EU agrees 5 billion euro boost for Ukraine military aid fund

Ukrainian service members prepare a D-20 howitzer before firing toward Russian troops in Donetsk region

By Andrew Gray

BRUSSELS (Reuters) -European Union countries agreed on Wednesday to provide 5 billion euros ($5.48 billion) for military aid to Ukraine as part of a revamp of an EU-run assistance fund, handing Kyiv a timely boost as its forces struggle against Russia's invasion.

Ambassadors from the EU's 27 member countries agreed to the overhaul of the European Peace Facility (EPF) 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 message is clear: we will support Ukraine with whatever it takes to prevail," EU foreign policy chief Josep Borrell posted on social media platform X after the decision.

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

France, a strong promoter of European defence industries, had insisted on a strong "buy European" policy for arms eligible for refunds. Other countries argued that requirement would inhibit efforts to buy worldwide to get weapons to Ukraine quickly.

Germany, by far Europe's biggest bilateral donor of military aid to Ukraine, had demanded such donations be taken into account in determining the size of countries' financial contributions to the fund.

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

"This is yet another powerful and timely demonstration of European unity and determination in achieving our common victory," said Ukrainian Foreign Minister Dmytro Kuleba.

"We look forward to the final decision being approved at the next EU Foreign Affairs Council meeting."

The final text says the scheme should give priority to the European defence industry while "exceptionally allowing for flexibility in cases where it cannot provide within a timeframe compatible with Ukrainian needs".

The compromise will allow the fund 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 to military aid for Ukraine, according to the EU.

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 rules for future aid, eventually leading to Wednesday's agreement.

The compromise includes measures to satisfy Hungary, which has previously blocked payouts from the EPF and said it does not want its contributions to finance arms for Ukraine.

Under the deal, its contributions will be used to fund military aid to other countries, according to EU officials.

"Ukraine needs more arms and equipment, we will provide them in sufficient quantities and in a coordinated manner," said Hadja Lahbib, the foreign minister of Belgium, the current holder of the EU's rotating presidency.

"Europe is true to its commitments. Our freedom is at stake."

($1 = 0.9124 euros)

(Additional reporting by Yuliia Dysa and Charlotte Van Campenhout;Editing by GV De Clercq, William Maclean and David Gregorio)