EU clarifies proposed new rules for future Ukraine weapons fund

Stricter reimbursement rules for joint procurement of European-made defence equipment and a way to work around vetoes would make deliveries to Ukraine faster and more long-term, according to an internal memo seen by Euractiv. 

The draft note is a follow-up to an earlier non-paper on a reformed EU weapons fund for Ukraine, reported by Euractiv last week.

The point was withdrawn from the agenda of the bloc’s ambassadors on Wednesday (31 January), one person said, where it stood as a potential discussion and approval point on the draft agenda on Monday night.

It was first expected to be formally signed off by EU leaders on Thursday (1 February) when they meet for an extraordinary summit on Ukraine support, according to a draft of the conclusions seen by Euractiv.

“Military support to Ukraine at the EU level under the European Peace Facility will continue to be driven by the evolving needs of the Ukrainian Armed Forces,” the EU’s diplomatic service (EEAS) stated in an internal memo circulated among the bloc’s member states on Friday (26 January).

“It will seek to maximise the EU’s added value in terms of delivering more and better operational support to Ukraine, complementing bilateral efforts,” the memo states.

The paper follows an extra request from Germany for additional information to the EU diplomatic service after a meeting of the bloc’s foreign ministers last week on the future Ukraine Assistance Fund (UAF), a special fund of the European Peace Facility (EPF).

EU tables reform proposal for Ukraine weapons fund

A reformed EU weapons fund for Ukraine should be used to incentivise European joint procurement and apply stricter reimbursement rules to factor in national bilateral donations to the war-torn country, according to an internal EU memo circulated to the bloc’s member states, seen by Euractiv.

The three-page addendum, however, seems to dismiss Berlin’s wish that the value of their national direct donations to Ukraine is subtracted from their contribution to the fund despite including a similar idea in the first draft.

According to the proposed scheme, the new UAF would finance jointly procured European defence equipment – a French demand – and the ‘train and equip’ programme for Ukrainian armed forces under the EU’s training mission for Ukraine (EUMAM).

This comes after the EU’s diplomatic service last year proposed a €20 billion top-up to the European Peace Facility (EPF), which Germany and France have been reluctant to green light without first changing the way it is used to move from an incentives-based approach of depleting national stocks to a procurement-based one.

The internal memo also pushes for an agreement on a €5 billion budget top-up for the fund for 2024 to finance Kyiv’s needs – a first step to the initially proposed €20 billion.

Fewer vetoes

To avoid vetoes, “an abstaining member state will instead make a corresponding financial contribution to another assistance measure in support of other partners,” the EEAS proposes as a new rule.

This way, Hungary, refusing to green-light funds to Ukraine-related support, would instead need to send their contribution to another country receiving aid under the EPF.

The scheme is already in place for neutral countries that do not fund lethal aid to Ukraine.

“The rules in force governing abstentions from assistance measures providing lethal support should be extended to assistance measures providing non-lethal support to Ukraine,” the text states.

Under the proposal, the UAF would also work with new and stricter fixed reimbursement rules to avoid having EU countries devise new methods of calculating the price of each donated equipment and finger-pointing in the negotiations.

“Governance arrangements will be improved through agreement on a fixed reimbursement rate, use of inventory value as the sole valuation methodology,” the EU memo states.

The scheme would allow EU member states to only pay to the fund what they have not received in reimbursements in a move to make accounting easier.

EU member states could “mak[e] use of the possibility to offset in a given year the value of reimbursements to be received from the Facility against their financial contributions due,” the text says.

There will, therefore, be no impact on the overall budget of the “Facility” – without specifying if it is the EPF or UAF.

“Offsetting applied to one Member State does not affect other member state’s contributions or the liquidity of the Facility,” the text reads.

Flexible European joint procurement

The internal memo also builds on the idea of the ammunition plan to deliver Ukraine 1 million rounds of ammunition.

“The provision of military support to meet Ukraine’s needs will be articulated through a more structured, efficient and pragmatic approach, gradually shifting from destocking towards joint procurement from the European defence industry (and Norway),” the paper reads.

Norway – which was not mentioned in the previous proposals – is also considered as ‘European’ under the ammunition initiative.

Despite having an ‘EU and Norway preference’ for joint procurement, “allowing for flexibility in supply chains where needed” is also a must, the paper states.

It will also have to “tak[e] advantage of well-functioning national procurement structures as well as existing framework contracts” using both a lead nation approach and the European Defence Agency (EDA).

[Edited by Alexandra Brzozowski/Alice Taylor]

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