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Shkruar nga Pamfleti
Why this prediction?
Russia's war against Ukraine looks likely to end next year, and on very unfavorable terms for Kiev. Why this prediction? Because the European Union failed last week to reach an agreement on the use of 210 billion euros in frozen Russian assets, aimed at keeping Ukraine financially stable and able to finance its military efforts.
The collapse of the proposal for a so-called “reparation loan,” which would recycle Russian assets, mostly frozen in a clearing bank in Belgium, deprives Ukraine of funding security for the next two years.
Belgium's legal concerns about the loan, along with the reluctance of French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni to join German Chancellor Friedrich Merz in supporting the proposal, were factors that doomed it. This came despite weeks of debate and high expectations from the plan's backers, including European Commission President Ursula von der Leyen.
However, the EU will continue to provide a significant financing package for Ukraine, having agreed to jointly borrow €90 billion from capital markets, guaranteed by the EU budget, and provide these funds to Kiev as interest-free loans.
But while this will prevent Ukraine from running out of cash early next year, the package is expected to be distributed over two years and will not be enough to keep the country at war. According to International Monetary Fund forecasts, due to the reduction in financial support from the US, Ukraine's budget deficit over the next two years is expected to reach approximately $160 billion.
Simply put, Ukraine will need much more help from Europe, and this will be increasingly difficult for the bloc to provide.
However, many European leaders appeared quite optimistic after the financing deal reached last week. Finnish President Alexander Stubb noted on Sunday that the approved package remains tied to frozen Russian assets, as the scheme envisages that Ukraine will use 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 them to repay this loan ,” he wrote on the X platform.
By this logic, a later loan could be added and indirectly linked to Russian assets. This is possible, but it could also be seen as counting chickens before they hatch, as it all depends on the kind of agreement that will be reached to end the war.
Meanwhile, securing another loan will not be easy once Ukraine’s financial reserves run dry again. Three countries, Hungary, Slovakia and the Czech Republic, have already opted out of last week’s joint borrowing scheme. It is not hard to imagine that other countries could join them, hesitating in the face of another multi-billion-euro package in 2027, a key election year for both France and Germany. Meanwhile, Donald Trump will still be in the White House, so it makes no sense to expect additional help from Washington.
However, Belgian Prime Minister Bart De Wever described last week's agreement, reached after almost 17 hours of negotiations, as a victory for Ukraine, a victory for financial stability and a victory for the European Union.
But that is not how Russian President Vladimir Putin will see the situation. As Ukrainian President Volodymyr Zelensky warned, trying to persuade European leaders to support the reparations loan: “If Putin knows that we can hold out for at least a few more years, then his reason for dragging out this war is significantly weakened .”
But that didn’t happen. And as last Friday’s debacle exposed the divisions among European leaders, that’s not the message Putin will take. On the contrary, it has likely reinforced his belief that time is on his side. That, if he waits a little longer, the 28-point plan his aides drafted with Trump’s special envoy, Steve Witkoff, could backfire, leaving Ukraine and Europe in a bind, an ideal scenario for the Kremlin.
Putin may also be reading opinion polls and noting the growing impatience of European voters with the war, especially in some of the continent’s largest economies. A POLITICO poll of 10,000 respondents, published last week, found that in Germany and France there is a greater willingness to cut than to increase aid to Ukraine. In Germany, 45 percent said they favored cutting financial aid, while only 20 percent wanted it increased. In France, 37 percent preferred to give less, while only 24 percent wanted more.
On the eve of last week’s European Council summit, Estonian Prime Minister Kristen Michal told POLITICO that European leaders had an opportunity to counter Trump’s claim that Europe is weak. By approving a deal to unlock hundreds of billions of dollars in frozen Russian assets, she said, they would also be responding to the US president’s description of Europe as a “group of nations in decay.” They failed to do so./ Adapted from “Pamphlet” by “Politico”
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