Europe Borrows €90B for Ukraine: Sends Strong Signal to Trump, Putin, and Global Markets

In a dramatic shift in European financial strategy, EU leaders have agreed to borrow €90 billion from markets to fund a two-year loan to Ukraine. The move follows the failure to agree on using frozen Russian state assets as collateral, initially seen as a possible solution.

The plan, long advocated by Belgian Prime Minister Bart De Wever, aims to send a strong political and economic signal to both Trump and Putin, demonstrating that the EU can act independently. This strategy highlights how European fiscal policy is increasingly tied to geopolitical stability.

However, the agreement is not fully unified. Three countries — Hungary, Slovakia, and the Czech Republic — opted out, revealing the persistent internal disagreements within the EU on foreign policy. This fragmentation shows that the EU increasingly needs alternative financing mechanisms, approaching the logic of Eurobonds.

The loan will be guaranteed by the EU’s common budget, despite objections from northern states, traditionally opposed to guaranteeing bonds for highly indebted partners. The urgent liquidity needs of Ukraine, entering the fourth year of conflict with Russia, make unified EU action necessary.

Markets are already reacting. German 10-year Bund yields climbed above 2.88%, raising borrowing costs for consumers and businesses, and confirming that the EU is entering an unprecedented borrowing cycle that pressures the cost of capital.

The agreement provides critical support to Ukraine, which faces a liquidity crunch as early as spring 2026. However, deep-seated corruption and administrative weaknesses raise serious doubts about the effective use of the funds.

De Wever’s tactics, in collaboration with Italian Prime Minister Giorgia Meloni, enabled the implementation of a realistic Plan B, bypassing the dogmatic objections of northern states. As French President Emmanuel Macron noted, “it emerged as the most practical and realistic solution.”

This move is both geopolitical and economic: through joint borrowing, Europe creates a precedent for future Eurobonds, strengthening the reach of its monetary and fiscal policy. It signals to markets that it can support strategic partners even when initial initiatives fail.

With this step, the EU demonstrates it can balance geopolitical risk, economic pressure, and internal unity, shaping the future of European financial strategy.

Source: pagenews.gr