Poland and Germany Divided on How to Use Unblocked $7.6B EU Ukraine Fund

EU member states are currently debating the allocation of $7.6 billion in funding from the European Peace Facility that was recently unblocked following a shift in Hungary’s policy.

While Germany, the fund’s largest contributor, is advocating for these resources to be directed entirely toward Ukraine, Poland is insisting that a portion of the funds be used to reimburse member states for the military equipment they have already supplied, according to Babel on June 10.

The European Peace Facility is an off-budget mechanism intended to finance defense initiatives. Since the start of Russia’s full-scale invasion of Ukraine, the fund has been used to partially reimburse countries for weapons transferred to Kyiv.

In total, member states have spent $49.5 billion on such efforts, with Brussels theoretically obligated to reimburse $15.5 billion. However, the treasury currently holds only $7.6 billion.

EU High Representative for Foreign Affairs Kaja Kallas has proposed a distribution plan for these funds. Under her proposal, 10% would be allocated to reimburse member states for past weapons purchases, while the remaining 90% would be dedicated to supporting the training of Ukrainian forces and procuring new equipment for Ukraine.

Poland has rejected this plan. Cezary Tomczyk, Poland’s deputy defense minister, stated that Warsaw intends to "fight for every euro" and is seeking approximately $517.5 million in reimbursements for the equipment it has already provided to Ukraine.

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Warsaw has characterized the current proposal from Brussels as an attempt to "change the rules of the game in the middle of the game," a position currently supported by Slovakia.

In contrast, Germany is calling for the entirety of the unblocked funds to be transferred directly to Ukraine rather than returned to national budgets. Sebastian Hartmann, Germany’s deputy defense minister, expressed this position during a meeting of EU defense ministers in Nicosia.

Germany’s view is shared by several Scandinavian countries. France has generally aligned with the proposal from Kaja Kallas, partly because the smaller scale of French contributions means the country expects lower reimbursement amounts. France’s primary condition remains that any equipment purchased with these funds must be of European origin.

The government of Hungarian Prime Minister Péter Magyar officially ended a two-year blockade on the European Peace Facility, which unlocked $7.68 billion in immediate funding to compensate EU member states for weapons supplied to Ukraine during Russia’s full-scale invasion of Ukraine.

This decision marked a fundamental pivot in Budapest’s foreign policy, as the previous administration had used the requirement for unanimous consent to stall the fund, which had led to a significant backlog in pending reimbursements.

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