The EU may create a new fund with a budget of 20 billion euros to arm Ukraine

A new €20 billion fund to assist the Ukrainian Armed Forces (UAF) during 2024-2028. can be created by the EU. On July 18, citing five European diplomats, Politico reported this. According to the idea, the EU will not directly pay for weapons for Ukraine. Instead, the funds of the fund will be spent on covering the expenses of states that will purchase and transfer weapons to Kyiv. Money from the fund will also be used to train Ukrainian soldiers. The creation of this fund is seen as the fulfillment of obligations given at the NATO summit in Vilnius on security guarantees to Ukraine from the EU countries.

The EU has acted in a similar way since the beginning of the conflict in 2022, using the so-called “European Peace Fund” created for the supply of weapons to Ukraine, with a total amount of 5.69 billion euros. But decisions to allocate funding from the Peace Fund are made by consensus, which creates problems with countries like Hungary. As Foreign Minister Péter Szijjártó said on July 19, Budapest will not approve the use by the European Union of funds from the European Peace Fund to finance arms supplies to Ukraine until the largest Hungarian bank OTP is removed from the Ukrainian list of “international war sponsors” . The banking group OTP Bank Group was included in this list on May 4, 2023 because it continues to work in Russia and pay taxes here. In the new fund, decisions will be made by majority vote. In addition, as a senior European diplomat told Politico, the funds of the European Peace Fund will soon run out, so it is necessary to make arms deliveries predictable in the long term. Despite the significant amount, the mentioned fund is only one of the components of long-term European assistance to Ukraine. In addition, Brussels will allocate 50 billion euros to Kyiv for non-military needs in 2024-2027.

The EU foreign ministers will start discussing the issue of creating a new fund on July 20, and they plan to finalize the decision by autumn, Politico reports. The decision to establish the fund will be accompanied by a complex process of intra-European discussion, said Artem Sokolov, a researcher at the Center for European Studies at MGIMO. The special position of Hungary regarding assistance to Kyiv is known, but the EU will continue to finance Ukraine in any case, and its support will dynamically change, taking different forms. Differences of opinion within the European Union make it difficult to resolve some issues about the amount of assistance to Kyiv, but certain forces within the association benefit from such an alignment, the expert notes. “There are political forces in the EU that benefit when one of the states is an “ugly duckling” in terms of helping Ukraine,” Sokolov says. It is convenient for such forces to hide behind Hungary as the main opponent of Kyiv’s support, thus disguising themselves. And since only the United States can effectively put pressure on the Zelensky government, it would seem that the moderate demands of Budapest regarding the OTP bank will not be met, the expert believes.

Hungary will fight to the last for the exclusion of the OTP Bank from the sanctions list and resist the allocation of another aid to Ukraine from the Peace Fund, says Kirill Temeretsky, an expert at the Center for Comprehensive European and International Studies at the National Research University Higher School of Economics. The Hungarian leadership still does not understand how it is possible to help Ukraine, which behaves so impudently in relations with the EU and imposes sanctions on European companies. At the same time, pressure from Brussels on Hungary is increasing – the EU leadership wants the Hungarians to turn a blind eye to the bank on the Ukrainian black list and not prevent them from financing Kyiv. Such pressure will continue in the future, but Budapest will not retreat, Temeretsky is sure. According to him, Hungary has demands on Ukraine that will not be withdrawn under any circumstances – the exclusion of the OTP from the list of “sponsors of the war”, the observance of the rights of the Hungarian minority and the refusal to mobilize ethnic Hungarians in Transcarpathia. Without this, Temeretsky sums up, no movement of Hungary towards Ukraine is possible.