign goodwill for basic government functions.

Whether Western partners can sustain this unprecedented level of support will determine the viability of Ukraine’s war effort and its state.

New British Foreign Secretary Yvette Cooper announced £142 million in Ukraine aid just three days after Russian drones violated NATO airspace and explicitly linked the two events.

Cooper declared “Ukraine’s security is crucial to the UK’s security” while citing Tuesday’s “unprecedented violation of a NATO airspace in Poland” in her funding announcement—transforming routine aid into pointed strategic messaging after Moscow’s first direct military engagement with NATO forces since 2022.

Britain shows the way

The timing reveals how NATO powers plan to counter Russian boundary-testing without military confrontation. Ukraine’s fear following the Polish incident is that Western allies will now divert resources from Ukrainian aid toward beefing up their own air defense capabilities.

“Putin’s bombardment of Ukrainian civilians, his stalling and delaying in internationally-backed peace talks, and his blatant disregard for human life must end,” Cooper stated, directly addressing Moscow’s recent actions.

Details: £142 million package reinforces record UK commitment

The funding splits between £100 million for humanitarian assistance and £42 million for critical energy infrastructure repairs ahead of winter.

Cooper will meet President Volodymyr Zelenskyy and visit Russian-damaged buildings in Kyiv, with symbolic locations underscoring her message that Russian aggression threatens European security architecture.

“Through our ongoing military support, lifesaving funding announced today, the UK-Ukraine 100 Year Partnership and our ongoing leadership of the Coalition of the Willing, we will be by Ukraine’s side,” Cooper emphasized.

MP Röwekamp emphasized that Ukraine should receive modern air defense systems and equipment to strike targets on Russian territory, and that coordination within NATO should allow responding to threats in the airspace of allied countries.

Amid the ongoing Russo-Ukrainian war, providing Ukraine with such capabilities becomes particularly relevant after the incident in which some Russian UAVs entered Polish airspace. To protect key logistical hubs, such as Rzeszów Airport, the Bundeswehr deployed Patriot air defense systems and 200 soldiers, while Dutch F-35s shot down at least three drones.

The head of the Bundestag Defense Committee, Thomas Röwekamp, told the German magazine Spiegel that NATO needs to act more decisively against Russian drones. He stressed the need to shoot down drones over Ukraine and to strike production sites and launch platforms in Russia.

According to him, mass UAV attacks create very serious challenges for air defense, and military capabilities in this area should be expanded. Germany should increase its contribution and help Ukraine acquire modern air defense systems and other tools to counter drones.

Röwekamp highlighted the importance of NATO coordination to determine when and over whose territory threats can be countered:

“There must be a possibility, with the consent of the affected country, to neutralize drones that threaten NATO territory, even in their airspace.”

Ukrainian President Volodymyr Zelenskyy has repeatedly called for a coordinated approach to protect Ukrainian airspace, proposing to work with partners to find solutions that minimize escalation. German Defense Minister Boris Pistorius has refrained from commenting on the possibility of shooting down drones over Ukraine, emphasizing the need for caution and coordination with allies.

Meanwhile, Germany and other partners are actively supplying Ukraine with modern air defense systems and assisting in the development of long-range UAVs. This allows not only repelling attacks but also planning actions against the sources of threats on Russian territory.

On 9 September 2025, London hosted the 30th meeting of the Ukraine Defense Contact Group, also known as the Ramstein format after its first session at the US airbase in Germany. Over more than three years, the group has pledged over $145 billion in military aid, providing Ukraine with vital assets such as modern air defense systems, F-16 aircraft, tanks, armored vehicles, and artillery shells.

At the latest meeting in the Ramstein format, Germany announced a new ambitious initiative — support for the production of Ukrainian long-range drones. Berlin will invest €300 million in contracts with domestic companies, effectively betting on Ukrainian defense engineering as one of the key forces in the war against Russia.

The decision demonstrates a fundamental shift in Berlin’s approach. While earlier it was mostly about supplying ready-made weapons from Bundeswehr stockpiles, now the German government is betting on the development of Ukraine’s defense industry. This means not only supporting the front now but also creating the foundation for Ukraine’s defense independence.

German Defense Minister Boris Pistorius said the new program is called “deep strike.” It envisions the purchase of thousands of drones of various types, from reconnaissance to strike UAVs. Their ranges will allow them to hit targets far behind the frontlines. 

Pistorius stressed that cooperation with Ukrainian manufacturers will be long-term and scalable. 

“This is not only support for today but also an investment in the future of Ukraine and European security,” he said. 

For Ukraine, this news carries another dimension – recognition of its technological capability. Germany is effectively acknowledging that Ukrainian engineers are able to create world-class weaponry. This could open the door not only to military but also to civilian high-tech cooperation in the future.

