The European Commission has proposed a €20bn fund to help arm Ukraine over the next four years at a meeting of EU foreign ministers on July 20. It will now be discussed by member state governments, with Hungary once again threatening to obstuct it.

The proposal will allow the bloc to allocate €5bn a year from the fund as part of its long term sustainable support for Ukraine and could be implemented as soon as this autumn. The funding will be in addition to €50bn pledged for non-military assistance for 2024-2027.

The EU funding will be used to cover the expenses incurred by member states for donating and purchasing military aid for Ukraine, such as ammunition and tanks, rather than direct payments. It will also be used to train Ukrainian soldiers.

The EU has broken new ground by using its European Peace Facility (EPF) to provide piecemeal military aid to Ukraine, as it was the first time this has been used in an ongoing war. The European Peace Facility (EPF), created in 2021 is meant to finance actions that prevent conflicts, build peace and strengthen international security. It was initially worth €5.7 billion, but has since grown to €12 billion.

The plan now is to make this facility more long-term, following the G7 agreement on the fringes of last week's Nato summit in Vilnius to provide Ukraine with “specific, bilateral, long-term security commitments and arrangements” for immediate assistance and to deter future aggression from Russia.

“You have to make Ukraine able to defend,” said the EU’s chief diplomat Josep Borrell.  “So, the European Peace Facility for Ukraine, maybe it has to become a new Ukrainian defence fund.” 

The proposal will aim to quell some of the fears that many have over a potential Donald Trump victory, or similar candidate, in next year’s US presidential elections. Ukraine has relied heavily on US support under the administration of President Joe Biden, and if funding is pulled following a rival’s victory it could leave Ukraine in a precarious situation.

In its joint declaration, the G7 announced last month it will provide support to further Ukraine's  defence industrial base, training and exercises for Ukrainian forces, intelligence sharing and cooperation and support for cyber defence, security and resilience initiatives. In addition, the group will strengthen Ukraine's economic stability and resilience with reconstruction and recovery efforts as well as energy security and provide technical and financial support for Ukraine's  immediate needs.

Among the military aid recently announced by EU member states, Germany has  announced a new $770mn package, which includes two Patriot launchers, 24 Leopard 1A5 tanks, 40 Marder infantry fighting vehicles and 20,000 artillery rounds.

However, the EPF aid programme has encountered opposition from Hungary.  Hungary is already holding up the repayment of €500mn in current EPF funds for Ukraine on the pretext that Hungarian bank OTP must first be removed from a Ukrainian blacklist.

Hungarian Foreign Minister Peter Szijjarto said Budapest would take the same stance with the new proposal, Reuters reported. "Neither for the €500 million blocked so far, nor for the €20 billion now proposed, are we willing to engage in any kind of negotiations as long as OTP is on this list," he told reporters.

Hungary – the only country in the EU that is still maintaining close links with Moscow  – can only delay the reimbursement of defence aid to member states but it is unable to stop Ukraine receiving aid from member states.