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Proposal of the High Representative of the Union for Foreign Affairs and Security Policy, with the support of the Commission, to the Council for a Council Decision establishing a European Peace Facility (off-budget fund for the duration of the next MFF)

In “A Stronger Europe in the World”

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The Council Decision (CFSP) 2021/509 of 22 March 2021 created the European Peace Facility (EPF), entering into force on the same day, and operational on 1 July 2021. On 30 July 2021, the Council approved the first ever EPF-funded assistance measure (AM), for the EU military training mission in Mozambique. The EPF allows worldwide funding of Common Foreign and Security Policy (CFSP) actions with military and defence implications. It had an initial budget of €5.692 billion (2021 prices (p.), over €5 billion in 2018 p.) for 2021-2027. Article 41 TEU bans the use of the EU budget to fund expenditure with military or defence implications. As an off-budget tool financed by contributions of EU Member States (MSs), the EPF enables the EU to:

  • contribute to the common costs of EU military missions and operations (replacing the Athena mechanism);
  • provide support to partners’ military peace support operations, (replacing the African Peace Facility);
  • support broader military actions.

European Parliament (EP): Its Foreign Affairs Committee(AFET) and Security and Defence subcommittee(SEDE) drafted a recommendation. The Development committee (DEVE) gave its position. AFET approved its recommendation in February 2019, also taking into account DEVE's main points. Plenary adopted the recommendation in March 2019. MEPs called for proper parliamentary control of the EPF. 

Swiftly reacting to Russia's full invasion of Ukraine (UA) on 24 February 2022, and to a request by UA, the Council adopted on 28 February two EPF-funded AMs, to assist the Ukrainian Armed Forces (UAF) with  the supply of (a) military equipment and platforms designed to deliver lethal force -a first in EU history-, and (b) non-lethal military equipment. These first two AMs were €500 million worth each, an amount  the Council quintupled in 2022, with 4 other tranches of €500 million. In January and February 2023, the Council agreed on the 6th & 7th tranches of €500 million. A MS has blocked the 8th tranche since then. The Council on 17 October 2022 set up an EU Military Assistance Mission for UA (EUMAM), in order to train UAF in EU MSs, with the common costs of the mission - in addition to AMs to EUMAM. In December 2022, the EU and Norway agreed on a voluntary Norwegian contribution of around €14.5 million, an unprecedented contribution from a third country, followed in July 2023 by a new contribution of €22 million from Norway.

The Council in December 2022 increased the EPF budget by €2 billion (2018 p.) for 2023, with a possible new increase later. On 13 March 2023, the Council  Decision 2023/577, amending the Decision 2021/509, adopted this first increase to the budget, raising it to €8 billion in current prices (c.p.) until 2027.

On 20 March 2023, the Council considered a 2d increase of the EPF budget by €4 billion in c.p. The Council aimed to provide 1 million artillery shells in a joint effort within the next twelve months, under a three-track UA ammunition plan mobilising fresh €2 billion from the EPF. On 26 June, the Council adopted this second increase, bringing the budget to €12 billion in c.p. 

* Track 1 (activation of a fresh EPF-funded €1 billion) : On 13 April 2023, the Council amended its Decision 2022/338 of 28 February 2022 (the first 'lethal' package ever), allowing for the reimbursement of donated materiel (ground-to-ground and artillery ammunition and, if requested, missiles ) from existing stocks or from re-prioritisation of existing orders delivered before 31 May 2023. 
* Track 2 (activation of another EPF-funded €1 billion ): On 20 March 2023, the Council called on MSs  to jointly procure 155mm ammunition and, if requested by UA, missiles, as fast as possible before 30 September 2023 from the European defence industry (and Norway), within an existing European Defence Agency (EDA) project or through complementary joint acquisition projects led by a MS. On 5 May, the Council adopted the relevant decision, from which Austria, Ireland, Malta and Hungary constructively abstained.     
* Track 3 (without EPF funding): Regulation on supporting ammunition production ('ASAP', adopted on 20 July, entered into force on 25 July).

The Council, amending Decision 2021/509, adopted on 18 March 2024 a third top-up of €5 billion in c.p. to the EPF budget - the Ukraine Assistance Fund, a 'dedicated amount' of €5 billion for military aid within the EPF, an amount however still blocked by a MS. In principle, its aim was to increase joint procurement from European defence industries.

EPF global ceiling totals over €17 billion in c.p.-including €11.6 billion earmarked for UA. 