The deep strike initiative comes amid the growing use of drones in the war. Ukrainian UAVs have already proven their effectiveness, striking oil depots, military warehouses, and ships of Russia’s Black Sea Fleet. Due to German investment, the scale of such operations could increase many times over.

At the same time, Berlin announced continued support with air defense systems, including Patriots, reinforcing the comprehensive nature of its assistance: on the one hand, protection of Ukrainian skies, and on the other, the ability to deliver pinpoint strikes on the enemy hundreds of kilometers away.

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Promises in Kyiv, rejection in Berlin. The German CDU and SPD factions have voted against the Green Party’s initiative to allocate an additional €4.5 billion this year to strengthen Ukraine’s air defenses and compensate for the suspended US aid, BILD reports. 

A visit to Kyiv – and a refusal in Berlin

Last week, German CDU and SPD leaders Jens Spahn and Matthias Miersch visited Kyiv, where they met with Ukrainian President Volodymyr Zelenskyy and called the trip “a sign of support.” But back in the budget committee, their factions voted together with the Left Party and AfD against releasing the funds.

German politicians’ arguments

Social Democrat Andreas Schwarz has explained that the proposed billions “could not be spent before the end of the year.”

CDU representative Christian Haase claimed that Berlin had already “delivered everything Ukraine needs” and that he was “unaware” of additional requirements from Kyiv.

This contradicts Zelenskyy’s statement in July, where he stressed that Ukraine needed another €6 billion by year’s end to fully scale production of long-range weapons and FPV drones.

Sharp reaction from the Greens

The decision by governing partners drew outrage within the Greens.

“It is hypocrisy — to promise help in Kyiv on Monday and then on Thursday vote together with the AfD and the Left against further support for a country suffering heavy attacks day and night,” said the party’s budget expert, Sebastian Schäfer.

Ukraine races against an October deadline to secure emergency military funding while international partners debate whether aid restrictions designed to prevent corruption now undermine the war effort itself.

Ekonomichna Pravda (EP) reports that Ukrainian policymakers have three weeks to secure 300 billion hryvnias ($7 billion) in additional defense funding or face military salary disruptions starting in November. This is despite having $6-7 billion in unused civilian aid sitting in government accounts.

The funding gap exposes how current Western aid frameworks create unintended consequences, forcing Ukrainian officials into urgent negotiations with international partners about relaxing restrictions prohibiting financial assistance for military purposes—a policy debate that could reshape how democracies fund wartime allies, according to EP’s analysis.

Ukraine seeks access to frozen Russian assets

EP highlights that Ukrainian officials are now pressing Western partners to lift restrictions on at least portions of financial aid for military use.

While Britain’s portion of approximately $3 billion already allows weapons purchases, Ukraine seeks access to the EU’s roughly $20 billion share for military purposes, EP reports.

Such a change would ease the funding crisis while ending the current system where civilian programs receive surplus funding as military operations face shortfalls.

Time pressure mounts as military salaries are at risk

Without parliamentary approval of budget changes by the end of the month, EP warns that Ukraine will face potential military salary disruptions starting in November.

However, EP notes that parliamentary rejection of proposals to expand government reallocation powers means any major budget shifts require legislative approval—creating democratic accountability while complicating rapid military funding.

The two-budget paradox strains war financing

Ukraine effectively operates separate defense and civilian budgets due to Western aid restrictions.

While international partners have provided $144.7 billion since Russia’s invasion, these funds cannot support military operations, creating structural imbalances even when aid arrives in surplus amounts.

This leaves $6–7 billion in unused foreign funds, explaining Prime Minister Yulia Svyrydenko’s government’s continued launch of new programs, including expanded “National Cashback” funding—a program that reimburses households for part of their utility spending and also rewards purchases of Ukrainian-made products—and grants for entrepreneurs.

Meanwhile, EP reports that defense requirements consume nearly all domestic tax revenue, yet still fall short by hundreds of billions of hryvnias.

Multiple pressures drive defense spending surge

EP reports that Ukraine increased defense spending by 400 billion hryvnias ($9.7 billion) in July, but officials immediately understood this would not suffice.

Key drivers include accelerated weapons purchases after Donald Trump’s election, when Ukraine’s National Security and Defense Council decided to boost ammunition procurement following signals about potential US supply disruptions.

Officials also cite increased one-time death benefits of 15 million hryvnias ($36 480) per fallen soldier, with recent prisoner exchanges returning hundreds of bodies and triggering massive benefit payouts.

Western partners face policy adjustment pressure

The crisis, as outlined by EP, illustrates broader challenges facing Western aid frameworks: balancing oversight requirements with wartime urgency, as Ukrainian officials argue for policy adjustments that better match aid structures to battlefield realities.

