EU launches talks on €20 billion Ukraine military fund

The European Union’s foreign policy chief on Thursday (20 July) proposed a €20 billion ($22.4bn) fund to pay for weapons, ammunition and military aid for Ukraine over four years, but the plan will need more scrutiny from EU governments before any decision is made.

High Representative Josep Borrell (pictured) presented the proposal to EU foreign ministers meeting in Brussels as part of an effort to put European support for Kyiv on a longer-term footing after more than a year of scrambling to respond to Russia’s invasion.

The proposal comes amid an international drive to give Ukraine long-term security assurances, as announced by members of the G7 on the sidelines of last week’s NATO summit in Vilnius.

“We proposed the creation of a dedicated section under the European Peace Facility to provide up to €5bn a year for the next four years for the defence needs of Ukraine,” Borrell told a news conference after the meeting.

“This is the evaluation of the needs and the cost of our long-term security commitments to Ukraine,” he said.

The European Peace Facility (EPF), created in 2021, is meant to finance actions that prevent conflicts, build peace and strengthen international security. It was initially worth €5.7bn, but has since grown to €12bn.

The facility is used to reimburse EU countries for at least part of the cost of weapons, ammunition and other military aid that they give to nations outside the bloc.

Several ministers at the meeting welcomed the idea of longer-term military aid for Ukraine but said the details and amount of funding would be subject to further discussions. Their governments would have to pay for any boost to the fund.

“A fund for the defence of Ukraine is going to be developed,” Portuguese Foreign Minister Joao Gomes Cravinho told reporters. “As for the amounts, we are not there yet.”

Borrell said detailed talks of EU foreign and defence ministers on the fund would take place during a ministerial meeting at the end of August in Spain.

LANDMARK MOVE

The EU’s decision last year to bankroll arms supplies to a country at war was a landmark moment for the 27-member bloc, which for decades concentrated on economic and political cooperation and avoided involvement in armed conflicts.

But the debate on the new proposal are unlikely to be straightforward.

Hungary is holding up the disbursement of €500 million in current EPF funds for Ukraine aid, demanding that Hungarian bank OTP (OTPB.BU) first be removed from a Ukrainian blacklist.

Hungarian Foreign Minister Peter Szijjarto said Budapest would take the same stance with the new proposal.

“Neither for the 500 million blocked so far, nor for the 20 billion now proposed, are we willing to engage in any kind of negotiations as long as OTP is on this list,” he told reporters.

EU governments want to consider the Borrell plan alongside a proposal from the European Commission to provide 50 billion euros in economic aid to Ukraine over the same four-year period.

“It’s not enough to simply put sums of money on the table,” German Foreign Minister Annalena Baerbock told reporters. “It has to be logically and sensibly interlinked and that’s what we’re talking about today.”