BRUSSELS – European Union leaders on Thursday debated fresh ways to help boost arms and ammunition production for Ukraine amid a new sense of urgency about the future of the war-torn country.
Ukraine’s munition stocks are desperately low, while Russia has more and better-armed troops. There is also a growing awareness that the EU must provide for its own security, with election campaigning in the U.S. raising questions about Washington’s commitment to its allies.
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At the same time, political rhetoric is at fever pitch as the campaign for Europe-wide elections on June 6-9 gathers pace, with security a major issue. As they talk up the need to fund the defense industry, both at home and in Ukraine, many leaders are also trying to convince citizens that budgets could be tightened elsewhere.
Ahead of the summit in Brussels, EU Council President Charles Michel said the Europeans “face a pivotal moment." He said that with Europe "facing the biggest security threat since the Second World War, it is high time we take radical and concrete steps to be defense-ready and put the EU’s economy on a ‘war footing.’”
Across town at NATO, the alliance's secretary-general, Jens Stoltenberg, warned Thursday that “the situation on the battlefield remains very difficult. Ukraine is running out of ammunition. So, Ukraine needs even more support, and they need it now.”
New plans are on the EU's table, notably to use the profits from frozen Russian assets to buy arms and ammunition for Ukraine.
The 27-nation EU is holding around 210 billion euros ($228 billion) in Russian central bank assets, most of it frozen in Belgium, in retaliation for Moscow’s war against Ukraine. The bloc estimates that the money could generate profits of up to 3 billion euros ($3.3 billion) each year.
“I am glad that leaders endorsed our proposal to use the extraordinary revenues from immobilized Russian assets,” European Commission president Ursula von der Leyen said after the meeting. “This will provide funding for military equipment to Ukraine.”
A small group of member countries, notably Hungary, refuse to supply weapons to Ukraine, so these windfall profits would be split up. Around 90% of the money would be put into a special fund that many EU countries already use to get reimbursed for arms and ammunition they send.
The other 10% would be put into the EU budget to help bolster Ukraine’s defense industry. Members that object to sending weapons could then claim that they are not arming the country.
German Chancellor Olaf Scholz said that these profits should be used “first and foremost” to buy weapons and ammunition for Ukraine. “What is important to me is that we give this use a clear direction now, the direction of acquiring ammunition, for example,” he said.
Asked what signal would be sent to Russian President Vladimir Putin if there is no agreement on using windfall profits, Scholz said: “I am very sure that we are sending a very clear signal to Putin here. He has miscalculated if he thinks we are not in a position to support Ukraine for as long as is necessary, and the use of the windfall profits is a small but important element.”
Speaking to the leaders via video-link, Ukrainian President Volodymyr Zelenskyy urged them to provide his armed forces with more artillery shells and air defense systems following an overnight missile attack on the capital Kyiv.
“Unfortunately, the use of artillery at the front line by our soldiers is humiliating for Europe in the sense that Europe can provide more. And it is crucial to prove it now,” he said, adding that Ukraine’s current “air defense systems are not enough to protect our entire territory from Russian terror.”
Some countries want to use the windfall profits to help Ukraine rebuild, but Belgian Prime Minister Alexander De Croo, whose country currently holds the EU’s rotating presidency, said that “the first necessity is ammunition. Of course I would love to invest in reconstruction but it’s a bit pointless to invest in reconstruction if you risk losing the country.”
The leaders of Estonia and Lithuania, two of Ukraine's staunchest supporters within the EU, said it would be best to use the frozen assets themselves and not just the interest earned on those billions.
“The damage that Russia is causing to Ukraine is much bigger than the value of those assets that we have in Europe. We have to think how we can really achieve this (so) that our taxpayers don’t have to pay the damage that Russia is causing in Ukraine,” Estonian Prime Minister Kaja Kallas said.
De Croo also urged his EU partners to be receptive to new ideas. "We’ll need different types of financing, or at least be open to the discussion. It will need to be national contributions, it might be defense bonds, it might be financing by the EIB (European Investment Bank),” he said.
The idea of issuing defense bonds to finance military spending through common debt issuance is gaining some traction, but is far from having the unanimous agreement that such a move would require. It would mirror way the EU raised money to kickstart economies with its pandemic recovery fund.
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Samuel Petrequin and Raf Casert in Brussels, and Geir Moulson in Berlin contributed to this report.