EU Gives Initial Backing to €5 Billion Weapons Fund for Ukraine

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(Bloomberg) -- Ambassadors of the European Union agreed in principle to provide €5 billion ($5.5 billion) in military support for Ukraine, after member states reached a compromise to allow purchases from outside the bloc.

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The envoys backed the plan at a meeting Wednesday, the Belgian presidency of the EU said in a post on X. The agreement boosts the European Peace Facility (EPF), a mechanism used to refund member states for weapons they send Ukraine.

The priority will be for the money to be used to support Ukraine quickly, with flexibility for imports from beyond the EU as part of the European defense industry’s supply chain, according to a draft document seen by Bloomberg News ahead of the gathering.

European allies have been struggling to meet commitments to supply Kyiv with military equipment at a delicate moment in the war, with Ukrainian officials concerned that Russian troops may break through their defenses by summer. More than $60 billion of proposed US emergency aid to Ukraine is stuck in Congress and fears are mounting in Europe that if Donald Trump is elected president in November he may withdraw support to Kyiv.

In a revamp of the EPF, the newly dubbed Ukraine Assistance Fund aims to meet Kyiv’s most urgent needs for artillery, specialized munitions, drones and air defense, as well as in non-lethal areas such as demining. The draft document is subject to change.

As part of the annual funding plan, non-EU supplies will be used in exceptional circumstances or when Kyiv’s urgent needs cannot be met by European production.

France, backed by Greece, Cyprus and to some extent Spain, had argued that for joint procurement of equipment to Ukraine, deliveries should only originate from the European defense industry, according to people familiar with the issue who spoke on condition of anonymity. For unilateral procurement, these countries pushed for deliveries to be prioritized from the European defense sector.

Germany initially sought to have all of its bilateral aid to Ukraine deducted from its contributions to the EPF, a request other member states dismissed amid concerns that would gut the entire fund. Belgium worked to forge a compromise with the Netherlands and Italy, the people said.

Member states had been tied up in negotiations to overhaul the EPF since the EU’s foreign-policy arm presented its proposal in January. With stockpiles depleted, the EU is seeking to incentivize procuring new weapons. EU member states had been seeking to reach an agreement well before leaders meet next week.

The EU is setting aside an initial €1.5 billion to boost the bloc’s defense industry, Bloomberg News reported earlier this month. The funding for the strategy would be allocated for 2025 until 2027 and would act as a bridge until the EU agrees on its new budget.

The EU wants to boost the bloc’s defense industry amid increasing doubts about the US commitment to European security. Most European nations are now increasing their military budgets.

--With assistance from Natalia Drozdiak and Kevin Whitelaw.

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