Still, they now create situations where partner nations must navigate complex funding streams while facing urgent military requirements.

The debate reveals broader questions about aid architecture for wartime allies, EP concludes, as democracies must balance accountability with the flexibility that active combat operations demand.

Russia flaunts resilience in the face of new US and EU sanctions. The Kremlin’s spokesperson, Dmitry Peskov, has openly declared that it is impossible to force Moscow to change its course on Ukraine, Reuters reports. 

Kremlin dismisses Western sanctions

“No sanctions will be able to force the Russian Federation to change its consistent position, which our president has repeatedly voiced,” says Peskov.

The Kremlin’s spokesperson’s words aren’t far from the truth. Despite thousands of sanctions imposed after the annexation of Crimea in 2014 and the full-scale invasion in 2022, the Russian economy has stayed afloat.

Russia’s economy even grew by 4.1% in 2023 and 4.3% in 2024. But this year, growth has slowed sharply due to high interest rates and the costs of war. 

Ukraine calls for real security

Meanwhile, Ukrainian presidential sanctions adviser Vladyslav Vlasiuk has calculated that Russia has lost at least $150 billion due to sanctions, yet retains its military potential. The country remains the most sanctioned state in the world. 

At the same time, President Volodymyr Zelenskyy has stressed that real security guarantees, which can protect Ukraine from Russia, can only come from a strong Ukrainian army backed by support from its Western allies. 

However, as Washington has delayed a new package of military aid to Kyiv, the fighting between Russia and Ukraine is dragging on into a war of attrition for both sides.

Belgian Foreign Minister Maxime Prévot has announced his country will provide Ukraine with batch of F-16 fighter jets in coming months, Novini.Live reports. 

Belgium has pledged 30 F-16s by 2028—more than any other single donor. These American-made aircraft symbolize Ukraine’s modernization and its fight to reclaim the skies.

Yet as of mid-2025, none have been delivered. Officially, the delay is due to Belgium’s own transition from F-16s to newer F-35s. 

Ukraine support from Benelux

Prévot’s statements came at the Ukraine–Benelux meeting in Odesa on 26 August with foreign ministers from Belgium, Luxembourg, and a representative from the Netherlands. During the event, the leaders reaffirmed support for Ukraine and emphasized the importance of holding a Special Tribunal for the Crime of Aggression.

Belgium’s contribution: F-16s, drones, and demining

Prévot also said Belgium has trained more than 3,000 Ukrainian military personnel and technicians, provided drones, allocated €20 million to the Ukrainian Grain Initiative, and plans to complete Black Sea demining by 2029.

“I remember the drawings Ukrainian children gave me in Rome. They remind us that this struggle is not just about borders but also the dreams and dignity of a new generation,” Prévot stated.

Joint statement on “grain corridors”

Following the meeting, the officials confirmed in a joint statement:

• Assistance in rebuilding schools, hospitals, and energy infrastructure in Ukraine;
• Financial, military, and humanitarian support “as long as needed”;
• Protection of grain routes in the Black Sea, vital for global food security.

Germany has committed to providing €9 billion ($10 bn) in annual support to Ukraine over the coming years, German Finance Minister and Vice-Chancellor Lars Klingbeil announced during a meeting with Ukraine’s president.

“As finance minister, I emphasized, and this was also agreed by the Federal Government, that we commit to supporting Ukraine in the coming years, spending 9 billion euros annually,” Klingbeil said.

The German finance minister held separate discussions with his Ukrainian counterpart Serhiy Marchenko to address Ukraine’s financial resource requirements for 2026.

Marchenko revealed that Germany’s direct budget assistance to Ukraine has reached €1.6 billion ($1.9 bn) since early 2022. The Ukrainian minister highlighted additional German contributions through European Union mechanisms.

“Also significant is the support by the German government of the EU’s Ukraine Facility instrument, within which €22.6 billion ($26.2 bn) has already been attracted to the state budget, and the ERA mechanism — we received €9 billion ($10 bn) from the EU,” Marchenko wrote.

Germany’s financial commitment extends beyond budget support to military assistance. The country previously announced it would finance a $500 million package of military equipment and ammunition from the United States for Ukraine. Additionally, Germany and Norway will jointly fund two Patriot air defense systems for Ukraine.

The €9 billion ($10 bn) annual pledge represents a substantial increase from current direct budget assistance levels, signaling Germany’s long-term commitment to supporting Ukraine’s financial stability.

“This is the end of Starlink internet for Ukraine.” Poland’s Digital Minister Krzysztof Gawkowski has sharply criticized President Karol Nawrocki’s decision to veto a law on assistance to Ukrainians who fled Russia’s war. 

