Europe Funnels Billions to Ukraine but Wobbles Geopolitically

The European Union came up with an 11th-hour compromise to help Ukraine, but the solution raised questions about the bloc’s decisiveness.

Just before 3 a.m. on Friday, the news began to percolate through the European Union’s cavernous headquarters in central Brussels. After more than 16 hours of negotiations, leaders from across the 27-nation bloc had come up with a plan to finance a desperate Ukraine through 2027.

It wasn’t the plan that officials had been talking up for weeks. That one would have used Russian assets frozen in Europe to back a loan to Ukraine, and leaders had repeatedly said it was their best option — a decisive course of action and a show of strength.

Instead, it was a messy compromise.

“Europe always works on the basis of muddling through,” said Mujtaba Rahman, the managing director for Europe at the Eurasia Group. “A much more decisive signal could have been sent, and they failed to do that.”

European leaders celebrated the final result, which will funnel 90 billion euros’ worth of loans to Ukraine (about $105 billion) over the next two years. That extends a crucial lifeline for the country, which had been expected to start running out of money early next year. Ukraine will need to pay back the loans, which will carry no interest, only if Russia pays reparations.

“I don’t like to be here at four o’clock in the morning,” said António Costa, the president of the European Council, at a news conference in the small hours of Friday morning. “But I like that we deliver.”

The agreement will use the European Union’s own budget to back the loan, instead of using the €210 billion ($246 billion) worth of Russian state assets immobilized in Europe. That was the plan that European Union leaders and Friedrich Merz, the German chancellor, had pushed for months.

The frozen-asset idea collapsed at the 11th hour, after feverish negotiations punctuated by frantic side huddles. It was killed both by long-running opposition from Belgium and by reservations from Luxembourg, Italy and France, according to European diplomats and officials.

Belgium hosts most of the assets frozen in Europe, and Luxembourg is home to a smaller pot. Both worried that they could be on the hook for damages if Russia were to successfully retaliate.

Emmanuel Macron, the French president, and Giorgia Meloni, the Italian prime minister, voiced concerns about the financial cover that Belgium wanted, according to two diplomats who spoke on the condition of anonymity to discuss the deliberations. They were worried about getting loan guarantees through their national parliaments.

By early Friday morning, it was clear that the frozen-asset plan itself was dead for now. Even the solution that eventually emerged was not a clear display of European unity. Hungary, Slovakia and the Czech Republic will not participate in the compromise loan plan. All three had consistently expressed reluctance or outright opposition to the options to fund Ukraine.

“We managed,” Mette Frederiksen, the prime minister of Denmark, said at a news conference after the decision. She expressed worry that such divisions within the bloc would only deepen with upcoming elections and that “things will be more difficult from now on.”

The failure of the much-discussed frozen-asset plan could have consequences, because it leaves pressing questions unanswered.

The United States and Russia have been eyeing the pile of frozen funds for weeks. When a 28-point peace plan that American officials had drawn up was leaked last month, it envisioned using some of those assets for a joint American-Russian investment program.

European Union leaders have frozen the funds indefinitely. But they have not reached an agreement to use them, and that could keep the assets in play as negotiations proceed, Mr. Rahman said.

“There was a geopolitical purpose in the use of these reserves,” he said. “Yes, the assets are immobilized, but they will be more susceptible to pressure from the United States and Russia.”

While European leaders insisted on Friday morning that they would continue working on plans to use the assets, this week’s negotiations illustrated how difficult it is to reach consensus.

Bart De Wever, Belgium’s prime minister, was the most visible and stalwart opponent to tapping the frozen assets. In the early hours of Friday, he acknowledged at a news conference that the eventual compromise did not censure President Vladimir V. Putin of Russia as directly as the frozen-asset solution would have, a disappointment to some of his fellow national leaders.

“There’s also a geopolitical motivation behind it,” he said of the frozen-asset plan. “They want to punish Putin by taking his money.” He added, “Politics is not about emotion. It’s a rational job.”

Perhaps most important, the European Union’s reputation could take another hit. Officials had insisted for weeks that they would find a way to use the frozen funds and then failed to do so at the last possible moment.

To make matters worse, the compromise came hours after Europe delayed a decision on a huge trade agreement with South American countries, in the face of Italian and French opposition. The deal was supposed to be signed on Saturday and had been billed as a sign of how Europe was strengthening itself through new trading partners at a contentious moment.

“Europe has sent a signal of weakness,” one likely to resonate in both Moscow and Washington, said Juraj Majcin, a policy analyst at the European Policy Center.

That display of vulnerability comes at a challenging juncture in global politics.

Russia is aggressive and expansionist. China is taking an increasingly hostile economic stance toward the bloc. And the United States, long Europe’s most important ally, has pulled back. President Trump recently labeled Europe as “decaying,” with “weak” leaders.

America’s derision has had real consequences. The United States has repeatedly left European officials out of critical discussions over Ukraine.

That is one reason that Europe wanted to display strength this week with a decisive funding plan. Instead, it showed that the bloc’s clunky decision-making structure can eventually get to a result — but not as forcefully as hoped.

“Trump understands only power, like Putin does,” Mr. Majcin said. “We failed geopolitically.”

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