Since the beginning of the year, Ukraine has been concluding bilateral security agreements. As of the end of June, there were 19 agreements with national countries and one agreement with the European Union. The first agreement was reached back in January with the UK. Some of the recent agreements were signed on June 27, with the European Union, Estonia, and Lithuania.
Negotiations with other powers, such as with Poland and the Czech Republic, are underway. In fact, the agreement with Poland was signed on July 8, but it has not been covered in this overview.
Standard agreement
The total military support under these agreements should amount to $60 billion annually, Prime Minister Denys Shmyhal said during a Government meeting on June 28. The agreement with the United States signed on June 13 was called on the website of the President of Ukraine "the strongest of all time of independence".
All agreements are similar structurally. However, accents and commitments differ. The agreements are divided into blocks: military cooperation, responsibility for aggression, democracy, reforms and European integration, economy, energy, etc. Civil Network OPORA highlights 17 criteria in our study.
The chart shows the situation with the bilateral security agreements as of the end of June 2024.
The key part is defense cooperation and the development of the Ukrainian military-industrial complex. However, the agreements shall not be interpreted as defense contracts. Rather, they are arrangements on cooperation. And they are quite wide.
No specific actions are planned for the event of a new Russian aggression (whatever that means), and assurances of assistance in the event of an attack are also lacking in detail. The same situation is with the nuclear threat. Individual agreements make no mention of this at all, and nuclear blackmail is one of Russia's tools of pressure.
The agreements consolidate Ukraine's course towards joining the EU and NATO. Although some countries do not clearly express their position, in particular regarding the North Atlantic Alliance. For example, the positions of Germany and Italy regarding Ukraine's membership in NATO are cautious.
Therefore, the agreements should be regarded as expanding opportunities for Ukraine and outlining areas of cooperation. Also, for the future. Lack of specifics for many points and the possibility to stop financing at any time are the weaknesses of the agreements. However, financing also takes place outside the limits defined by the agreements. The example is the allocation of a package of military and financial assistance from the United States to Ukraine for $60 billion in 2024.
Military finances
Key references to financing are provided specifically for the military sphere. However, such assistance is not specified by all countries. For the most part, it is guaranteed only in 2024. Two of the 19 countries (USA and Italy) did not stipulate any funding. Notwithstanding, Italy has pledged to maintain military support at the level of the past two years, of at least 8 packages of military assistance.
12 countries have provided funding for military support for 2024. Only 7 countries planned it for the following years. It should be borne in mind that military support is not limited to the agreements only.
In total, for 2024, the agreements provide for military support of at least 22.95 billion euros. Germany has to provide assistance for more than 7 billion euros, Great Britain — 2.5 billion pounds, France — up to 3 billion euros, the Netherlands — 2 billion euros, Denmark — at least 1.8 billion euros, Norway — 1.3 billion euros, Spain — 1 billion euros, Belgium — at least 977 million euros, Finland — at least 400 million euros, Latvia — 112 million euros, Portugal — 126 million euros. Estonia will provide defense assistance worth more than 100 million euros.
As to Canada, it stands out to a certain extent, indicating a total amount of macroeconomic and military support of 2.1 billion euros (3.02 billion Canadian dollars).
Iceland has pledged 2 million euros for the Czech initiative for the purchase of ammunition in support of Ukraine, launched in February 2024. By the end of June, 15 EU and NATO countries had already provided more than 1.6 billion euros. This initiative is also mentioned in the agreements with Belgium (allocated 200 million euros) and Portugal (100 million euros).
Five countries also recorded clear promises to provide military equipment (as of the end of June):
- Belgium – 30 F-16 aircraft by 2028, one anti-mine boat;
- Sweden – CV 90 IFV, Archer self-propelled guns, ASC 890 aircraft, potential Jas 39 Gripen transfer;
- Norway – F-16 fighters, NASAMS SAMs;
- Denmark – provision of F-16 fighters.
In the agreement of July 8, Poland undertakes to consider the possibility of transferring to Ukraine at least one additional squadron of MiG-29 (at least 14 fighters).
The graph shows the military assistance specified in bilateral security agreements as of June 13, 2024. Since then, agreements with Estonia, Lithuania, the EU and Poland have been added.
Only the Baltic and Scandinavian countries indicated long-term military assistance in the agreements.
The Danish National Ukraine Fund will provide EUR 8.5 billion in 2023–2028. But it involves more than just military support. Sweden plans to provide 6.5 billion euros over three years. Norway will allocate 6.4 billion euros in 2023-2027.
Iceland has committed to allocating at least 4 billion Icelandic kroner (about 26 million euros) each year during 2024-2028, subject to the annual approval of these payments by Parliament.
Latvia, Estonia and Lithuania promise to allocate 0.25% of their GDP each year. For example, for Latvia it is about 100 million euros.
Such different approaches are explained by the process of organizing expenditures within states, the availability of funds in the budgets of countries and the need for approval by parliaments and governments. At the same time, the amount of assistance is by no means limited to bilateral security agreements themselves.
However, there is a risk to sustainability of military assistance, which will depend on the political situation within the allied countries. For example, US presidential candidate Donald Trump announced his intentions to "cut off" aid to Ukraine in the event of his victory.
Money for the economy
Financial international assistance is key to maintaining economic stability. To compare, in 2023, the state budget received UAH 783.6 billion in taxes. And as of June 28 this year, more than UAH 540 billion ($13.8 billion) of international assistance was received to the budget. Another UAH 250 billion was brought by the sale of national government bonds (government bonds).
In total, for 2022-2023, Ukraine received funding for $73.5 billion. In 2023 alone, it was $42.6 billion. As of 2024, the need for external support was $37.3 billion, or more than $3 billion per month.
