The foreign policy department of the European Union presented to the member states a proposal to reform the fund that provides military support to Ukraine. This is due to the fact that the EU is moving from providing weapons from existing stockpiles to purchasing new ones.
This is reported by Bloomberg with reference to a document of the European External Affairs Service.
The document sets out the conditions for the creation of the previously proposed Fund for Aid to Ukraine with an annual budget of about €5 billion, which the EU governments could not agree on.
Under the current financing mechanism of the European Peace Fund, member states receive compensation for the weapons they transfer to Ukraine. The size of the fund has been increased several times, but decisions on the allocation and payment of funds require unanimous support.
Diplomats from several countries, including Germany, suggested at a meeting on Wednesday that the European Peace Fund is becoming less effective in its current form, as more military aid to Ukraine will come from new arms purchases rather than existing stockpiles.
Some member states would prefer that military support to Ukraine be embedded in the European Peace Fund, while others want to preserve the current mechanism.
The proposal by the European External Action Service is to reconcile the different positions by changing the management of the fund. In particular, they propose to fix reimbursement rates and provide larger bonuses for joint initiatives between European and Ukrainian industry. Compensations for the transfer of weapons from stockpiles and new purchases will be gradually canceled, the document says.
The fund is expected to have two main "European pillars": providing lethal and non-lethal support to Ukraine through joint procurement through European industry, and continuing to train and equip Ukrainian forces.
The instrument will complement any bilateral aid to Ukraine from member countries.
The foreign policy department foresees that the fund will serve to meet Ukraineʼs most urgent needs in artillery, ammunition, drones and air defense, as well as in non-lethal elements, in particular in means of demining, military medical support and cyber means.
- The European Peace Fund was created in March 2021 to finance all common foreign and security policy actions related to military and defense issues. In particular, this EU fund is designed to finance the strengthening of the potential of countries that are not part of the EU.
- In July 2023, it was reported that the European Union planned to create a special fund to finance the Ukrainian army over the next four years in the amount of up to €20 billion. €5 billion were to be allocated each year.
- The EU is still unable to agree on the creation of a special fund, because Hungary opposes this plan, and such decisions must be unanimous.