Written by: Eufemia Colucci

Edited by: Clelia Vettori

Supervised by: Syuzanna Kirakosyan

The European Peace Facility (EPF) has emerged as a critical financial instrument for delivering EU military assistance to Ukraine following the unprovoked Russian aggression against the country (Bilquin, 2023).Conceived as part of the 2016 EU Global Strategy, the EPF was established by the Council on 22 March 2021 through Council Decision CFSP 2021/509. It substitutes and expands upon former financial instruments and it is tailored to provide quick responses to security crises (Council of European Union, 2021), funding both lethal and non-lethal military equipment and supplies (Council of the European Union, 2024).

The EPF operates through the Operations and Assistance measures pillars: the first funds common costs of EU military operations, while the latter finances the EU’s actions in assisting third countries (Council of the European Union, 2024). However, as established under Art. 41(2) of the Treaty of the European Union (TEU), the EU budget cannot be allocated for operations having military or defence implications; therefore, the EPF is designed as an off-budget instrument financed according to each Member State’s Gross National Income (GNI) (Furness & Bergmann, 2018). Specifically, the EPF works as a cash-back instrument; Member States can submit requests for reimbursement for the equipment they deliver (Bilquin, 2023). 

The EPF’s financial ceiling was initially set at €5,69 billion (2021-2027). However, the intensification of the conflict demanded increased EU support for Ukraine: the EPF’s ceiling was raised in March 2023 by €2,29 billion and then again in June by an additional €4,06 billion, totalling 12,04 billion  in current prices (Council of the European Union, 2024). It is worth noticing that military support provided to Ukraine through the EPF totals €6,1 billion (European Commission, 2024).

On 30 August 2023, EU High Representative Josep Borrell proposed establishing a Ukraine Assistance Fund (UAF) for the years 2024-2027. This initiative aims to provide consistent EU military aid to Ukraine (EU Neighbours East, 2023), with a planned budget of up to €5 billion annually over four years (Brzozowski, 2024). Since its inception, indeed, the EPF has demonstrated a substantial contribution towards reinforcing the capabilities and resilience of the Ukrainian Armed Forces. The establishment of a UAF is expected to provide additional assistance to the country in the attempt to protect its on integrity and sovereignty as it still faces challenges posed by the on-going Russian aggression (European Commission, 2024).

The Belgian Presidency of the EU announced that, on 13 March 2024, the EU27Ambassadors “agreed on principles” to reform the EPF by establishing a UAF, supplying aid worth €5 billion by the end of 2024 (X, 2024) and bringing the overall EPF’s ceiling to €17 billion (Barigazzi, 2024). The provisional agreement resulted from extensive discussions among Member States, with France and Germany playing a pivotal role during negotiations (Reuters, 2024). On the one hand, France had insisted on a strong “Buy European” clause concerning arms eligible for refunds. On the other hand, Germany – the most significant bilateral donor of military aid to Ukraine (Ryder, 2024) – initially demanded 100% bilateral aid to be considered in determining the size of countries’ contributions to the fund (Al Jazeera, 2024). Among the main elements of the agreement, there is a one-time €5 billion injection specifically allocated for 2024 (Reuters, 2024). 

Additionally, joint procurement of defence equipment from the European defence industry and Norway – including SMEs – is prioritized over unilateral purchases or donations. Exceptions to the French “Buy European” clause are also permitted to accommodate supply chain flexibility, including products with components from outside the EU and Norway, where the European defence industry cannot meet Ukrainian needs within a compatible timeframe. Furthermore, as proposed by Germany, counting bilateral aid in the form of arms shipments is considered an alternative to making financial contributions to the fund (Brzozowski & Pugnet, 2024). In fact, Member States can deduct in-kind donations from what they owe to the fund at a rate of 50% (Barigazzi, 2024); in 2023, most EU governments increasingly opted for bilateral donations to Ukraine instead of collective contributions. 

Finally, abstention from voting is allowed as a workaround for any EU country that prefers not to support Ukraine, redirecting the abstaining government’s contribution to another assistance measure; this measure is designed to avoid a EPF paralysis (Liboreiro, 2024). 

The EU Foreign Affairs Council adopted the provisional agreement on 18 March, 2024. It amends Council Decision (CFSP) 2021/509 by formally establishing a UAF (Council of the European Union, 2024); the UAF is expected “to add predictability to the EU’s military support and will remain guided primarily by the needs of Ukraine” (Council of the European Union, 2024).

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