On 21 May 2024, the Council greenlighted the use of the net windfall profits from Russian assets frozen in the EU to support UA's self-defence through the EPF for 90% of these profits (and reconstruction through the EU budget for 10%). The G7 Apulia Summit on 14 June and the European Council on 27 June planned to provide UA with a US$50 billion syndicated loan, repaid by the windfall profits. On 26 July, the Commission made the first payment of €1.5 billion from these revenues, to UA, with a key of 90 % in military equipment through the EPF, including procurement from the UA Defence industry, and 10 % in reconstruction aid through the UA Facility. The EU reversed the 90 % / 10%  key with 3 legal acts of 24 October:

a)EP and Council Regulation(EU)2024/2773 establishing the Ukraine Loan Cooperation Mechanism (ULCM) and providing exceptional macro-financial assistance to UA (a UA Loan of €35 billion, reduced to €18.11billion on 25 October by the G7, as the EU part of the G7 loan of US€50 billion);

b)Council Implementing Decision (CFSP)2024/2760; 

c)Council implementing Regulation (EU)2024/2761.

With this legal package, the profits from frozen Russian assets will go to the EPF in military aid for 5% only, and to the ULCM (EU budget) in reconstruction aid for 95%. This applies from the 2d bi-annual payment to UA of these profits, to be made in 2025. 

 References: 

  • Commission Work Programme 2020, Annex III, priority pending proposals, n°79; Council Decision (CFSP) 2021/509 of 22 March 2021 establishing the EPF (basic Decision); AMENDING Decisions:  2023/577  of 13 March 2023 (first ceiling increase of €2 billion in 2018 prices, or €2.5 billion in c.p.), 2023/1304 of 26 June 2023 (second ceiling increase of €3.5 billion in 2018 prices, or €4 billion in c.p.) and 2024/890 of 18 March 2024 (third ceiling increase of 5 billion in c.p.); the 3 amending decisions raised the EPF budget to €17 billion in c.p. until 2027.
  • EPF-funded military assistance measures to Ukraine since 28 February 2022: successive tranches of EUR 500 billion each, with both lethal and non-lethal components: INITIAL decisions: Council Decision (CFSP) 2022/338 for equipment designed to deliver lethal force, and Council Decision (CFSP) 2022/339 for non-lethal support, both of 28 February 2022; AMENDING Decisions: 1st tranche: Council Decisions (CFSP) 2022/471 (lethal) and (CFSP) 2022/472 (non-lethal), both of of 23 March 2022; 2d tranche: Council  Decisions (CFSP) 2022/636 (lethal)  and (CFSP) 2022/637 (non lethal), both of 13 April 2022; 3d tranche: Council decisions  2022/809 of 23 May 2022 (lethal)  and 2022/810 (non lethal), both of  23 May 2022; 4th tranche: Council decisions 2022/1285 (lethal) and 2022/1284 (non lethal), both of 21 July 2022; 5th tranche: Council Decisions 2022/1971 (lethal) and 2022/1972 (non lethal), both of 17 October 2022; 6th tranche: Council Decisions of 23 January 2023 (lethal and non lethal); 7th tranche: Council Decisions of 2 February 2023 (non-lethal only); Global (Ukraine and beyond) updated  EPF mobilisations timeline
  • Council Decision of 13 April 2023 (lethal only, amending above-mentioned Decision 2022/338, first track of the Ukraine ammunition plan)

  • Council Decision of 5 May 2023 on an assistance measure under the European Peace Facility to support the Ukrainian Armed Forces through the provision of ammunition, second track of the Ukraine ammunition plan.
  • Council Press Release 21 May 2024 (greenlighting the use of net windfall profits from Russian assets frozen in the EU to support UA's self-defence through the EPF for 90% of these profits, and UA's reconstruction through the EU budget for 10%).
  • Council Regulation (EU)  2024/1469 of 21 May 2024.
  • Council Decision (CFSP) 2024/1470 of 21 May 2024.
  • Parliament and Council Regulation (EU) 2024/2773 of 24 October 2024 establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine.
  • Council Implementing Decision (CFSP) 2024/2760 of 24 October 2024, implementing and amending its Decision 2014/512.
  • Council implementing Regulation (EU) 2024/2761 of 24 October 2024, implementing Regulation 833/2014.

Further reading:

Author: Bruno Bilquin, Members' Research Service, legislative-train@europarl.europa.eu

As of 15/12/2024.