This is how Europe will reimburse the EU states for sending weapons to Ukraine. Numbers and problems
The EU will use the European Peace Facility to reimburse member states that have sent arms to Ukraine. But the countries have not received any euros so far. Here are facts, numbers and the in-depth analysis of the Politico newspaper
Brussels is very eager to issue proclamations of solidarity with Ukraine. It is much less so when it comes to reimbursing, through a fund created ad hoc but still inactive, the Member States that decide to donate weapons to Kiev.
An EU fund to give arms to Ukraine
It is Politico who tells the story of this fund created immediately after the invasion, bypassing the provisions of the Treaties that prevent the EU budget from being used to finance military operations.
The trick was to make use of the so-called "European Peace Facility", a financial instrument placed outside the budget perimeter that has so far been used for small-scale coastal initiatives such as providing funding to the Georgia army or supporting an EU training mission. in Mozambique.
It is therefore the first time that the European Peace Facility has been used on a large scale to intervene in an ongoing war.
Appropriations to repay arms to Ukraine
As the first tranche of the fund, the EU has allocated 500 million euros in the wake of the emergency, with the specific invitation to the member countries to arm Kiev and ask the Union for a regular reimbursement. Within a short time, the EU received payment requests for € 600 million, thus establishing a reimbursement rate of 85%.
With the progress of military operations in Ukraine, the EU has decided to replenish the fund by drawing on ever greater shares of the European Peace Facility's budget of 5.7 billion euros. As a second tranche, an allocation three times the original one, equal to 1.5 billion euros, was provided.
It is at this very moment that the EU found itself inundated with payment requests that quickly reached the value of 3.3 billion euros. The inexorable implication is that the repayment rate dropped dramatically from 85% of the first tranche to 45% of the second.
The discontent
This situation has created a lot of discontent and heated discussions among the Member States, particularly Poland which, with € 2 billion in donations, is the most exposed financially.
The discussion on the fund has rekindled in the last few days when the difficult agreement was reached on the repayment rate, definitively fixed at 46%. It was also decided to set the endowment of the fund at 2.5 billion euros, multiplying it by five times the initial level.
But the appropriation fails to keep up with the new donations made by member states to Ukraine and the related reimbursement requests received in Brussels.
Payments still outstanding
Then there is another problem, Politico recalls: the Member States have not yet materially received a euro. However, the EU's External Action Service ensures that the money is on its way. "The relevant reimbursements are starting now", was the statement of a spokesperson for the Service, who preferred not to comment on the issue of the reimbursement rate.
But discontent continues to spread among EU diplomats, amid accusations in Brussels of inadequacy and others directed at Poland of having overstepped the limits by stealing precious resources from other member states.
Proposals for the future
On one point, however, everyone agrees: in the words of Politico, "the Peace Facility fund is simply too small … if the Continent really wants to become a reliable security provider".
Between the buildings of Brussels and the European capitals there are already those who are demanding a change of pace. Among these is the new Slovak Foreign Minister Rastislav Káčer, who has formulated the proposal to double the funds available. “And of course”, the minister specified, “we are ready to increase our contribution”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/ue-fondo-rimborso-armi-ucraina/ on Tue, 18 Oct 2022 06:18:53 +0000.