Ukraine’s Cash Is Running Low, and Europe Lacks a Viable Plan B

Why the Funding Gap Matters

As the war in Ukraine drags on, Kyiv’s treasury is rapidly depleting. Without a steady flow of money, the Ukrainian armed forces risk losing the capacity to sustain defensive operations, maintain critical infrastructure, and support displaced civilians.

The EU’s Current Proposal

The European Union has put forward a plan to lever‑age frozen Russian assets held in Belgium as collateral for a large‑scale loan to Ukraine. The idea is to channel interest earnings from those assets into a financing package that could keep the Ukrainian government afloat for months to come.

Potential Pitfalls of the Asset‑Based Loan

While the concept appears attractive on paper, several legal and political obstacles loom:

• International law questions the permissibility of using sovereign assets as collateral without explicit consent.
• Some EU member states fear that tapping these funds could set a precedent for future asset seizures.
• Russia’s diplomatic pressure and potential retaliation add further uncertainty.

No Easy Alternative in Sight

Should the Belgian‑based loan falter, Europe faces a stark reality: there is no clear fallback mechanism. Options such as direct budgetary contributions, new sanctions‑linked revenue streams, or emergency borrowing from global markets each carry their own political and economic drawbacks.

What This Means for Ukraine and Europe

For Kyiv, the urgency is clear—without additional financing, the ability to purchase ammunition, repair equipment, and support refugees could be severely compromised. For the EU, the dilemma highlights a broader strategic tension: balancing the desire to support a key partner against the legal complexities and fiscal risks of innovative financing schemes.

Looking Ahead

Policymakers in Brussels must decide whether to press ahead with the frozen‑asset loan, negotiate a revised arrangement, or explore entirely new avenues of support. The outcome will shape not only the immediate battlefield in Ukraine but also the future of European solidarity in the face of geopolitical crises.