Cyprus Emerges as Drone Manufacturing Hub Supporting Ukraine War Effort

In an unexpected development from Europe’s southeastern edge, Cyprus—with a population of just over a million people—has become a significant supplier of military drones now buzzing over Ukrainian battlefields.

Manufacturer Swarmly reports that more than 200 of its H-10 Poseidon drones are currently aiding Ukrainian artillery batteries in identifying enemy targets across various weather conditions. These unmanned aerial vehicles (UAVs) have accumulated over 100,000 flight hours during the past three years of the conflict.

The company’s 5,000-square-meter (54,000-square-foot) factory has evolved into a major production center for drones exported to countries including Indonesia, Benin, Nigeria, India and Saudi Arabia. While most of the factory is dedicated to aerial drone manufacturing, a secured area houses Swarmly’s advanced marine drones equipped with high-definition cameras and .50-caliber machine guns.

Russia’s invasion of Ukraine has catalyzed defense industry development across the European Union, including its smallest members. The conflict has transformed Ukraine into a global leader in cutting-edge UAV technology, with many EU countries partnering with Kyiv to develop and test these systems on active battlefields.

“The example of Swarmly, as well as other important companies based in small EU countries, is a testament to the serious effort made by the private sector in Europe to innovate and build mass production capacity of defense items, including uncrewed systems,” said Federico Borsari, an expert with the Washington-based Center for European Policy Analysis.

Similar developments are occurring elsewhere in Europe. The Baltic nations and Denmark have accelerated their drone and counter-drone technology programs, while Greece has incorporated drone development into its 25-billion euro ($29-billion) military modernization plan.

Force Multipliers

UAVs are fundamentally changing modern warfare by providing militarily weaker countries with strategic advantages against stronger opponents. While drones won’t replace traditional weapons systems like tanks, artillery, and aircraft, they offer flexibility and cost-effectiveness that make them powerful force multipliers on the battlefield.

Swarmly’s explosives-packed, satellite-guided Hydra marine drone exemplifies this cost-benefit advantage. Each unit costs approximately 80,000 euros ($94,500), meaning a group of these drones could neutralize a billion-euro warship at a fraction of the cost, according to company director Gary Rafalovsky.

The effectiveness of such asymmetric naval warfare has been demonstrated by Houthi attacks from Yemen, notes Fabian Hinz, a research fellow for missile technologies and UAVs at the International Institute for Strategic Studies, Europe.

Hinz points out that the barrier to entry for companies in this sector is relatively low because UAVs can be designed and assembled using components that are affordable and readily available on the global market.

“And that, of course, means that basically you don’t have to have a great industrial investment at first that you need with other military capabilities. You don’t need decades of experience in certain material sciences or these kinds of things,” Hinz explained.

European Nations Accelerate Defense Development

Denmark has seen companies specializing in anti-drone technology report substantial increases in clients, with some devices being shipped to Ukraine specifically to jam Russian technology on the battlefield. Last September, Ukraine announced a partnership with Danish companies to build missile and drone components at a factory in Denmark.

In Lithuania, scientists and business partners have united under the VILNIUS TECH initiative to develop UAVs, automated mine detection systems, and other military technologies. The state-run ammunition factory Giraite has increased its production capacity by 50% since 2022.

Greece showcased its domestically produced drones and counter-drone technology during a tactical exercise last November as NATO urged European defense sectors to increase production pace.

“We need capabilities, equipment, real firepower and the most advanced technology,” NATO Secretary-General Mark Rutte warned during a visit to Romania. “Bring your ideas, test your ingenuity and use NATO as your test bed.”

Despite the rapid advancement in drone technology, Borsari cautions that their advantages can be limited by factors including harsh operating environments, operator training levels, and the robustness of logistical support systems needed to maintain functionality.

Europe Embraces Defense Self-Reliance

Russia’s war in Ukraine, combined with uncertain signals from the Trump administration regarding NATO commitments, has compelled European leaders to prioritize defense self-reliance. In response, the EU has allocated billions of euros to stimulate investment and strengthen collective defense capabilities.

This funding has benefited nations like Cyprus, which assumed the six-month EU presidency on January 1. Last week, the EU’s executive branch approved financial assistance for eight member states including Spain, Croatia, Portugal, Bulgaria, Belgium, Romania and Cyprus.

Cyprus is expected to receive final approval from EU leaders for approximately 1.2 billion euros ($1.4 billion) in low-cost, long-term loans under the EU’s 150-billion-euro ($177-billion) joint procurement program called Security Action for Europe (SAFE).

The Mediterranean island nation has developed a growing defense industry comprising around 30 companies and research centers producing technology for both civilian and military applications. This includes robotics, communications networks, anti-drone systems, and satellite communications and surveillance capabilities.

“We have niche capabilities on very high-tech products and this has to be taken seriously into account,” said Panayiotis Hadjipavlis, chief of the armaments and defense capabilities development directorate within Cyprus’ Defense Ministry, suggesting that major defense industry players should take note of the country’s emerging technological prowess.