EU agrees €5bn boost for Ukraine military aid fund

European Union countries agreed on Wednesday to provide 5 billion euros for military aid for Ukraine as part of a revamp of an EU-run assistance fund, the Belgian EU presidency said.

Envoys from the EU’s 27 member countries agreed to the overhaul of the European Peace Facility fund at a meeting in Brussels after months of wrangling, with EU heavyweights France and Germany at the centre of much of the debate.

The fund operates as a giant cashback scheme, giving EU members refunds for sending munitions to other countries.

France had insisted on a strong “buy European” policy for arms eligible for refunds while Germany demanded bilateral aid be taken into account in determining the size of countries’ contributions to the fund, diplomats said.

Diplomats said a compromise was found that allows some flexibility on “buy European” rules and takes into account part of the value of bilateral aid when calculating members’ financial contributions.

The compromise will allow the fund to be used to help finance a Czech initiative to buy hundreds of thousands of desperately needed artillery shells from countries outside Europe, according to diplomats.

The EPF has already been used to allocate some 6.1 billion euros for military aid to Ukraine, according to the EU.

The EU’s foreign policy chief, Josep Borrell, proposed last year creating a new cash pot specifically for aid to Kyiv – the Ukraine Assistance Fund – inside the EPF, with a budget of up to 5 billion euros per year for the next four years.

That prompted a prolonged debate over the rules for future aid, eventually leading to Wednesday’s agreement.