The unravelling of a plan to use frozen Russian financial assets as collateral for a loan to Ukraine was humiliating for Ursula von der Leyen and Friedrich Merz. But it was good news for the European Union and for Kyiv.
Europe dodges a bullet
For weeks before last week’s summit, EU leaders led by the commission president and the German chancellor spoke of the Russian assets loan plan as the only way to ensure that Ukraine did not run out of cash in the first half of 2026.
But after Belgium, where most of the assets are held, insisted on sweeping guarantees to cover the financial and legal risks of the scheme it turned out there was an alternative after all.
The €90 billion loan will instead be borrowed against the EU’s own budget and Ukraine will only have to repay it if Russia pays reparations after the war ends. The deal was possible because Hungary, Slovakia and the Czech Republic agreed not to block it on condition that they would not have to contribute to financing the loan.
The new scheme is more straightforward and legally stable than the original plan, offering Ukraine a reliable source of funding that can be drawn on again if necessary. And the issuance of common European bonds is a step towards deeper European integration, as is the use of enhanced co-operation for an action of this sort.
Von der Leyen and Merz thought that using the Russian assets – which remain frozen – would give Europe extra leverage in the United States-led negotiations to end the war in Ukraine. But Washington made its opposition to the scheme clear and Moscow threatened to retaliate if it went ahead.
The negotiations, which continued in Miami over the weekend, are focused on three documents. The first is the peace plan, including the issue of territory; the second is the security guarantee for Ukraine; and the third is an economic recovery plan.
Washington feared that Europe’s use of the Russian assets would complicate the economic recovery plan, one version of which envisaged using part of the assets for reconstruction. The White House is also interested in using the assets for a joint US-Russian investment plan.
The talks have seen American negotiators engage in shuttle diplomacy with Russia on one side and Ukraine and the EU on the other. But Emmanuel Macron suggested on Friday that it is time to introduce a new dimension by resuming direct contacts between the EU and Russia.
“Either a lasting peace is reached or we find ways for Europeans to re-engage in a dialogue with Russia in transparency and association with Ukraine,” the French president told reporters in Brussels.
“It will become useful again to speak to Vladimir Putin.”
The EU and most of its member-states, with the exception of Hungary and Slovakia, stopped talking to Putin after the full-scale invasion of Ukraine in February 2022. Macron spoke to him last July for the first time in three years, asking him to agree to a ceasefire.
The Kremlin said on Sunday that Putin was ready to engage with Macron and the Elysée said they would “decide in the coming days on the best way to proceed”. This direct European engagement with Moscow, which is welcome and overdue, would be impossible if the EU leaders had not dodged their own bullet at last week’s summit.
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