Ukraine, EU promises to speed up military deliveries but no agreement on how to fund them

Brussels – More support on the ground by speeding up military deliveries, including through the possible use of extra profits generated by frozen Russian assets in Europe, and a hard line against third countries that help Russia keep its war machine active by circumventing sanctions. The heads of state and government of EU member states are meeting the demands of Ukraine’s President Volodymyr Zelensky by promising more ammunition, artillery pieces, and anti-aircraft defense systems as soon as possible. One way to respond to the criticism and accusations over an alliance, the one with the EU, seen in Kyiv as “humiliating.”

The conclusions of the first day of the European Council summit reiterate the unconditional commitment to Ukraine. “Russia must not win” is the firm political message put in black and white by the leaders, which is why the Union says it is “determined to continue providing all the political, economic, financial, military, humanitarian and diplomatic support for as long as it takes.” The shortage and, therefore, the need to replenish ammunition and anti-aircraft defense systems is recognized, so the 27 Member States pledge to “speed up and intensify the delivery of all necessary military assistance.”

The biggest hurdle remains the practical one: the financial one that clashes with the need and timing. Money that the EU does not have is needed to revive the European war industry, and European leaders leave the table with no practical solution. They call on the Commission and relevant ministers to “explore all options” to mobilize funding and take stock  “in June” at the European Council June 27-28 summit. It means giving another three months to the Russian war machine, during which the Europeans will likely continue to fail to initiate the orders needed to supply and replenish Ukraine.

The conclusions on defense jar with the proclamations and commitments written in the conclusions devoted to Ukraine: a careful reading is necessary. “Exploring all options” may imply that using eurobonds for defense, and thus common debt to stimulate the defense industry, is not entirely ruled out. But in the language of technicians, eurobonds refer to “innovative solutions,” a reference that disappeared from the conclusions. Between those who would like eurobonds (Italy, Estonia, Lithuania, and Spain) and those who prefer existing instruments, preferably in the common budget (Germany, Denmark, Finland, the Netherlands, and Sweden), the latter seem to prevail.

What Zelensky gets is the Union’s willingness to consider “also the possibility of support for military financing” through the use of extra profits from frozen Russian assets in Europe. A proposal that will have to continue to be worked on for there to be a solid legal basis to avoid lawsuits, appeals, and the resulting impossibility of militarily aiding Kyiv and crippling national justice systems. If all goes well, the European Commission President Ursula von der Leyen ventures that through extra profits, Kyiv could receive a billion euros “as early as July 1”.

The intention remains firm to make the European Investment Bank a tool for the cause and open the way for loans and financing for the defense industry. The EIB is asked to “adapt its policy” of lending and “adapt its current definition of a dual-use asset.” It is these ‘dual-use’ technologies for civilian and military use that are the key to being able to open the taps.

The European Union is trying, but again, one will see when all is said and done. The absence of a common defense and a still too-confederal Europe are a drag. “Military support and EU security commitments will be provided in full respect of the security and defense policy of certain Member States and taking into account the security and defense interests of all Member States.”It means that the risk of proceeding in a disorderly manner is still on the table, and this could work in Putin’s favor.

The industrial world welcomed the outcome of the meeting, and called for being quick in the implementation of the political committments. “The European defence industry stands ready to support EU governments and institutions in this endeavour”, said Jan Pie, Secretary General of the Aerospace, Security and Defence Industries Association of Europe (ASD). “We are pleased to see that in the conclusions, many of the industry’s concerns have been addressed such as better access to public and private finance, incentives for joint development, procurement and investment, better predictability for defence companies through long-term contracts, a more supportive regulatory environment and reliable supply chains”. Now, he added, “it is crucial to swiftly translate this mandate into action“.

With regards to most defence issues such as increased spending, establishment of multi-year fixed contracts and procurement decisions, “the responsibility rests with EU member states“, recalled Pie. “We therefore count on EU leaders to drive forward the concrete implementation of the commitments made today”.