How Franco-German animosity is hampering the EU’s Ukraine arms fund

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Good morning. Here’s another marmalade-dropper from our Russia investigations team: How the Kremlin war-gamed a possible Chinese invasion, according to leaked military documents.

Today, I wade into the Franco-German battle over the EU’s Ukraine weapons fund, and Wales’ top politician explains why he wants closer ties with Brussels.

War of words

France and Germany’s public spat over military support to Ukraine is exacerbating arguments delaying an agreement to pump €5bn into the EU’s fund for weapon shipments, as they bicker over separate demands regarding its rules.

Context: The European Peace Facility (EPF), funded by the bloc’s 27 members outside of the EU budget, partly reimburses capitals for weapons provided to Kyiv. It is overdrawn and needs replenishing.

At a meeting of EU ambassadors yesterday, France continued to demand the EPF only reimburse weapons manufactured in the EU or Norway, arguing that EU money spent to help Ukraine should simultaneously develop the bloc’s defence industry, not third countries’.

But other countries, including Italy, Poland and Finland, want more flexibility, arguing that Ukraine’s ammunition needs are critical and EU producers can’t meet them.

France’s objection comes despite President Emmanuel Macron vowing to support a separate Czech-led initiative to buy artillery shells from outside the EU.

“We will mobilise bilateral financing as well as multilateral,” Macron said. But while he supports (bilaterally) using French cash to buy non-EU materiel, he is blocking others using EU cash to (multilaterally) do the same.

French officials counter that the Czech idea is a short-term fix, and the EPF should remain strategic.

“Certainly, let’s prioritise ‘buy European’,” said one EU diplomat involved in the negotiations. “But let’s not cut off our nose to spite our face.”

Separately, Germany argues the (substantial) value of its bilateral military donations should cancel out its share of the €5bn top-up.

Given Germany contributes about a quarter of the EPF’s funding, other member states oppose this offset demand because it would significantly reduce its liquidity.

The wider context here is the acrimonious war of words between Macron and German Chancellor Olaf Scholz. Macron’s Monday remark that he “could not rule out” western troops deploying in Ukraine was immediately rebuffed by Berlin, who shot back that Paris should instead send more weapons.

Berlin is the EU’s biggest military supporter of Ukraine by a vast margin. It has vowed to send €7.1bn in 2024, and is increasingly irritated by Paris’ far smaller pledges.

“Macron’s ‘troops’ stunt was about portraying him as a staunch defender of Kyiv and distracting from the money,” said another frustrated EU diplomat. “It has infuriated the Germans.”

Officials caught in the crossfire remain confident of an agreement before the March 21 EU leaders’ summit. But most reckon that while the German issue should be resolvable with creative accounting — a Brussels speciality — France’s ideological stance may only be solved by someone backing down.

Chart du jour: Crunch time

The cost of emitting CO₂ in Europe has crashed over the past year, sowing the seeds of a future carbon crunch. That volatility won’t incentivise long-term decarbonisation projects, writes Lex.

Moules frites

Moules were on the menu for outgoing Welsh first minister Mark Drakeford on his trip to Brussels yesterday, but sadly not to eat. Instead, he raised the plight of Welsh producers who can no longer export to the EU post-Brexit, writes Alice Hancock.

Context: A majority in Wales voted in favour of the UK leaving the EU in 2016, only to discover that much of Welsh industry relied on EU labour and access to the bloc’s single market. Despite thawing UK-EU relations, many businesses find themselves in crisis because of the red tape involved in EU trade.

Welsh mussel producers have repeatedly warned that they are going out of business because border checks prevent them from selling live shellfish to the EU. “It relied upon leaving the north of Wales fresh and arriving fresh as it had for years and years — and it can’t happen,” Drakeford, a Labour politician, said.

Drakeford hopes a new Labour government in Westminster “could begin to address some of those barriers that now exist, that didn’t exist when we were part of the European Union and which I don’t believe people in Wales who voted to leave the European Union were preoccupied by”.

Depending on the scale of a Labour victory in elections expected to take place this year, different elements of the relationship could be “reset”, Drakeford said.

First steps could include rejoining the bloc’s student exchange programme Erasmus, cultural funding scheme Creative Europe and “straightforwardly sensible arrangements” such as the European arrest warrant scheme.

A Labour government could even envisage a broader rethink of economic relations, he said.

What to watch today

1. Final day of WTO ministerial conference in Abu Dhabi.

2. Latvia’s Prime Minister Evika Siliņa meets Polish counterpart Donald Tusk in Warsaw.

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