According to Gawkowski, the president’s veto effectively blocks providing Ukraine with internet access via Starlink and halts support for storing data from the Ukrainian state administration in secure Polish data centers.

“Karol Nawrocki is shutting down the Internet for Ukraine with his decision… This is the end of Starlink internet, which Poland provides to Ukraine, waging war.

This is also the end of support for storing Ukrainian administration data in a safe place,” says Gawkowski. 

“A gift to the Kremlin”

Gawkowski has stressed that this step plays into Russia’s hands. 

“I can’t imagine a better gift for Putin’s troops than cutting off Ukraine from the internet, which the President has just decided,” he claims. 

Politics versus security

The deputy prime minister appealed to the president, urging him to stop using veto power as a political weapon.

“Mr. President – you must stop blindly throwing punches at the government in the name of political fighting. You are harming people who are fighting for their independence and at the same time helping Russia,” Gawkowski concludes. 

Earlier, Ukrainian Prime Minister Yuliia Svyrydenko said Kyiv tested the revolutionary Starlink Direct to Cell technology for the first time.

It allows smartphones to connect directly to satellites without special antennas or equipment. The technology could keep communications running even during massive attacks and blackouts. 

Kyiv sends first wartime text via new Starlink’s tech — no Russian-made blackout can interrupt it

The U.K. has used interest generated from frozen Russian assets to purchase weapons for Ukraine, buying 350 air defense missiles worth £70 million ($87 million), The Guardian reported on June 25.

The move represents the U.K.'s first direct use of Russia-linked funds to buy weaponry for Kyiv.

The weapons purchase was funded through Britain's Extraordinary Revenue Acceleration (ERA) scheme, which captures interest from frozen Russian central bank assets.

According to The Guardian, the missiles, originally designed as air-to-air weapons, were converted by RAF engineers and MBDA UK in just three months to fire from ground-based systems.

Five additional Raven launcher systems will accompany the missiles to Ukraine, bringing the total to 13.

U.K. Prime Minister Keir Starmer announced the package ahead of NATO's annual summit.

"Russia, not Ukraine, should pay the price for Putin's barbaric and illegal war," he said.

The package is part of Britain's largest-ever annual military commitment to Ukraine of £4.5 billion ($5.6 billion), the Guardian reports.

It follows a £1.6 billion ($2.0 billion) deal in March for over 5,000 air defense missiles and a separate £350 million ($436 million) investment to increase drone deliveries tenfold.

The announcement comes as Starmer and President Volodymyr Zelensky agreed to work closely on military production between the UK and Ukraine. On June 24, Ukraine's Defense Minister Rustem Umerov announced that Britain will finance Ukrainian-designed drones manufactured in the UK.

European countries cannot fully confiscate the frozen Russian assets due to concerns about international law and financial stability. The European Central Bank warned that such a move could undermine confidence in the euro as a reserve currency, since most of the assets are euro-denominated.

Instead, only the interest generated from these funds is currently being used to back a $50 billion loan package for Ukraine, while the principal amount of 300 billion euros ($348 billion) remains frozen but not seized.

In June, Ukraine received another 1 billion euros ($1.1 billion) from the EU as part of the G7 loan program backed by frozen Russian assets, Prime Minister Denys Shmyhal announced.

Canadian Prime Minister Mark Carney announced a sweeping new support package for Ukraine on June 17, during a bilateral meeting with President Volodymyr Zelensky on the final day of the G7 summit in Kananaskis, Alberta.

The measures include two billion Canadian dollars ($1.5 billion USD) in military funding and new sanctions aimed at restricting Russia’s energy revenues and evasion tactics.

"To be absolutely clear, this support will be unwavering until we get a just peace for Ukraine and the Ukrainian people," Carney was quoted as saying.

The aid package includes funding for drones, ammunition, and armoured vehicles, as well as a $2.3-billion loan to support the reconstruction of Ukrainian infrastructure damaged by Russian attacks. Zelensky, who was invited to the summit by Carney, thanked the prime minister for his support, noting that Ukraine had just endured one of the largest missile attacks since the start of the full-scale invasion, killing 14 and injuring 117 people in Kyiv.

The new sanctions target 77 individuals and 39 entities, including 15 people involved in Russia’s so-called “shadow fleet,” three financial firms facilitating war-related transactions, and 14 entities tied to the development of quantum technologies with possible military use. Canada also upgraded its sanctions against Russian oil and gas giant Surgutneftegas.

Canada’s announcement came alongside similar measures from the U.K., which sanctioned individuals and entities connected to Russian finance, energy, and military operations, including 20 shadow fleet vessels and two U.K.-based individuals accused of exporting high-tech electronics to Russia.

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