By Alexandra Brzozowski
(EurActiv) — The European Union is increasingly bogged down in difficulties in its efforts to provide more support for Ukraine.
When EU foreign and defence ministers meet in Brussels at the beginning of next week to discuss how to further support Ukraine in its fight against Russia’s aggression, the list of challenges is long.
A new Ukraine war fund worth €20 billion in military aid for Kyiv is running into resistance from member states and may not survive in its current form, EU diplomats said this week.
Proposed by the bloc’s chief diplomat Josep Borrell in July, the plans would foresee creating a fund with up to €5 billion committed per year over four years as part of broader Western security commitments and effort to put support on a longer-term footing.
The fund would come under the existing European Peace Facility (EPF), which over the past 20 months has been used to reimburse member states for their lethal and non-lethal deliveries to Ukraine, send aid to other partners in the bloc’s neighbourhood and fund missions and operations.
But several member states, including Germany, for a while now have voiced reservations about committing such large sums years in advance.
“I’m not going to declare it dead at this point yet. But of course, improvements can always be made,” a senior EU diplomat said on Friday, speaking on condition of anonymity.
“Germany has had a lot of questions (…) and rightfully so. We’re talking about a lot of money,” they said.
An idea to break the deadlock is splitting the €20 billion fund decision up into four tranches of €5 billion, which could be separately agreed upon each year.
“We have not spoken recently about this figure,” a second EU diplomat said of the €20 billion, adding that a decision first had to be taken on how the fund would work before a decision could be made of greenlighting the funding.
“This will not be closed [at the EU ministerial meeting] next Tuesday,” they added.
Separately, an eighth EPF tranche of €500 million in reimbursement to member states is currently held up by Budapest over Ukraine’s blacklisting Hungarian bank OTP as a ‘war sponsor’.
But while Kyiv has removed the bank from the blacklist, Hungary has been insisting it wants guarantees it will not return there.
“Frankly, let’s not kid ourselves, this has never been about this particular bank – we know it and the Hungarians know it,” a third EU diplomat told Euractiv.
“If someone expects the Ukrainians to come to Budapest to negotiate, as [Hungary’s Prime Minister Viktor] Orbán suggested last month, it might not be a long time until it is resolved,” they added.
Some other EU diplomats have also increasingly expressed the sense that Hungary is not only hurting Ukraine with its blockage, but in fact, the member states that are awaiting the reimbursement payments from the fund.
At the same time, the debate over EU military aid comes as the bloc is unlikely to reach the pledged target of providing Ukraine with 1 million rounds of ammunition by March 2024.
Under plans made earlier this year, the bloc committed to using existing member states’ stocks to send shells to Ukraine and then through joint procurement contracts and increasing its own industrial capacity.
The EU so far delivered 300,000 shells of the 1 million goal, according to people familiar with the matter.
The shortfall has caused concerns among some EU officials and diplomats that it could complicate Kyiv’s ability to keep pace with Russia’s own production and purchase of North Korean shells.
“It will be very difficult to reach the target by mid-March,” a forth EU diplomat said on the condition of anonymity.
Euractiv understands several member states have asked the EU’s diplomatic service to extend the March deadline.
“The target is not dead,” a senior EU official insisted, adding the numbers are “intermediate” since thousands more rounds will be dispatched under another joint procurement program by the end of this year, where another assessment will show how close the bloc come to the declared target.
“We are still very much committed to giving all the ammunition to Ukraine it needs, the overall problem now is a problem with industrial capacity,” they added.
European defence industry representatives over the past months have pointed to staff shortagesand issues with the sourcing of explosives as some of the bottlenecks facing their companies as they seek to ramp up production.
EU defence ministers are expected to issue a joint call next week on banks to grant the defence industry access to loans, in a bid to remove hurdles for greater investment into production capacities, Euractiv has learnt.
The hiccups with the EU’s military aid for Ukraine come as member states are also in discussions over a proposal to give Ukraine €50 billion in financial aid by the end of the year.
Seasoned diplomats expect a tough EU December summit battle over a proposed EU budget revision, which includes the €50 billion in new aid for Kyiv, and which is expected to be intertwined with Ukraine accession talks and domestic demands by some members of the bloc.
The threat of Hungary and Slovakia potentially teaming up to push their own priorities promises lengthy discussions that could spill over between the two topics, likely with attempts by Budapest and Bratislava to force a ‘package deal’ of sorts.
EU officials say Brussels is looking at unlocking at least some EU funds for Hungary as the bloc seeks to win Orbán’s vote for Ukraine. But they also admit that Budapest would still need to meet the necessary conditions.
For Kyiv, the lengthy debate in Brussels over next year’s aid package is becoming increasingly disturbing, particularly with the US Congress also at a stalemate over providing more assistance.
Washington’s support for Ukraine will most likely decrease, and the EU should have the political willingness to continue to send aid regardless, Borrell said at the Congress of the Party of European Socialists on Saturday (11 November).
To make that happen, the bloc has also started considering a backup plan to bypass a potential Hungarian veto on €50 billion of fresh aid to Ukraine, which could involve national guarantees from member states to raise funding in the markets, according to some people with knowledge of the discussions.
“We need to make rapid progress with adopting the Ukraine facility,” European Commission Vice President Valdis Dombrovskis also told reporters after a meeting of EU finance ministers in Brussels earlier this week.
“Last year we were indeed discussing Plan B. We were able to avoid this scenario last year so I hope we will be also able to avoid this scenario this year.”