1. Introduction: breaking the EU’s monetary defence taboo
The Russian invasion of Ukraine in February 2022 acted as a strong catalyst in revolutionising the European Union’s conventional method to the Widespread Overseas and Safety Coverage (CFSP) and the Widespread Safety and Defence Coverage (CSDP), forcing the EU to create and adapt its instruments to be more practical in offering navy support. Whereas CFSP and CSDP have been beforehand completely oriented in direction of peacekeeping, there’s now a reorientation in direction of conventional defence and collective self-defence.
The European Peace Facility (hereinafter EPF), established in 2021 (earlier than Russia’s full-scale invasion) to handle the navy and defence-related facets of CFSP motion, successfully built-in and expanded upon its predecessor, the Athena mechanism. Whereas Athena was restricted to the financing of the frequent prices of EU’s personal navy operations, the EPF’s major innovation lies in its expanded mandate: it permits the EU to offer navy help – together with gear – to 3rd states and companion organizations globally. Thus, this mechanism quickly transitioned from being a help mechanism for peacekeeping – whose major objective was the financing of the frequent prices of navy operations (e.g., a measure was adopted by the Council (price €25 million over a interval of 36 months) to reinforce the capabilities of the Ghana Armed Forces to guard the territorial integrity and sovereignty of the nation and its civilian inhabitants) – to a monetary car for the supply of weapons (together with deadly ones) to 3rd international locations.
This weblog submit argues that, by being primarily accountable solely to the Council of the European Union, the European Peace Facility dangers making a transparency deficit and weakening democratic accountability in relation to essential navy and defence expenditures within the pursuit of de facto larger defence coverage integration on the EU degree.
2. The restrictions of the TEU and the intergovernmental expenditure system
Earlier than the EPF was created, the administration of operational expenditure for the CFSP was rigorously ruled by Article 41(2) TEU. It establishes a basic distinction for expenditure:
Operational expenditure not derived from operations with navy or defence implications is charged to the Union finances.
Expenditure arising from operations having navy or defence implications just isn’t borne by the Union finances.
This technique displays the intergovernmental nature of EU defence, whereby the prices of navy operations are sustained instantly by the Member States. In accordance with Article 41(2) TEU, which prohibits using the EU finances for operations with navy or defence implications, these bills are borne by the Member States.
The financing follows two distinct paths. First, the overwhelming majority of bills are ruled by the “prices lie the place they fall” precept, which means every Member State pays for its personal deployed troops and gear. Second, the “frequent prices” of an operation – which stay residual and characterize solely a small fraction of the entire expenditure – are managed by a distribution criterion primarily based on Gross Nationwide Earnings (GNI/GNP). In any case, Member State representatives within the Council could make a proper declaration below Article 31(1) TEU so as to not contribute to those frequent prices.
Due to this fact, the innovation of the EPF just isn’t the introduction of GNI-based funding itself (as this was already the usual for frequent prices below the Athena mechanism) however moderately the growth of this off-budget framework to incorporate help measures for third international locations, comparable to the supply of navy gear.
3. The institution of the EPF: an off-budget fund for defence
The geopolitical scenario modified in 2021. This required to adapt the EU’s devices to the renewed context. The EPF, and its use within the Russian-Ukrainian battle was essential on this perspective. As acknowledged earlier than, the EPF was established in 2021 – earlier than Russia’s full-scale invasion – to handle the navy and defence associated facets of CFSP motion. Council Determination (CFSP) 2021/509 stipulated that the Facility ought to be established at Union degree to finance the frequent prices of navy operations and missions below the CSDP. However, earlier than the Russian-Ukrainian battle, it had by no means been utilized in such a transformative manner.
Concretely, the EPF is an off-budget reimbursement mechanism for Member States after they present technical help to CFSP actions with navy and defence implications. The EPF legally bypasses the authorized and monetary limitations set forth in Article 41(2) TEU, as mentioned within the earlier part. It permits the mutualisation of economic burdens, guaranteeing that the financial effort for navy actions is proportionally borne by all Member States and not solely sustained by the few States that provide the weapons. The financing of any motion below the Facility is topic to the prior adoption of a call by the Council, usually proposed by the EU Excessive Consultant and should be voted on unanimously. The EPF at the moment has a complete finances of greater than €17 billion for the interval 2021-2027.
4. The EPF in motion: deadly help and geopolitical shift
Using the EPF grew to become transformative with the Ukraine disaster. On February 28, 2022, the Council adopted the primary help measures for the Ukrainian armed forces, together with the supply of deadly gear to defend Ukraine’s territorial integrity and sovereignty towards the Russia’s invasion. As of October 2025, the EU has offered a complete (together with additionally funding by the EPF) €69.3 billion in navy support to Ukraine so far, primarily based on numbers offered by the Fee.
The authorized foundation for adopting navy support measures for third States is the mix of Articles 8(1) and three(5) TEU and, within the case of the help offered to Ukraine, Article 1(2)(c) of the EU-Ukraine Affiliation Settlement. These provisions set up that Ukraine shares EU values and respects the UN Constitution: that is what concretely makes it attainable below EU regulation to ship weapons – the truth that the recipient adheres to the ideas of EU and worldwide regulation (the EU is a part of the Arms Commerce Treaty (ATT) and has adopted the Council Widespread Place 2008/944/CFSP, which regulate and restrict the import/export and switch of weapons).