This year, key donors to the state budget were the EU ($8.5 billion), Japan ($2.1 billion), and Canada ($1.4 billion). It is noteworthy that due to the political situation, no assistance has yet been received from the United States.
The schedule shows the financing of the general fund of the state budget as of June 28, 2024. The main part of the assistance comes in loans from foreign countries and government bonds.
Non-military assistance is much less reflected in the agreements. Mostly, these are funds for macroeconomic assistance, reconstruction, and investment. Such support is mentioned in 7 agreements – with Japan, Canada, Spain, Finland, Latvia, Estonia, and Lithuania.
However, some agreements mention previous commitments or support. For example, the UK confirms that it has committed some £4.2 billion in fiscal support and more than £640 million in aid since the full-scale invasion.
Japan does not envisage military assistance at all. However, it allocates 4.2 billion euros ($4.5 billion) for financial, humanitarian and other assistance. Canada's support is fixed at 2.1 billion euros, some of which will be spent on military needs. Latvia pledges €15 million with a focus on rehabilitation of social infrastructure, psychological support for women and transfer of experience, especially on issues related to EU integration.
The agreement with Spain specifies the amounts for reconstruction. More specifically, it is EUR 15 million for a contribution for Ukraine and Moldova through the World Bank's Special Programme for the Recovery of Ukraine and Moldova. The country also confirms the allocation of 250 million euros in the field of global food security. The funds will support initiatives such as the Spanish Food Security Action Plan, the EU-Ukraine Solidarity Lanes and the Grain from Ukraine Humanitarian Programme. Another 1.5 million euros will be allocated for combatting organized crime.
Estonia is supposed to allocate 56 million euros for the development and humanitarian support of Ukraine in 2024-2027. Lithuania promises 24 million euros for the restoration and rebuilding of Ukraine.
The agreement with Finland is much more interesting, since there are quite detailed ways of allocating funds. Finland has pledged to recapitalize the EBRD by 50 million euros. Up to 50 million euros will be allocated for a new mixed loan instrument – Ukraine Investment Facility (UIF) of the Public Investment Fund (PIF). The same amount is planned to finance the export of the Finnish national export credit agency, Finnvera, to compensate for potential credit losses.
Another 8 million euros will be allocated to the Finnpartnership program. It supports Ukrainian society by offering business partnerships and support for investment training for Finnish companies in Ukraine. The authorized capital of the Finnish financial company Finnfund will be increased by 25 million euros. Finnfund's investment risk in Ukraine will be covered by special government risk financing in the amount of up to 80% of the risk.
Finland and Latvia also undertake to participate in the financing of the EU support program for 2024-2027 Ukraine Facility. It was proposed by the European Commission in June 2023. Its final approval took place this February. In March, Ukraine received the first 4.5 billion euros under the program.
In general, the budget of Ukraine Facility is 50 billion euros, which will be provided in tranches if Ukraine meets the established indicators for recovery and reforms. 69 reforms have been envisaged for public administration, justice, economy, etc.
The funding itself will mainly go to cover the needs of the state budget, for which 38.27 billion euros are allocated. Another 6.97 billion euros – to support investments in Ukraine, 4.76 billion euros – to cover interest on loans and technical assistance to the government for reforms.
Reconstruction and Energy
Although the agreements indicate the need for reforms in the economy and governance, their detail should be determined by other documents. Presently, those are pretty general definitions. For example, the UK distinguishes three areas in the reform of the economy – the reform of state-owned enterprises, the involvement of the private sector, and investor confidence. France emphasizes transparency and good governance in the economic sector.
A separate topic in the agreements is reconstruction and recovery. At the end of 2023, the total economic, social and other losses of Ukraine amounted to $499 billion. And $486 billion was needed to rebuild. These numbers have clearly risen since the strikes on critical infrastructure in 2024.
Although in all agreements the countries undertake to participate in the reconstruction of Ukraine, only some of them have the amount of funding for this activity specified. For example, these are the above-mentioned 15 million euros from Latvia and Spain, or 640 million pounds confirmed by Britain.
Interestingly, several countries indicated “priority” regions for themselves. Thus, Estonia will focus on Zhytomyr region, including the city of Zhytomyr. Latvia and Belgium will focus on the Chernihiv region and the city of Chernihiv. Denmark will focus on Mykolaiv region and Mykolaiv city. Italy prioritized Odessa region.
Energy and critical infrastructure protection are another cross-cutting themes in the agreements. There are various estimates of Ukraine's generating capacity. The public summit "Security Guarantees for Ukrainian Democracy In War" announced the number of 36 GW before the full-scale invasion, 18 GW in the winter of 2023-2024, and the loss of another 9 GW over the past six months. The UP, with reference to the Financial Times, estimates 55 GW by 2022 and about 20 GW currently.
The agreements call the energy sector crucial for Ukraine's resilience. Some countries pay special attention to this issue. France is committed to contributing to the protection of critical infrastructure. In particular, through military means such as strengthening air defense. Latvia speaks of the protection by military means, in particular with air defense and electronic warfare.
A separate emphasis is on taking into account the "green" component. For example, Germany, in the context of restoring and protecting Ukraine's energy system, emphasizes Ukraine's transition to green energy. In the agreement with Italy, Ukraine undertakes to transfer its economy to a sustainable and climate-neutral path. Sweden also mentions a “green” transition.
The lack of detailed recovery mechanisms and the Ukrainian energy sector provision are key risks of bilateral agreements. In addition, these aspects should be specified in subsequent agreements.
Special for LIGA.net