Europe lets Ukraine down as squabbling leaders kill Russian asset deal

Politico reported the information.

The European Union fell short last week in its effort to mobilize €210 billion in frozen Russian assets to support Ukraine's war effort, marking a significant setback for Kyiv as it faces mounting financial pressures in 2025. The failed "reparations loan" proposal would have leveraged Russian funds held primarily in a Belgian clearing bank to guarantee Ukraine's solvency for the next two years.

Belgium's legal concerns, combined with hesitation from French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni to back German Chancellor Friedrich Merz's push for the plan, ultimately sank the initiative after weeks of negotiations.

The EU did manage to salvage a €90 billion package through joint borrowing from capital markets, secured against the bloc's budget and offered to Ukraine on a no-interest basis. However, analysts warn this falls far short of what's needed. The International Monetary Fund projects Ukraine's budgetary gap over the next two years at closer to $160 billion, particularly given reduced U.S. financial support.

"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," Ukrainian President Volodymyr Zelenskyy said while lobbying European leaders to support the reparations loan.

The funding failure may have sent the opposite message to Moscow. Russian leader Vladimir Putin is likely to interpret the EU's divisions as confirmation that time favors Russia's position, according to European officials.

Future funding packages face steep political obstacles. Three countries—Hungary, Slovakia and the Czech Republic—already opted out of the joint-borrowing scheme. With major elections scheduled in France and Germany for 2027, securing another multi-billion-euro package could prove even more challenging.

Public opinion is also shifting. A recent survey of 10,000 respondents across Europe found growing resistance to Ukraine aid. In Germany, 45 percent support cutting financial assistance to Ukraine, while only 20 percent favor increasing it. French respondents showed similar trends, with 37 percent wanting to reduce aid and just 24 percent preferring to give more.

Estonian Prime Minister Kristen Michal had framed the European Council meeting as an opportunity to counter President Trump's characterization of Europe as weak and decaying. Instead, the outcome may have reinforced such perceptions.