After the EU failed to reach an agreement on the use of frozen Russian assets, Kiev will need more support from Brussels, and this will prove increasingly difficult.
Russia’s war against Ukraine seems to be ending next year, on very unfavorable terms for Kiev. What is this prediction based on? On the failure of the EU last week to accept the use of Russia’s money – 210 billion euros in frozen assets – to keep Ukraine solvent and able to finance its war effort, writes Politico.
The rejection of the „reconstruction loan” proposal, which would have used Russian assets, mostly blocked in a bank in Belgium, leaves Ukraine without guaranteed funding for the next two years.
### Kiev doesn’t run out of money now. But what’s next?
Belgium’s legal anxieties about the loan, combined with the reluctance of French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni to join German Chancellor Friedrich Merz in supporting this proposal, condemned this solution after weeks of disputes and exaggerated expectations of the plan’s supporters, including European Commission President Ursula von der Leyen.
Fortunately, the EU will continue to offer a substantial funding package for Ukraine, after deciding that member states would jointly borrow 90 billion euros from the capital markets, guaranteed by the EU budget, and lend it to Kiev interest-free.
So, Ukraine will not run out of money at the beginning of next year, but the package is set to be distributed over two years, so this solution will not be enough to keep Ukraine in the fight.
According to IMF projections, due to the reduction in US financial support, Ukraine’s budget deficit over the next two years will be nearly $160 billion.
In other words, Ukraine will need much more support from Europe, and it will be increasingly difficult for the EU to provide it.
### It’s not good to count the chickens before they hatch
However, many European leaders were quite optimistic once the funding agreement was reached last week.
Finnish President Alexander Stubb mentioned that the agreed package will still be tied to immobilized Russian assets, as the scheme envisions Kiev using them to repay the loan once the war is over. „The immobilized Russian assets will remain immobilized… and the Union reserves the right to use the immobilized assets to repay this loan,” he posted on X.
Additionally, it is assumed that a subsequent loan could be added and indirectly linked to Russian assets. And maybe that’s the case. But this could also be interpreted as counting the chickens before the hen raises from the eggs, because everything depends on the type of agreement that will be concluded to end the war.
Getting another loan will not be as simple once Ukraine’s treasury empties again.
Three countries – Hungary, Slovakia, and the Czech Republic – have already abandoned last week’s joint loan scheme. It is not an exaggeration to imagine that others will join them, rejecting the idea of another billion-euro package in 2027, an important electoral year for both France and Germany.
Also, Trump will still be in the White House – so there is no point in looking to Washington for additional funds.
And yet, Belgian Prime Minister Bart De Wever described last week’s agreement, reached after nearly 17 hours of negotiations, as a „victory for Ukraine, a victory for financial stability… and a victory for the EU.”
### Putin sees things differently
However, Vladimir Putin will not see things that way, as Volodymyr Zelensky noted while trying to convince European leaders to support the repair loan: „If Putin knows that we can resist for at least a few years, then his reason to prolong this war becomes much weaker.”
However, this did not happen. And after last Friday’s disaster highlighted the division among European leaders, this is certainly not the lesson Putin will learn. Rather, it will only confirm that time is on his side. That if he waits a little longer, the 28-point plan his advisers drafted together with Trump’s friendly special envoy, Steve Witkoff, can be put back on the table, leaving Ukraine and Europe shaking – a dream outcome for the Kremlin.
Putin can also read opinion polls and observe the growing irritation of European voters with the war in some of the continent’s largest economies.
For example, a Politico poll of 10,000 respondents published last week found that respondents in Germany and France are even more hesitant to continue financing Ukraine than those in the US.
In Germany, 45% said they would support reducing financial aid to Ukraine, while only 20% said they wanted to increase financial assistance. In France, 37% wanted to give less, while only 24% preferred to give more.
In the lead-up to last week’s European Council meeting, Estonian Prime Minister Kristen Michal stated that European leaders were given the opportunity to reject Trump’s assertion that they are weak. By signing an agreement to unlock hundreds of billions of frozen Russian assets, they would respond to the „arrow” launched by the US president, who labeled Europe a „group of nations in decline.”
That they failed to do, the publication cited.
T.D.