The European Union has approved the mobilisation of approximately €4.9 billion under the European Peace Facility (EPF), implementing a significant part of an earlier agreement intended to resolve disagreements over military assistance to Ukraine.

The eight decisions, adopted by the Council on 26th October, allocate €4.7 billion towards partial reimbursement of military equipment already supplied by member states and €230 million towards the EU Military Assistance Mission in support of Ukraine.

Although the announcement represents an important step in restoring the operation of an established financing mechanism, most of the money does not correspond to fresh deliveries of military equipment.

That distinction is important as European governments attempt to reconcile continued support for Kyiv with growing pressure on national defence budgets and the need to replenish their own military inventories.

From political agreement to financial implementation

The decisions implement part of the €6.6 billion agreement reached by EU governments on 25th September, which ended a prolonged dispute over the allocation of European Peace Facility resources.

As EU Today reported following that agreement, the package separates reimbursements for previous deliveries from financing for new equipment and military training.

Under the original arrangement, €4.7 billion was earmarked for reimbursements, €1 billion for new joint procurement and approximately €900 million for training-related expenditure.

Monday’s decisions authorise most of the reimbursement component alongside a further allocation for training. They do not, by themselves, demonstrate that the separately planned €1 billion in new military equipment has been purchased or delivered.

The distinction reflects the unusual structure of the European Peace Facility.

Established in March 2021, the EPF operates outside the EU’s regular budget and finances security and defence assistance, including military equipment supplied by member states to partner countries.

Governments can provide weapons from their national stocks and subsequently seek partial reimbursement. This enables the EU to share some of the costs, although actual deliveries remain dependent on national decisions, industrial capacity and available equipment.

Reimbursements therefore strengthen the financial position of contributing governments without necessarily increasing Ukraine’s immediate stock of weapons.

Nevertheless, by reducing the financial burden of earlier donations, the mechanism can help governments preserve the capacity to make further contributions.

Military training becomes a longer-term commitment

The additional €230 million for the EU Military Assistance Mission also reflects the increasingly institutional character of European military support.

Established in November 2022, EUMAM Ukraine provides training for Ukrainian personnel through facilities and instructors made available by participating countries.

According to an EU statement delivered at the OSCE in October, the mission had trained approximately 97,000 Ukrainian soldiers.

The EU has agreed to extend the mission for another two years, moving military training beyond a series of short-term emergency measures.

Training programmes can be adapted to battlefield requirements, including the operation of Western equipment, command procedures, engineering and specialised military functions.

However, the usefulness of training also depends on the availability of appropriate weapons, ammunition and replacement equipment once personnel return to Ukraine.

The Council says the latest decisions bring overall support under the European Peace Facility to approximately €10.8 billion, comprising €9.9 billion associated with military assistance reimbursements and €950 million for training.

Frozen Russian assets and the defence industry

A separate financing mechanism is increasingly relevant to European support for Ukraine.

The Council reports that €3.5 billion in extraordinary revenues generated by immobilised Russian sovereign assets has already been channelled through the EPF to finance ammunition, air defence and drones.

More than €1.5 billion of the resulting procurement has been directed towards Ukraine’s own defence industry.

This creates a different relationship between European financing and Ukrainian military production.

Rather than relying exclusively on weapons taken from European stockpiles, the arrangement allows part of the support to be translated into orders for equipment manufactured inside Ukraine.

The approach may also reduce certain transport and procurement constraints, although production remains vulnerable to Russian attacks, component shortages and interruptions to electricity supplies.

The legal and political questions surrounding Russian-asset revenues remain significant. As EU Today previously examined, disputes over how European institutions approve funding measures have generated legal challenges.

The next test for European governments

At their 15–16 October summit, EU leaders welcomed the EPF agreement and continuing disbursements under the separate €90 billion Ukraine support loan covering 2026 and 2027.

The two instruments serve different purposes. The loan supports wider Ukrainian financial and defence requirements, while the EPF provides a mechanism for sharing the costs of military assistance.

