Germany and France Clash Over Ukraine's €90 Billion EU Loan Arms Procurement Rules

EU Loan for Ukraine Sparks Franco-German Disagreement

A significant debate has emerged within the European Union, pitting Germany against France over the conditions attached to a crucial €90 billion loan package for Ukraine. The core of the dispute centers on the rules governing how Ukraine will procure arms using these funds, with implications for both Ukraine's immediate defense needs and the future of Europe's defense industry.

The €90 billion EU loan, agreed upon by the European Council in December 2025 and formally presented by the European Commission on January 14, 2026, is designed to cover Ukraine's financial requirements for 2026-2027. Approximately two-thirds (€60 billion) of this sum is earmarked for military assistance, with the remaining one-third (€30 billion) allocated for general budget support. The loan is to be financed through common EU borrowing and guaranteed by the EU budget's 'headroom.' Its approval proceeded under an 'enhanced cooperation procedure' due to the abstention of Czechia, Hungary, and Slovakia, with the European Parliament fast-tracking its endorsement on January 21, 2026.

Divergent Approaches to Arms Procurement

The primary point of contention lies in whether Ukraine should be mandated to prioritize European defense industries when purchasing weapons or retain the flexibility to acquire necessary armaments from any global supplier. France, under the leadership of President Emmanuel Macron, is a staunch proponent of a 'Buy European' policy. Paris argues that the loan funds should predominantly be spent on arms produced within the bloc, aiming to bolster the EU's own defense industrial base. This stance has led France to oppose proposals that would simplify Ukraine's acquisition of non-EU military equipment, such as British Storm Shadow missiles, insisting that funds remain exclusively within the EU.

Conversely, Germany, supported by the Netherlands and a coalition of 19 other countries, advocates for greater flexibility. Berlin contends that Ukraine's urgent and evolving defense requirements necessitate the ability to procure weapons from any source, particularly when European suppliers cannot meet specific demands or when critical equipment, such as US-made air defense systems, interceptors, and long-range missiles, is needed. Germany has also introduced an amendment suggesting that arms purchases could favor countries that have demonstrated greater generosity in providing bilateral military aid to Ukraine. This move is perceived by some as an effort to incentivize other donors and by others as a strategic counter to France's 'Buy European' initiative.

Ukraine's Urgent Needs and Broader Context

Ukrainian officials have emphasized the critical need for a wide range of military equipment, including items that European industries currently struggle to supply in sufficient quantities. Reports indicate that Ukraine faces the risk of running out of resources by the second quarter of 2026 without this vital aid. The debate also unfolds against the backdrop of differing contributions to Ukraine's defense; Germany has been Europe's largest military donor, providing €19.7 billion since the full-scale invasion, while France has committed €5.9 billion, figures that Paris disputes.

As EU ambassadors convened on January 28 to finalize the eligibility criteria for the loan, the divisions underscore a broader struggle within the bloc regarding strategic autonomy versus immediate operational effectiveness for Ukraine. The outcome of these negotiations will not only shape Ukraine's ability to defend itself but also influence the future direction of European defense policy and industrial cooperation.