German opposition to the €5B reform of Ukraine’s military support fund risks delaying the supply of arms.

As the FT writes, the European Peace Fund (EPF) needs additional funding so that countries can receive partial compensation for the costs of supplying weapons. However, the proposed €5B financing has been delayed as the countries wrangle over how to reform the fund to better meet Ukraine’s needs and help Europe’s arms industry to meet them.

One issue is that Germany and other countries that favor rejecting the compensation model “argue that they do not need it.” Berlin demands that the cost of the weapons it supplies to Kyiv on a bilateral basis be counted against its share in the fund. Smaller countries say it would dramatically reduce the size of the fund.

The next challenge is how quickly the EPF will move from reimbursing countries to funding arms contracts. Countries with large military industries, such as Germany and France, are pushing for changes as soon as possible.