For Kyiv, the central question is how rapidly European financial commitments can be converted into deliverable military capabilities.

For EU governments, the challenge is whether reimbursement mechanisms, national procurement and Ukrainian industrial production can operate together on a predictable basis.

The release of €4.9 billion resolves an important financing issue. It does not eliminate the continuing requirement for new equipment, ammunition and sustained production.

The European Commission is checking whether laws Ukraine’s parliament passed last week earn it a €3.7 billion ($4.3 billion) EU payment, spokesperson Balázs Ujvári told reporters in Brussels on 19 October. He also said Ukraine’s 2027 funding gap stands at about €70 billion, and that the EU “cannot do this all alone.” How Ukraine pays for Russia’s war next year now depends on reforms in Kyiv and on money from Europe and beyond.

Russia keeps striking Ukraine’s power grid and cities, and Kyiv already faces a hole in next year’s war budget before any new military spending. Foreign money keeps salaries, pensions, and repairs flowing while Ukraine spends its own revenue on defense. So each delayed payment is felt at home while Russia hits the energy system again.

Brussels reads Kyiv’s new laws before paying

The payment is the second tranche of the EU’s macro-financial assistance to Ukraine, and each one depends on reforms, Ujvári said at the Commission’s midday briefing.

“We saw that last week some important laws were adopted in the Rada, and we are in the process of analyzing these laws and we will formulate our assessment thereafter,” he said.

On its third attempt, parliament passed a law on 15 October ending the VAT exemption for foreign parcels worth up to €150 from 1 July 2027, and making online marketplaces collect the tax. The Commission had warned the law was one of 12 conditions for the tranche. Fewer than 1% of the 75 million parcels Ukrainians receive each year were taxed, and lawmakers had rejected the measure twice despite IMF pressure.

About €30 billion is in the pipeline for Ukraine this year, mostly under the EU’s €90 billion support loan, if reforms continue, Ujvári said.

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A €70 billion gap for 2027

Current pledges leave a gap of about €70 billion for 2027, Ujvári said, even counting the €45 billion ($52 billion) the EU has set aside for next year and some partners’ commitments.

“We cannot do this all alone. Therefore, our partners in general must step up,” he said. “They have to come forward with pledges, and they have to deliver on those commitments.”

On 16 October, Ukrainian President Volodymyr Zelenskyy asked EU leaders for at least €70 billion more for 2027. They tasked the Commission with a proposal but set no deadline. Asked whether it would revisit using frozen Russian assets, Ujvári said it was “a little bit early” to discuss options in that detail. New EU borrowing has also grown costlier: 10-year rates rose from 3.2% to just above 4% in six months, he said.

The €90 billion loan was designed on the assumption that the war would end in 2026. Slovak Prime Minister Robert Fico said Slovakia and Hungary would opt out of new aid but would not block others.

Russia has placed five foreign-owned businesses under compulsory administration, including Belgian manufacturer Ontex and French flooring group Tarkett. The latest seizures deepen the confrontation over sanctions, frozen Russian assets and the future of European investment in Russia.

Russian President Vladimir Putin has ordered the transfer of five Western-owned businesses into compulsory Russian management, extending a campaign of asset seizures targeting European companies that continued operating in Russia after the full-scale invasion of Ukraine.

The decree, signed on 15 October, affects businesses with combined annual revenues exceeding 53 billion roubles, approximately €530 million. They include French flooring manufacturer Tarkett, Belgian hygiene products group Ontex, German packaging producer Menshen, Kappa Rus and Eviosys Packaging Kuban, now linked to American group Sonoco.

Under Presidential Decree No. 738, operational control has been transferred to Centre Capital, a little-known Moscow company established in February 2026 with registered share capital of just 10,000 roubles.

The decision follows similar interventions against Nestlé, Auchan, FM Logistic and Metro in September. Together, the measures demonstrate how Moscow is using foreign-owned businesses as instruments of economic retaliation against countries supporting Ukraine.

