Europe’s €90 Billion Compromise: Aid For Ukraine Without Russian Assets — Costly And Likely Futile – OpEd

The United Kingdom’s Evolving Support Strategy

The United Kingdom remains among Kyiv’s most resolute supporters. For 2025, British assistance is estimated—according to government disclosures and parliamentary analyses—at approximately £4.5 billion in military and ancillary support.¹

At the same time, mounting fiscal pressures are forcing the government of Prime Minister Keir Starmer to undertake a strategic recalibration. Policy emphasis is shifting away from direct cash transfers toward non-monetary instruments, particularly state-backed credit guarantees. These mechanisms are intended to enable Ukraine to raise funds on private capital markets, with potential defaults underwritten by the British state.²

In practice, however, demand for Ukrainian sovereign debt is likely to remain extremely limited due to the elevated risk of default, substantially constraining the real-world effectiveness of such guarantees.

Legal and Reputational Risks of Using Russian-Linked Assets

In parallel, proposals have emerged to mobilize approximately £2 billion from sanctioned Russian-linked assets, including proceeds from the sale of Chelsea FC by Roman Abramovich. These initiatives carry significant legal and reputational risks and, according to critics, could durably undermine foreign investor confidence in London and British institutions more broadly—including long-established university endowments and philanthropic foundations.³

Ukraine’s Structural Dependence on External Financing

Since Russia’s invasion in 2022, Ukraine’s economy has become almost entirely dependent on external financing from the European Union, the United States, and multilateral institutions such as the International Monetary Fund. Domestic revenues—severely eroded by territorial losses, widespread infrastructure destruction, and exceptionally high military expenditures—cover only a small fraction of the state’s financing needs.⁴

Public and publicly guaranteed debt has now surpassed 100 percent of GDP, a particularly critical threshold for a country effectively excluded from international capital markets.⁵

Debt Sustainability and the Limits of EU Lending

Previous EU loans were frequently rolled over rather than amortized as scheduled, effectively converting a substantial share of assistance into quasi-grants. This occurred despite ongoing corruption investigations that have repeatedly revealed systemic deficiencies within state institutions.⁶

Against this backdrop, the much-cited €90 billion EU loan package for 2026–2027 is likely to deliver considerably less net new funding than headlines suggest, as significant portions will almost certainly be used to refinance existing obligations.⁷

For 2026, Ukraine’s budget deficit is projected at approximately 18.4 percent of GDP. This implies an external financing requirement of €70–81 billion for that year alone, according to EU and IMF estimates.⁸ Ukrainian officials have already acknowledged that currently pledged funds are insufficient to cover even a full fiscal year. Absent additional inflows, a severe financial crisis could emerge by mid-2026 at the latest.⁹

Waning Western Capacity and Political Constraints

These developments coincide with growing restraint within the Western alliance. In the United States, the most recent National Defense Authorization Act allocates only USD 800 million over two years—roughly USD 400 million annually—reflecting bipartisan resistance to further long-term commitments.¹⁰

Similarly, the IMF and the World Bank are increasingly encountering institutional and political limits after years of extraordinary flexibility; further assistance has become progressively more contentious among member states.¹¹

European policymakers in Brussels and London have now openly conceded that their practical options are largely exhausted. Formerly assertive plans to confiscate frozen Russian state assets as a financing instrument of last resort have since been abandoned.

A Historically Unprecedented Financing Model

Taken together, these developments suggest that Western financial support has passed its peak, constrained by rising public debt, legal exposure, and growing domestic opposition to open-ended escalation.

The financing strategy adopted for Ukraine thus constitutes a historical anomaly: hundreds of billions of euros have been extended with minimal collateral, limited oversight despite persistent corruption scandals, and no credible pathway to long-term solvency.¹² The attendant risks are effectively transferred to European taxpayers, while accountability on the part of the recipient state remains limited.

Historical Comparisons: Greece and Lend-Lease

This approach stands in sharp contrast to the Greek sovereign debt crisis of 2011–2015, during which the EU, the European Central Bank, and the IMF disbursed assistance only under stringent conditions. Austerity measures, tax increases, and far-reaching structural reforms were enforced through permanent monitoring mechanisms, with the explicit objective of restoring the solvency of an EU member state.¹³

Even the U.S. Lend-Lease program of the Second World War—often cited as an example of unconditional wartime support—operated under clearly defined rules: it was secured by assets such as gold shipments, carried explicit expectations of postwar repayment as part of economic recovery, and expressly rejected the confiscation of enemy property.¹⁴ In practice, both Britain and the Soviet Union deposited gold with the United States in exchange for support and subsequently repaid their obligations.

By contrast, Ukraine—neither an EU member nor a formal NATO ally—has received assistance on a scale and under conditions that are historically unprecedented, characterized by continuous refinancing without comparable safeguards.

