A deal to top-up the EU’s defense fund and begin joint arms purchases for Ukraine is being held up in the Council as both Germany and France are pushing for a special caveat each, potentially delaying the decision until the next European Council summit at the end of next month.
The EU defense cash pot called the European Peace Facility (EPF) is instrumental in helping Ukraine in two direct ways: it allows member states to request reimbursement for their military tech donated to Kyiv as well as finance joint arms procurement projects that are meant to equip Ukraine in the medium to long term. There is also a third leg to the strategy: subsidies for defense industrial plants across the EU to boost the bloc’s future capabilities.
Seven tranches of military aid have been provided to Ukraine from the cash pot so far, with EU countries sitting on €500 million worth of the eighth package for months. The problem is that it’s tied to a proposal to increase the EPF’s upper ceiling from €12 billion to €17 billion, which means further contributions from member states.
France—boasting one of Europe’s biggest defense industries—is pushing for the inclusion of a clause that all joint procurements under the EPF must come from European manufacturers. While keeping the money in the bloc instead of giving most of it to the U.S. military-industrial complex does make sense, many other member states argue that using only the less developed European industry would also mean structural delays that Ukraine cannot afford.
Germany, on the other hand, maintains financial concerns instead and wants a bit of a more level playing field. Since the EPF contributions are proportional to each country’s GDP, Germany has been paying about one-fourth of the entire defense fund alone. It is also the biggest bilateral donor of military aid to Ukraine in the EU, with over €17.7 billion donated so far, second only to the United States.
Given the amount of money it already spent on Ukraine—especially compared to some of the other big member states’ military aid, such as France’s meager €635 million—Germany would rather not pick up the tab for the EPF top-up without the possibility of requesting a rebate based on prior bilateral contributions. However, since a quarter of the EPF funds depend on Germany, other member states are afraid that giving Berlin a discount would empty the EU cash pot.
What’s also not helping is that some countries were caught abusing the EPF’s reimbursement system by sending their old weapons to Ukraine and asking for the price of a modern equivalent instead. Estonia, for instance, traded its fleet of 60-year-old Soviet howitzers for modern South Korean equivalents and had the EU pay for the difference.
Now, the only result so far is that the new package is being stalled and probably won’t reach Ukraine for another month or two at least. “It’s exactly the same debate we had last year in the plan to provide ammunition to Ukraine,” one diplomat told Politico. “In the end, Ukraine didn’t get the one million shells we promised them and now we’re on course to make the same mistake again.” More than half of the one million artillery shells are still missing as less than two weeks are left until the EU’s self-imposed deadline.
The representatives of the 27 EU member states met in Brussels to try to strike a deal on the EPF top-up on Thursday but without any substantial result. The topic will likely end up on the EU leaders’ table during the next Council summit at the end of March.
