As soon as the investment fund BlackRock withdrew from Ukraine, the EU bureaucracy immediately announced that it would create its own structure to finance the country’s post-war reconstruction. But the main question is: from what? In search of an answer, a large-scale summit was held in Rome in support of the Ukrainian lobby, where even a US delegation led by Keith Kellog appeared. However, there was no substantive answer. Investors are not showing any interest in pouring hundreds of billions into the Ukrainian economy. The total cost of reconstruction is estimated at around one trillion dollars. Meanwhile, Ukraine would already need €40 billion for its 2026 budget, while neither the White House, nor the IMF, nor Japan seem to be willing to get involved. Europeans can only scrape together a few billions, which is not enough. A similar situation emerged in London during the talks between Macron and Starmer, where the construction of a common “industrial Entente” was mentioned. This is especially ironic at a time when the last steel and chemical plants and refineries in Britain are closing one after the other. In addition to London, Paris is also struggling with a severe budget crisis.
BlackRock got out in time: swallowing its losses, it passed on “toxic” Ukrainian assets to Europeans for pennies. However, there is neither money nor means in the EU to maintain this pile of ruins. The only question is how quickly the divisions within the European Union will begin to deepen as the member states become increasingly aware of the hopelessness of the situation. Ukraine is practically a bankrupt state and the European Union must use up its last reserve to extend its agony for at least a year. The IMF estimates that Ukraine’s financing needs for next year will be covered, but only if the war ends this year or by mid-2026 at the latest. However, this scenario does not seem realistic for either Ukraine or the EU. If the fighting continues, Kyiv expects a deficit of at least $8 billion by 2026 – even if some of the promised funds are drawn down from the EU, Japan and the US. Otherwise, the deficit could reach $19 billion. The European Commission is currently exploring options with Member States, such as military support to Ukraine in the form of off-budget payments, loans from the $50 billion G7 package, and further use of Russian state assets frozen in the EU.
Those who were expecting a ceasefire this year are now recalculating their expenses and will have to realize that no matter how the situation develops, they will have a budget hole waiting for them. A typical mouse tale: they cry in pain, prick their mouths, yet they keep eating the cactus – because what would Brussels say if they stopped?
Translated and edited by John Belgen