Ukraine has secured the right to buy military equipment from outside the European Union under the bloc's €90 billion Ukraine Support Loan, but France is now pushing to put a time limit on those exemptions. The move is designed to steer more of the EU-backed funding towards European — and potentially French — defence manufacturers, according to sources familiar with the discussions.
The loan, approved by EU member states in April, provides €30 billion in economic support and €60 billion for military assistance over 2026 and 2027. The first disbursement of €3.9 billion for drones was made in June, followed by €6.1 billion for defence procurement earlier this week, as reported by EU approval of the latest tranche.
Under the loan's rules, Ukraine cannot source more than 35% of the total cost of a defence product from outside the EU and the European Economic Area. However, Kyiv can request an exemption when no EU-made equivalent meets its immediate operational needs, or when European products cannot match the required volume, production timelines, or price.
So far, Ukraine has requested two exemptions: one for Chinese-made drone components and another for US-made Patriot interceptor missiles, which are critical for its air defences. The European Commission has approved both, acknowledging that Europe currently lacks sufficient production capacity and remains dependent on foreign suppliers in key areas of modern warfare.
France, which hosts one of Europe's largest defence industries — including the Franco-Italian SAMP/T system, Europe's closest alternative to the Patriot — is now pressing the Commission to ensure that these exemptions are temporary. Paris wants to guarantee that a greater share of the EU-backed funding ultimately supports European production, and potentially French companies.
Balancing urgency and industrial policy
The push from Paris contrasts with the stance of nine other EU defence ministers. In July, the defence ministers of Sweden, the Netherlands, Germany, Denmark, Estonia, Poland, Latvia, Finland and Lithuania wrote to EU foreign policy chief Kaja Kallas and Defence Commissioner Andrius Kubilius, calling for maximum flexibility for Ukraine to procure the equipment it urgently needs.
"We continue to stress that the swift approval of product schedules is crucial, including through the pragmatic use of the derogation for the purchase of materiel produced by third countries," the letter said.
How France's push could work in practice depends on the mechanics of the loan. At the outset, Kyiv provided Brussels with a broad breakdown of its intended spending by product category — drones, air defence systems, artillery, and so on. The precise allocations are classified and can be adjusted as battlefield needs evolve.
For products covered by an exemption, a second stage requires the Ukrainian government to provide details of how the money will be spent, including contracts specifying the equipment, the supplier, and the delivery timeline. The Commission releases the funds only after reviewing these contracts. For Chinese suppliers, the Commission must also verify that the companies are not subject to EU sanctions targeting Russia's military-industrial complex, as China-based drone manufacturers can supply both sides.
Crucially, exemptions must be renewed each time Ukraine requests a new payment. This means that if a European supplier emerges that can match the foreign manufacturer's volume, cost, and production times, the Commission could refuse to renew the exemption and require Kyiv to source from the European supplier instead. Informally, the EU executive could also impose tighter deadlines for Kyiv's contracts with foreign suppliers to be fulfilled.
The Commission will have to strike a delicate balance: boosting European defence production and reducing strategic dependence on foreign suppliers over the medium to long term, while ensuring Ukraine has the equipment it needs to defend itself against Russia. The outcome of this balancing act could set a precedent for other EU financial instruments, notably the Security Action for Europe (SAFE) and the European Defence Industry Programme (EDIP).
As the war continues, the debate over procurement flexibility is likely to intensify. While Ukraine's immediate needs are paramount, the long-term goal of a stronger European defence industrial base remains a key priority for many member states, including France. The coming months will show whether Paris can turn its push into concrete policy changes.
