Europe is failing Ukraine

Jamie Dettmer is opinion editor and a foreign affairs columnist at POLITICO Europe.

Russia’s war on Ukraine seems likely to end next year — and on terms highly unfavorable for Kyiv.

Why the prediction? Because of the EU’s failure last week to agree to use Russia’s money — €210 billion in frozen assets — to keep Ukraine solvent and able to finance its war effort.

The felling of the “reparations loan” proposal, which would have recycled Russian assets that are mostly frozen in a clearing bank in Belgium, deprives Ukraine of guaranteed funding for the next two years.

It was Belgium’s legal anxieties over the loan, along with French President Emmanuel Macron’s and Italian Prime Minister Giorgia Meloni’s reluctance to join German Chancellor Friedrich Merz in championing the proposal, that doomed it. And all that, despite weeks of wrangling and overblown expectations by the plan’s advocates, including European Commission President Ursula von der Leyen.

Fortunately, the EU will still provide a sizable funding package for Ukraine, after agreeing to jointly borrow  €90 billion from capital markets secured against the EU’s budget, and lend it on a no-interest basis.

But while this will prevent the country from running out of money early next year, the package is meant to be spread out over two years, and that won’t be sufficient to keep Ukraine in the fight. According to projections by the International Monetary Fund, due to the reduction in U.S. financial support, Ukraine’s budgetary shortfall over the next two years will be closer to $160 billion.

Simply put, Ukraine will need much more from Europe — and that’s going to be increasingly difficult for the bloc to come up with.

Still, many European leaders were rather optimistic once the funding deal was struck last week. Finnish President Alexander Stubb noted on Sunday that the agreed package would still be linked to the immobilized Russian assets, as the scheme envisions that Kyiv will use them to repay the loan once the war ends. “The immobilized Russian assets will stay immobilized … and the union reserves its right to make use of the immobilized assets to repay this loan,” he posted on X.

Plus, the thinking goes, a subsequent loan could be added on and indirectly linked to the Russian assets. And maybe so. But this could also be construed as counting one’s chickens before they’re hatched, as everything depends on what kind of deal is struck to end the war.

In the meantime, securing another loan won’t be so simple once Ukraine’s coffers empty again.

Three countries — Hungary, Slovakia and the Czech Republic — already opted out of last week’s joint-borrowing scheme. It isn’t a stretch to imagine others will join them either, balking at the very notion of yet another multi-billion-euro package in 2027, which is an important election year for both France and Germany. Also, Trump will still be in the White House — so, no point in looking to Washington for the additional cash.

And yet, Belgian Prime Minister Bart De Wever still described last week’s deal, reached after almost 17 hours of negotiations, as a “victory for Ukraine, a victory for financial stability … and a victory for the EU.”

However, that’s not how Russian President Vladimir Putin will see it.

As Ukrainian President Volodymyr Zelenskyy had noted while seeking to persuade European leaders to back the reparations loan: “If Putin knows, that we can stay resilient for at least a few more years, then his reason to drag out this war becomes much weaker.”

But that’s not what happened. And after last Friday’s debacle highlighted the division among Europe’s leaders, surely that’s not the lesson Putin will be taking home. Rather, it will only have confirmed that time is on his side. That if he waits just a bit longer, the 28-point plan that his aides crafted with Trump’s obliging Special Envoy Steve Witkoff can be revived, leaving Ukraine and Europe to flounder — a dream outcome for the Kremlin.

Putin can also read opinion polls, and see European voters’ growing impatience with the war in some of the continent’s biggest economies. For example, published last week, a POLITICO Poll of 10,000 found respondents in Germany and France even more reluctant to keep financing Ukraine than those in the U.S. In Germany, 45 percent said they would support cutting financial aid to Ukraine, while just 20 percent said they wanted to increase financial assistance. In France, 37 percent wanted to give less, while only 24 percent preferred giving more.

In the run-up to last week’s European Council meeting, Estonian Prime Minister Kristen Michal had told POLITICO that European leaders were being handed an opportunity to rebut Trump’s claim that they’re weak. That by inking a deal to unlock hundreds of billions in frozen Russian assets, they would also be answering the U.S. president’s branding of Europe as a “decaying group of nations.”

That, they failed to do.