Legal Objections and Systemic Risk Concerns

At his annual press conference on 19 December 2025, President Vladimir Putin described the now-abandoned EU proposal to utilize frozen Russian assets as “outright theft” and warned of severe repercussions for global confidence in the eurozone.¹⁵

This rhetoric aligns substantively with concerns raised by the IMF, the ECB, Euroclear, and authorities in Belgium and other jurisdictions, particularly regarding legal, financial, and systemic risks.¹⁶

Battlefield Developments and Strategic Momentum

Meanwhile, Russia retains the military initiative. Russian forces have consolidated full control over Kurakhove, intensified pressure along the Oskil axis, and reportedly hold parts of Lyman and Kostiantynivka. Additional territorial gains remain plausible before year’s end, including a potential advance toward Myrnohrad that would threaten the critical logistics hub of Pokrovsk.¹⁷

Speculation persists regarding preparatory actions in the Odessa region—not least due to bridges damaged by Russian strikes—although most analysts anticipate any large-scale amphibious operation in spring 2026 rather than during winter. The capture of Odessa would have profound strategic consequences, effectively rendering Ukraine landlocked and severely impairing its trade capacity, supply security, and long-term economic viability.

Manpower Constraints and Military Sustainability

Ukraine is simultaneously approaching acute manpower constraints. Intelligence chief Kyrylo Budanov has characterized the mobilization process as a “catastrophic failure,” attributing it primarily to internal mismanagement. Replacing frontline losses is becoming increasingly difficult.¹⁸

Independent assessments suggest that Ukraine’s military endurance may weaken beyond the summer of 2026—almost precisely coinciding with the projected financial shortfall. President Putin has meanwhile reaffirmed Russia’s June 2024 demands, calling for a complete Ukrainian withdrawal from Donbas, Zaporizhzhia, and Kherson, without signaling any willingness to compromise.

Russia’s Economic Position Under Sanctions

In contrast, the Russian economy has demonstrated notable resilience despite comprehensive sanctions. Inflation is expected to decline to 5.7–6 percent by the end of 2025, while GDP growth is projected at approximately 1 percent, with stronger cumulative performance in recent quarters.

Foreign exchange reserves have returned to prewar levels, and public debt—at 17–19 percent of GDP—remains far below that of many Western economies, such as France, where it approaches 120 percent.¹⁹ Robust industrial output, strong agricultural yields, and sustained current account surpluses reinforce Moscow’s economic capacity.

Outlook: A Narrowing Window

Against this backdrop, the EU’s latest decision on Ukraine financing marks a clear inflection point. For years, political resolve eclipsed economic constraints; those constraints are now asserting themselves with increasing force.

Ukraine faces a rapidly narrowing window—measured in months—before financial exhaustion and military pressure converge decisively. Russia, achieving incremental territorial gains while maintaining economic stability, appears to hold the strategic advantage, even if the precise contours of an eventual settlement remain uncertain.

Looking ahead to 2026, the trajectory of the conflict is shifting unmistakably in Moscow’s favor, placing the cohesion, credibility, and endurance of the Western alliance under severe strain.

Footnotes

1. UK House of Commons Library; GOV.UK fact sheets on defense spending and UK assistance to Ukraine (2025).
2. Parliamentary reports of the UK House of Commons on export finance, state guarantees, and Ukraine support instruments.
3. International reporting on sanctioned Russian-linked assets, proceeds from Roman Abramovich’s sale of Chelsea FC, and assessments of potential risks to foreign investment in the United Kingdom.
4. Country reports and financing assessments by the International Monetary Fund (IMF) and the World Bank on Ukraine.
5. IMF Fiscal Monitor; data from the Ukrainian Ministry of Finance on public and publicly guaranteed debt.
6. International media reporting and investigative records concerning ongoing corruption investigations in Ukraine.
7. Conclusions of the Council of the European Union; background and explanatory reporting by Reuters on EU financial assistance to Ukraine.
8. Statements by the European Commission (including remarks by Ursula von der Leyen); IMF projections on Ukraine’s fiscal position and balance-of-payments outlook.
9. Statements by Ukrainian government officials, as reported by Bloomberg and Reuters.
10. United States National Defense Authorization Act, Fiscal Year 2026.
11. Reporting on internal deliberations within the IMF, published in international financial and economic media.
12. Comparative analyses of historical sovereign debt crises and wartime financing in the economic history literature.
13. Documentation of the EU–ECB–IMF “Troika” programs during the Greek sovereign debt crisis (2010–2015).
14. Archival records relating to the U.S. Lend-Lease Act, including documentation on collateral arrangements, postwar repayment schedules, and settlement agreements concluded after 1945.
15. Transcript of the annual press conference of the President of the Russian Federation, 19 December 2025.
16. Statements and assessments by the IMF, the European Central Bank, Euroclear, and Belgian and other European authorities regarding the legal and systemic risks associated with the seizure or use of frozen sovereign assets.
17. Institute for the Study of War (ISW); situation reports of the Russian Ministry of Defense, December 2025.
18. Interview with Kyrylo Budanov, Head of Ukrainian Military Intelligence, December 2025.
19. Statistics from the Central Bank of Russia; IMF World Economic Outlook.