Crucially, because the starting of the Ukrainian disaster, the rhetoric across the EPF has considerably modified. When it was initially arrange, the EPF was centered on stopping conflicts; now the Fund is framed within the context of the EU’s safety and geopolitical aspirations within the period for strategic competitors. The primary annual progress report on the Strategic Compass indicated that the EU’s response, together with by the EPF, was believed to have strengthened the geopolitical posture of the Union. This shift reveals that aiding Ukraine, and probably different international locations, notably by this software, follows a longer-term aspiration to forestall future navy aggressions by Russia in Europe.
The EPF has emerged as a pivotal instrument, which has enabled the Union to create a fast and substantial navy response. Due to this facility, the European Union undertakes the supply of navy support with what appears to be a proportional financial effort. Such efforts at the moment are “communitarised” even when they’re off-budget.
5. Penalties of selecting the EPF mechanism: institutional and authorized implications
The choice to determine and closely make the most of the EPF, moderately than making an attempt to reform Article 41(2) TEU, carries important institutional, monetary, and political penalties for the European Union. These penalties could be summarised as:
the erosion of budgetary transparency and oversight;
elevated operational flexibility and pace; and
the creation of a troubling authorized precedent.
Erosion of budgetary transparency and oversight
Probably the most direct consequence of utilizing the EPF’s off-budget construction is the problem it poses to conventional EU budgetary ideas. Crucially, it bypasses parliamentary management: actually, by working exterior the final EU finances, the EPF is primarily accountable to the Council of the European Union. This clearly reduces the direct scrutiny and oversight sometimes exercised by the European Parliament (Article 14 TEU), thereby weakening the democratic accountability for navy and defence expenditures. This lack of full parliamentary involvement dangers making a transparency deficit in a extremely delicate space of coverage.
Moreover, whereas this submit argues for a de facto “communitarisation”, the EPF stays funded by contributions from Member States primarily based on their Gross Nationwide Earnings (GNI), which stay separate from the Multiannual Monetary Framework (MFF). This construction maintains a semi-intergovernmental character of defence funding, perpetuating the excellence between “Union spending” and “Member State spending”.
Elevated operational flexibility and pace
Undoubtedly, the off-budget mechanism affords clear operational benefits that drove its creation and use in the course of the Ukrainian disaster. The EPF permits the EU to offer fast and substantial navy help by avoiding the lengthy negotiation and legislative processes required to amend the central finances. This expedited navy support functionality has huge transformative potential inside EU overseas coverage. This facility permits the Union to organise a swift navy response to aggression, displaying a novel diploma of EU solidarity and enhanced operational functionality. That is essential for the EU’s evolving strategic identification.
Authorized precedent and the way forward for Article 41 TEU
It’s debatable whether or not the sustained use of the EPF might really set up a authorized precedent that successfully reinterprets the constraints of Article 41(2) TEU, even with out formal modification, because the restriction is on Member States utilizing the EU finances. It is very important level out that if Member States want to use their nationwide budgets, even in keeping with a GNI-based criterion, that’s fully as much as them. The essential level is that Article 41 TEU was structured on this manner, to not forestall the EU from being concerned in defence however to protect the Member States’ prerogative to determine to not be implicated in the event that they so want. Nevertheless, on condition that CFSP and CSDP are more and more a key a part of the general panorama of EU exterior motion, it appears very odd that this basic space ought to “elude” democratic management. If we imagine that defence is healthier dealt with on the EU degree, then this space also needs to adhere to the factors relevant to different European insurance policies.
The EPF’s agility is a step in direction of altering the EU’s posture as a strategic actor; it helps the Union’s transition from a primarily normative energy to a real world safety actor. This expanded navy engagement, nevertheless, ought to require rigorous stability towards the necessity for stringent democratic oversight and a transparent articulation of the EU’s evolving strategic identification to protect its credibility.
The results, subsequently, are three-fold: a achieve in geopolitical effectiveness and operational readiness, achieved regardless of potential strains on budgetary transparency and undermining the best stability of energy inside the EU’s institutional framework, the third aspect being the creation of a worrying authorized precedent.
6. Conclusion: the EPF and the institutional problem
The European Peace Facility has demonstrated its capability as a strong and transformative software for EU overseas and defence coverage, enabling a fast and substantial navy response and enhancing the Union’s operational functionality. This newfound agility is essential for the EU’s evolving strategic identification, supporting its transition towards changing into a real world safety actor.
Nevertheless, the mechanism’s design, which operates exterior the final EU finances, permits it to bypass conventional monetary restrictions. This method carries important institutional penalties, primarily by decreasing the direct scrutiny and oversight sometimes exercised by the European Parliament and weakening democratic accountability for navy expenditures.
Due to this fact, whereas the EPF could also be a essential and efficient instrument for contemporary EU defence coverage, its construction raises a basic institutional problem. For defence coverage – now successfully changing into a vital a part of the Union’s exterior motion – to operate in an accurate and lawful method, it ought to be submitted to the identical standards of democratic management and transparency relevant to all different areas of Union motion. The longer term use and administration of the EPF should rigorously stability its strategic effectiveness with the necessity for stringent oversight and meticulous danger evaluation to protect the Union’s credibility and foundational values.
Olivia Schiatti is a Regulation graduate, specialised in European Union Regulation and Constitutional Regulation, and at the moment taking part within the Silvano Tosi Seminar for Parliamentary research and Analysis, organized by the Italian Parliament.
Particular because of Professor Antonio Tanca for his invaluable mentorship and for sharing superb insights gained over his distinguished profession, which vastly helped in refining the core concepts of this work.
