European leaders had hoped to flex their collective muscles with a huge pot of money to fund Ukraine’s war effort, one so large that it would put Kyiv in a strong negotiating position with Moscow.
That plan remains in jeopardy, and what was meant to be a show of strength is at risk of turning into a display of messy weakness when Europe is already floundering for influence on Ukraine, repeatedly left out of peace talks brokered by the United States.
At the core of the plan is as much as 210 billion euros ($244 million) in Russian state assets, frozen in Belgium, that European leaders have been hoping for months to use to make a giant loan to Ukraine. Agreement on how to do this has remained elusive.
In a last-ditch effort to make the plan work, European Union policymakers on Wednesday unveiled an updated version of the proposal that includes legal workarounds that will make it easier to enact the plan without support from every member state.
The ideas, which will be considered at a meeting of European leaders in Brussels on Dec. 18, could help the bloc overcome opposition from Hungary. But Belgium, where the money is held, remains skeptical, and diplomats and analysts have begun to acknowledge that policymakers could find themselves forced to offer Ukraine a more modest financial package.
The European Union laid out a less ambitious option on Wednesday, in case the frozen asset idea does not work.
In short, European officials may end up offering Ukraine a financial Band-Aid when they had hoped for a financial bazooka.
“It is a make or break moment for Europe and for Europe’s importance on the global stage,” said Daniel Hegedüs, a regional director for the German Marshall Fund, a think tank, who added that the European Union is more likely to opt for a less ambitious short-term funding plan this month.
“It will be tragic,” he added. “The optics will be that Europe was not able to own up to this strategic challenge.”
Europe has been struggling all year to demonstrate that it can work cohesively and act decisively as Russia presses on Ukraine and the United States is less supportive and more combative to the continent.
European nations are racing to bolster their ability to defend themselves and have pledged to dedicate more of their national budgets to military projects. Yet a plan to work together closely with Britain on a flagship joint military procurement plan crumbled in the 11th hour.
Plans to move nations, including Ukraine, closer to European Union membership have run into stiff opposition from Hungary.
And even rhetoric has been hard to agree upon. When European leaders initially pledged a “drone wall” to protect the bloc’s eastern flank against airspace incursions, the title was quickly abandoned. Member states further West did not want to create the image of an E.U. that was working to protect only the East.
Bickering is a natural part of European Union policy decisions. It is a 27-nation group, and it must find consensus on trade, diplomacy and, increasingly, defense policy. But plodding decision making creates big risks at this contentious geopolitical moment.
The frozen asset loan is one example.
For months, European Union officials hyped the potential frozen asset-backed loan, suggesting that an offer to Ukraine of such a large sum of money would strike fear in the heart of Moscow.
The loan from the frozen assets could be huge. While initially valued at 140 billion euros, Wednesday’s plan suggested it could be backed by as much as 210 billion euros.
The money would be dispersed gradually over time; Wednesday’s plan envisioned 45 billion euro installments over each of the next two years. It would be paid back only if Russia paid reparations.
With so much potential cash, the logic has gone, it would be clear to the Kremlin that Ukraine could keep fighting for years to come. That would put President Volodymr Zelensky and his government in a much better negotiating position to strike a peace deal.
“We can equip them with the means to defend themselves, and to lead peace negotiations from a position of strength,” Ursula von der Leyen, president of the European Commission, said at a news conference on Wednesday, where she expressed hope that an agreement on the frozen asset plan could still be reached.
But from early on, policymakers struggled to keep everyone on board.
Headed into a meeting of European heads of state in October, E.U. officials were confident that Belgium, which had already expressed reservations, would agree the plan. After all, diplomats argued, what other option did Europe have?
But the Russian assets are frozen at the financial firm Euroclear, which has its headquarters in Belgium. The nation’s leaders were worried that if Russia saw the plan as confiscation of its money and sued, Belgium might be on the hook.
So Belgian officials dug in against the idea. They asked the European Commission, the bloc’s executive arm, to come up with a detailed set of options for addressing potential legal risks associated with the plan.
Belgian officials have only solidified their opposition in recent weeks, especially after the Trump administration’s 28-point-plan for peace deal leaked. The outline included plans to use the frozen assets.
It made it “clear for everyone that those assets can play an important role in a peace plan,” Maxime Prévot, Belgium’s foreign minister, told The New York Times.
In the days since, Bart de Wever, Belgium’s prime minister, has called the frozen asset loan plan “fundamentally wrong” and warned that it could even prevent the conclusion of a peace deal, given that the money could be used as a bargaining chip with the Kremlin.
The European Commission has been racing to broker some agreement to use the frozen assets.
But Mr. Prévot told reporters on Wednesday morning in Brussels that the fleshed-out plan still “does not address our concerns in a satisfactory manner.”
Mujtaba Rahman, managing director for Europe at Eurasia Group, said he still thinks a frozen asset loan agreement will be reached, but he conceded that it could take longer than this month to reach a consensus.
If the plan does not come through, the E.U. suggested on Wednesday that it could use room in its existing budget to borrow money through joint debt, a less ambitious alternative. How much might be borrowed is not yet defined.
“Europe is going to stump up cash for Ukraine,” Mr. Rahman said. “Because there is no choice.”
Yet if Brussels ends up offering a smaller funding package to Ukraine, that could underscore that the continent cannot unify around big decisions at key moments.
That might make Europe look weak, analysts warned, and keep the bloc locked on the outside as the United States negotiates a peace between Russia and Ukraine. With an indecisive Europe at its back and a less impressive funding package, Ukraine could be left in a worse bargaining position.
“If Europe isn’t able to deliver, Ukraine could be pressed to accept a disadvantageous peace deal,” Mr. Hegedüs said.
Lara Jakes and Eshe Nelson contributed reporting.
Jeanna Smialek is the Brussels bureau chief for The Times.
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