Finland Uses Frozen Russian Funds to Support Ukraine and its Defence Industry with Heavy Ammunition.

On May 19, 2025, Finland signed an agreement with the European Commission to supply Ukraine with heavy ammunition funded by interest generated from frozen Russian assets. Valued at €90 million, the initiative will be implemented through the European Peace Facility (EPF), an off-budget mechanism of the European Union dedicated to supporting military partners abroad. Finland is among the first EU member states to activate this new financing method, which aims to transform the sanctions regime into a concrete channel for military assistance to Kyiv.
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According to Finnish Defence Minister Antti Häkkänen, the initiative serves both as a means to support local employment and to respond effectively to Ukraine’s operational needs (Picture source: Nammo)

The ammunition will be sourced from Finnish suppliers, allowing Helsinki to combine its support for Ukraine with the reinforcement of its domestic defence industry. According to Finnish Defence Minister Antti Häkkänen, the initiative serves both as a means to support local employment and to respond effectively to Ukraine’s operational needs. He indicated that negotiations with the European Commission led to the allocation of additional funding and that purchasing from domestic industry helps enhance both European security and Finland’s economic resilience.

The delivery of this ammunition is part of a broader Finnish assistance policy that includes a separate national military support programme for Ukraine amounting to €660 million. The Minister pointed out that this new European-funded package complements national efforts and reinforces ties between Finland’s defence industrial base and its strategic commitments, while also reflecting the utility of recent investments in ammunition production capacity.

This development comes at a time when Finland is rapidly expanding its defence industrial base. In January 2025, the government signed a letter of intent with the Finnish explosives company Forcit to build a new TNT production facility in the city of Pori on the country’s west coast. Estimated at over €200 million, the project is designed to address the ongoing shortage of explosives that is currently affecting ammunition production across Europe. For Häkkänen, this facility is expected to alleviate pressure on the explosive supply chain and to strengthen Europe’s long-term industrial capabilities. Forcit’s CEO Joakim Westerlund, described the investment as not only nationally significant but as a broader contribution to European security.

Simultaneously, Finland continues to secure its national production capacity through procurement contracts. Two major agreements have recently been signed with Nammo Lapua. The first, worth €79 million, involves the purchase of 155 mm artillery shells for use with K 83-97 and K 98 towed howitzers, as well as K9 self-propelled howitzers. The second, valued at €180 million, concerns the supply of 7.62 mm small-calibre ammunition for RK 62 assault rifles and KIV sniper rifles, with deliveries scheduled between 2025 and 2028. Häkkänen stated that these purchases aim to ensure the adequacy of Finland’s artillery stockpiles, which he described as a cornerstone of the army’s operational performance. He also emphasized the importance of maintaining and developing national production capacity for key defence equipment.

Since joining NATO in April 2024, Finland has been fully integrated into collective defence planning and has participated actively in multinational exercises, such as "Nordic Response", held earlier this year on Finnish soil with 20,000 troops from 13 countries. The government has committed to allocating at least 2% of GDP to defence spending, in line with NATO guidelines, while simultaneously advocating for a European approach to industrial sovereignty. Häkkänen is among the European leaders calling for increased defence investment, including private capital mobilization through instruments such as the European Investment Bank.

Finland also plays an active role within the European Defence Agency (EDA), with which it has maintained close cooperation since the agency’s creation. The country is involved in several core initiatives, including the maritime surveillance network MARSUR, joint cyber defence exercises, and the Combat Unmanned Ground Systems (CUGS) programme. On the land systems front, Finland leads the Common Armoured Vehicle System (CAVS) programme, alongside Germany, Sweden, and Latvia. To date, approximately 130 6x6 vehicles have been ordered from Patria to meet the needs of the Finnish Defence Forces, with deliveries ongoing. Through this programme, the Defence Ministry intends to establish a cross-border supply chain covering spare parts, production capabilities, and maintenance services, to reduce life-cycle costs and reinforce the European defence industrial base.

As the war in Ukraine continues and the broader European security environment remains volatile, the use of frozen Russian asset revenues introduces a new model for sustaining long-term military assistance. By combining industrial relocalisation, strengthened cooperation, and innovative financial mechanisms, Finland positions itself as a key contributor to the development of a resilient, credible, and sustainable European defence framework.