Foreign businesses placed under Russian control

Centre Capital is headed by Marat Mirkhaydarov, a former senior official in Russia’s Zabaykalsky region who reportedly served with the Akhmat military formation during Russia’s war against Ukraine.

The scale of the companies placed under his management contrasts sharply with the financial standing of the administrator.

Tarkett’s Russian operations generated approximately 19.3 billion roubles in revenue during 2025, while Kappa Rus recorded 16.5 billion roubles and Ontex RU another 10.3 billion. Eviosys Packaging Kuban and Menshen Packaging CIS reported approximately 6.1 billion and 1.4 billion roubles respectively.

The decree does not formally transfer ownership of the companies to Centre Capital. It does, however, remove the foreign shareholders’ effective control over management, operations and commercial decisions.

For Belgian manufacturer Ontex, the consequences are immediate.

In an official statement issued on 16 October, the Aalst-based company confirmed that a government-appointed administrator had assumed operational control of its Russian subsidiary.

Ontex Russia employs approximately 350 people, operates a manufacturing facility in Noginsk and maintains a sales office in Moscow. The subsidiary accounts for around five per cent of the group’s total revenue and between seven and eight per cent of adjusted EBITDA.

The company said it was examining measures to protect its assets and maintain business continuity.

Tarkett likewise confirmed that it was losing effective control of its Russian operations.

A mechanism established in 2023

The legal framework for such interventions dates to April 2023, when Putin introduced Decree No. 302, allowing the Russian authorities to place assets associated with countries designated as unfriendly under temporary external management.

The appointed administrator can exercise extensive ownership-related powers, although the formal right to dispose of the assets remains excluded.

Crucially, the arrangement can be terminated only by presidential decision. There is no automatic deadline for returning operational control to the original owners.

Moscow maintains that the measures are reversible. Nevertheless, the loss of management authority raises questions about whether businesses could eventually be returned with their financial position, organisational structure and commercial value intact.

The latest decree extends the process already documented by EU Today following the September takeover of Nestlé and Auchan’s Russian operations.

The Kremlin’s approach also serves domestic economic objectives. Keeping factories, retail networks and distribution facilities operating under Russian management helps preserve employment, production capacity and established supply chains.

At the same time, appointing Russian administrators allows the authorities to exercise greater influence over businesses originally developed through foreign capital, technology and expertise.

European companies caught in sanctions confrontation

Kremlin spokesman Dmitry Peskov has explicitly linked the seizures to the nationality of the affected companies and the policies of their governments.

He accused European states of participating in the unlawful seizure of Russian property through sanctions and financial restrictions.

Moscow’s argument centres partly on approximately €210 billion in Russian sovereign assets immobilised in the European Union, most of them held through Belgium-based securities depository Euroclear.

The European Union has used extraordinary revenues generated by those assets to support Ukraine, while further proposals involving the underlying funds remain subject to legal and political debate.

Belgium has been particularly concerned about potential financial exposure and legal claims. As EU Today reported in September, a Belgian Council of State judgment raised additional questions about the administrative procedures governing certain frozen assets.

The dispute has also moved into the European courts, with the Bank of Russia challenging EU measures intended to protect Euroclear against the enforcement of Russian judgments.

Moscow’s treatment of European businesses adds another dimension to this confrontation. By retaining control over foreign-owned industrial and commercial assets, Russia possesses a means of exerting pressure on companies whose governments support sanctions and military assistance to Ukraine.

The implications are particularly serious for Western banks that still maintain substantial Russian operations.

Austria’s Raiffeisen Bank International and Italy’s UniCredit remain exposed to Russia through local subsidiaries. Any extension of compulsory administration to financial institutions could create additional difficulties involving deposits, capital and banking supervision.

The cost of remaining in Russia

The seizures also expose the financial risks faced by Western companies that delayed their withdrawal after February 2022.

Many initially sought to protect their investments, employees and commercial infrastructure. Others reduced operations but retained ownership, expecting that conditions might eventually permit an orderly sale or renewed business activity.

