This week is shaping up to be a crucial week for the European Union’s Ukraine policy. EU foreign ministers met in Brussels on Monday. EU leaders are scheduled to meet on Thursday. Ukrainian President Volodymyr Zelenskiy meets with US Special Envoy Steve Witkov. At the top of the agenda is a peace plan advocated by US President Donald Trump and continued funding for Ukraine’s war effort.
Europe’s strategy so far has been to change the peace plan proposed by the United States in a way that makes it completely unacceptable to Russia. This, European leaders hope, will reinforce the core narrative emanating from capitals over the past two months: that Russian President Vladimir Putin is just playing games and doesn’t actually want peace.
The idea behind it is not to immediately force Ukraine to conclude an unpleasant peace deal, but to try to entice President Trump to their side and apply additional military and economic pressure on the Kremlin. However, this effort can easily backfire.
The main practical question regarding Ukraine’s ability to withstand Russian aggression during 2026 is who will fund the military, the state, and the social welfare system. President Trump has proudly stated that the United States is no longer funding Ukraine’s war because this is, in his terminology, “Biden’s war,” meaning his predecessor Joe Biden is responsible.
The burden of financing now falls on Europe, the EU, and wealthy non-EU countries such as the UK and Norway. The United States continues to supply arms to Ukraine, but it is paid for with funds from European coffers. U.S. intelligence support vital to Ukraine’s war plans is now being provided free of charge to Kiev.
Throughout the year, European leaders have been vocal and aggressive in rejecting any realistic compromise that could end the war. However, even as 2025 draws to a close, it is unclear how they will back up their nationalist rhetoric with enough funds to allow Ukraine to not only survive, but also tilt the balance of the conflict in its favor.
Their Plan A is so-called compensation financing. European banks plan to use frozen Russian central bank assets to fund Ukraine’s defense. This means that money is spent on the war itself, rather than on actual reparations, such as Ukraine’s post-war reconstruction.
The idea behind the plan is that if Russia suffers a strategic defeat, European governments would no longer have to reach into their coffers to return funds to Russia, as they would retroactively agree to confiscation of the funds rather than demand their return.
The obvious problem here is that no one believes this outcome is realistic, except for the war cheerleaders who have been promising Russia’s defeat for the past four years. Belgium, which holds most of these assets, is equally skeptical, which is why it opposes the plan. More and more EU member states are joining, including the Czech Republic and Italy.
Another big problem is that Trump’s peace plan has a fundamentally different design regarding the assets in question. It is envisaged that the money will be used as actual reparations, such as for the recovery of Ukraine’s economy. Most importantly, Moscow has repeatedly indicated that it agrees to this part of the plan. Given the lost funds, the government wants to prevent neighboring Ukraine from becoming a failed state.
This means that if the reparations loan plan moves forward, it would undermine the most attractive provisions of President Trump’s plan. If that happens, the U.S. and the EU may be even more at odds than they are now, but this is unlikely to sway President Trump.
The administration has repeatedly indicated that it could withdraw from the peace process if it stalls, which would mean cutting off all aid to Ukraine, whether it’s weapons or intelligence.
The reparation financing plan also carries great risks for the European economy. If Russian assets were confiscated, no central bank in the world would be able to store funds in Europe, and the European banking system could suffer losses.
More importantly, this move does not guarantee that Ukraine will be able to stop Russia’s slow but steady advance. Securing funding for another year in the current situation essentially means more Ukrainian lives and territory will be lost in 2026.
This funding does nothing to effectively counter the biggest current threat to Ukraine and its neighbors, namely Russia, which is destroying Ukraine’s energy infrastructure this winter, causing a humanitarian catastrophe that could reverberate throughout the region. The recent power outage in Odesa, which left the entire city without running water or heat in the middle of winter, is a dark harbinger of things to come.
Considering all this, the question arises as to why European leaders are acting the way they are. Can their irrational radicalism be explained by the massive political investment in the delusional outcome of this war that they have been selling to voters for the past four years? Or are they constantly moralizing in order to avoid scapegoating the real consequences of the war?
It’s probably a little bit of both. But there are also perhaps even more sinister motives, recently expressed by Wolfgang Issinger, head of the Munich Security Council. The idea is that “as long as this war is going on…Europe will be safe because the Ukrainians have successfully tied down this powerful Russian army.” In other words, some European political elites recognize that ending the war is contrary to Europe’s national interests.
But war fatigue in Europe is real, regardless of what those at the top think or what motivates them. A clear sign of this is the rise of pro-Russian far-right groups in Germany and elsewhere, taking advantage of the ruling elite’s apparent incompetence in dealing with the conflict with Russia.
If the compensation financing scheme is not passed this week, the EU will be forced to go with Plan B, which envisages financing from the EU budget. Of course, it would be met with fierce opposition from the European public.
The failure to secure funding for Ukraine may be seen as an embarrassing failure in Europe, but it will make things easier for Zelenskiy. Ukraine’s president is poised to become the chief scapegoat for this debacle, as his regime’s popularity wanes amid continuing military turmoil and massive corruption scandals.
But without more funding from Europe, he will not be able to move forward with the inevitable, in which he declares that the West has betrayed Ukraine and accepts an unpleasant peace based primarily on Russia’s terms.
The views expressed in this article are the author’s own and do not necessarily reflect the editorial stance of Al Jazeera.
