News from the Garden:
TENSIONS GROW OVER EU CASH FOR WEAPONS: In response to Russia’s full-scale invasion of Ukraine, Kyiv’s allies have rushed to provide military aid. In a historic first, EU countries have been partially reimbursed for that aid with money from a joint fund called the European Peace Facility (EPF), to which member nations contribute based on the size of their economies.
Officially, EU countries have hailed the fund as a sign of solidarity. But behind the scenes, tensions have grown over how much money countries are expensing to the joint fund. Playbook spoke to seven EU diplomats and officials for this report, who spoke on the condition of anonymity to discuss classified information.
The accusation that emerged from those discussions is that one country in particular — Estonia — has been renewing its arsenal at the expense of its EU neighbors, while sending old stocks to Ukraine.
Accounting magic: Officially, all countries receive the same rate of reimbursement, which EU nations agreed on: some 84 percent of the price paid. However, what’s not agreed is how countries calculate the price of the equipment they send to Ukraine. “There are widely different approaches, each country is using their own methodology” to calculate the costs, said one official.
Classified data from the EU’s foreign affairs and defense department (EEAS) shared with diplomats from EU countries and revealed for the first time by Playbook show that six countries have calculated their reimbursement claims based on the purchasing price of new materials, rather than the actual current value of what they’ve sent to Ukraine.
The 6 countries named: Finland (which according to the EEAS claimed 100 percent of the new purchasing price), Latvia (which claimed 99 percent), Lithuania (93 percent), Estonia (91 percent), France (71 percent) and Sweden (26 percent).
Estonia topped the list in absolute figures, claiming more than €160 million for its past donations to Ukraine, for which it was reimbursed €134 million based on the EPF’s rate, according to an EEAS overview obtained by Playbook.
Not happy: Those figures have diplomats from other countries fuming at what they described as sanctimonious behavior from Estonia. Prime Minister Kaja Kallas, the diplomats said, has very publicly led calls in the EU for more military support for Ukraine, but seems to have found a way to support her own army quite generously in passing.
Yikes: “They are sending their scraps to Ukraine and buying brand new material for themselves, financed with EU money,” said one EU diplomat about Estonia.
Keeping the peace: A second EU diplomat from a different country confirmed that Estonia’s behavior had raised eyebrows across the EU, as a “particularly blatant case” — even though no one wanted to call Tallinn out to avoid any sign of divisions.
How it works: “What the Estonians do is, they send old material, which is no longer in production, and then ask for reimbursement [based on the price of] modern alternatives,” said the second diplomat. To illustrate the point, the diplomat added: “For example, they have sent Strelas [old Soviet shoulder-fired surface-to-air missiles] to Ukraine, but claimed reimbursement for modern Stingers, which of course have more capabilities and command a much higher price. This is also why Estonia’s military support appears to be so much higher per capita than that of other countries in the statistics everybody cites.”
Estonia’s take: After Playbook hit your inboxes this morning, Estonia reached out with its response. First, the defense ministry took issue with the above diplomat’s example, pointing out that “Estonia has never had Strela-type weapons, nor has Estonia sent them to Ukraine, nor has Estonia owned or acquired Stingers.”
But what about the substance of the criticisms? “The declaration of European Peace Funding [sic] donations on the basis of recovery value is completely in accordance with the rules and applies in the event that the production of the donated equipment has been terminated and the restoration of its capacity is important from the point of view of national defense,” the defense ministry said in its statement.
Translation: All of this is within the rules. Indeed, the government in Tallinn has in the past confirmed that it calculates its aid to Ukraine based on the “recovery value” of the donated material and said in a statement in January that it was “applying for funds from the European Peace Facility for the replacement of equipment.”
No comment: Spokespeople for Finland and Lithuania declined to comment.