Russian restrictions have progressively complicated that calculation, requiring foreign investors from designated countries to accept substantial discounts on asset sales and obtain official approval for transactions.

Companies remaining in the country now face the additional possibility that the government will appoint administrators without their consent.

The consequences extend beyond the businesses immediately affected. Russia is establishing a precedent under which foreign investment can remain legally owned by its original shareholders while its economic benefits and operational management are placed beyond their control.

For European governments, the latest decree illustrates the increasing connection between commercial interests and geopolitical decisions.

The Kremlin has demonstrated that sanctions imposed over its invasion of Ukraine can be answered not only through diplomatic or financial measures, but also through direct intervention in European-owned businesses operating on Russian territory.

Any eventual negotiation over sanctions relief and the restoration of economic relations will consequently have to address the status of these assets, the rights of their original shareholders and the question of compensation.

Until then, Western companies remaining in Russia face an investment environment in which the ultimate authority over their businesses rests increasingly with the Kremlin rather than their shareholders.

Ukraine will resume strikes on Russian oil refineries, ending a three-day pause it held at Washington’s request, Ukrainian President Volodymyr Zelenskyy told the Financial Times in an interview published on 15 October. Russia kept bombing Ukraine’s energy system throughout the pause, while Kyiv lost US missile warnings and its Starlink service slowed. Zelenskyy said Ukraine would halt energy strikes again only in exchange for more US air defense.

Ukraine's deep-strike campaign targets the Russian oil industry, which fuels Russia's army in Ukraine and earns the export revenue funding the war. Striking the plants that turn Russian crude into fuel, 12 of them hit in September alone, is one of the few levers Kyiv controls on Moscow’s war income. US President Donald Trump has blamed those strikes for higher US fuel prices, which most analysts attribute to the Iran war, and Washington has threatened to withhold intelligence, and reportedly weapons, unless Kyiv gives it up. Each step Washington takes toward Moscow, from fuel waivers to talk of frozen assets, widens the gap Europe and Ukraine must fill, while Russia gains revenue and time to keep striking.

A pause that bought nothing

Zelenskyy said he stopped the refinery strikes for three days to meet US wishes, but Russia kept hitting Ukraine’s energy infrastructure and killing civilians. During the pause, Ukraine received no US warnings of ballistic missile launches, he said. Starlink also slowed across the country, hampering front-line operations and mid-range strikes on Russian military targets, he added.

Russia used those days to fire 39 ballistic missiles and more than 120 drones at Ukraine’s grid overnight into 14 October, leaving at least 600,000 people without power. “We hold energy ceasefire from our side,” Zelenskyy told Piers Morgan on 14 October. Of the Starlink slowdown, he added: “I’m sure that they knew what they did.”

The price of another pause

Ukraine could again stop hitting Russian energy only if it receives more US interceptors for its Patriot systems, Zelenskyy told the FT. He warned that a halt could simply invite more US-Russia deals that feed Russia’s war machine, and predicted the next one would involve gas.

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US intelligence officials had warned Ukraine’s embassy in Washington that a new strike on Russia’s energy facilities would end all intelligence sharing at once, The Washington Post reported, citing a person familiar with the matter. Washington has not fully cut it off, but the threat stands, the person said. Trump said on 13 October that the US was still sharing intelligence.

Washington’s other moves toward Moscow

A senior US official told Axios the administration had nothing to do with the Starlink limits, which Elon Musk had blamed on the US military. The administration is also considering easing sanctions on shadow fleet tankers, which have carried oil from Russia, Iran, and Venezuela, so the blacklisted vessels could haul non-sanctioned cargo, a US official told Reuters. The US Energy Department said the move would not help Russia ship its oil or fuel.

Washington eased sanctions on Russian oil this spring, after which Russia’s oil income jumped $890 million in a week, and it extended that waiver despite telling allies it would not. US envoys also proposed unfreezing part of Russia’s frozen assets to lure Moscow back to talks, an idea European officials rejected, the Financial Times reported.