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Bloomberg: EU discussing reforming its $5 billion Ukraine military aid fund

by Dinara Khalilova and The Kyiv Independent news desk January 20, 2024 3:09 PM 2 min read
A European Union (EU) flag next to the European Commission building in Brussels, Belgium, on Nov. 10, 2023. (Simon Wohlfahrt/Bloomberg via Getty Images)
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The European Union's foreign affairs agency has presented a proposal to member states to reform a fund that provides military aid to Ukraine as the EU transitions from sending arms from existing stockpiles to purchasing new ones, Bloomberg reported on Jan. 19.

A document by the European External Action Service, seen by Bloomberg, outlines the terms to create a previously proposed Ukraine Assistance Fund with an annual budget of about five billion euros ($5.4 billion) that EU governments have so far failed to agree on.

Under the current EU tool used for channeling military support to Ukraine, the European Peace Facility (EPF), member states receive reimbursement for weapons they send Ukraine, with the decisions to allocate and disburse funds requiring unanimous support.

EU members have argued over reimbursement rates and the use of the facility to offset purchases, while Hungary has blocked an eighth tranche of funding to compensate EU countries for supplies.

Diplomatic envoys from several countries, including Germany, suggested at a meeting on Jan. 17 that the EPF in its current form is becoming less effective since more future deliveries will be made through newly procured weapons rather than from existing stocks, Bloomberg wrote.

Other member states would reportedly prefer the Ukraine Assistance Fund to be integrated into the EPF, while some countries want to stay with the current mechanism.

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The European External Action Service's proposal aims to harmonize the different positions by modifying the fund's governance, including fixing its reimbursement rates and giving a higher bonus for joint initiatives between European and Ukrainian industries, according to Bloomberg. Compensation for deliveries from stocks and unilateral purchases would gradually be withdrawn, the document says.

The instrument would complement any bilateral assistance provided to Kyiv by member states. The involvement of non-European weapons and services in the EU's work to train and equip Ukrainian troops, for example, as part of the F-16 coalition, should be considered on a case-by-case basis, suggests the draft.

An EU diplomat told Bloomberg that the proposal was a nod to countries like France that want the fund to be spent mostly on EU industry. Some member states have reportedly lambasted this approach, arguing that arms for Ukraine should come from wherever they are immediately available.

The EPF was launched in 2021 to finance common foreign and security policy actions related to military and defense. In particular, this tool allows us to finance non-EU partners in pursuit of joint peace and security building.

Following Russia's full-scale invasion of Ukraine nearly two years ago, seven packages totaling 3.5 billion euros were approved, along with two billion euros for ammunition supplies, according to Bloomberg.

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