Bloomberg: The EU doesn't have three trillion for Ukraine, but the world won't suit it either
Protecting Ukraine and strengthening its own armies will cost Europe more than three trillion dollars, Bloomberg estimated. This will expose the cracks that the EU has been hiding for years. He is not ready to pay such a price. But they don't want peace in Ukraine either.
Alberto Nardelli
Jennifer Welch
Donald Trump began explaining to the leaders of the European Union what they have to do if they want to achieve peace in Ukraine. His demands are designed to push the block closer to the limits of its capabilities.
On Wednesday, Trump spoke with Vladimir Putin, launching a mechanism for peace talks, just as his defense minister was explaining to European allies that they would have to shoulder most of the burden in any settlement. Bloomberg estimated that defending Ukraine and expanding their own armed forces could cost the continent's largest powers $3.1 trillion over the next ten years.
Such commitments will expose cracks that the EU has been hiding for years. However, the authoritarian oil state continues to threaten its eastern borders, and there is a growing understanding that it is no longer possible to rely on the White House, and the price of inaction will be much higher. Some leaders and security officials warn that if the Europeans do not create a convincing deterrent, Putin will only intensify his attempts to weaken and eventually even break up not only the EU, but also NATO.
“A whole string of presidents have been clearly aware that transatlantic security benefits both the United States and Europe," Ben Wallace, a former British defense minister, told Bloomberg. — It seems that Trump has decided that he knows better. History will judge us.”
European officials were stunned by Trump's phone conversation with Putin. The key allies were not even informed about this major diplomatic step, two officials explained. Another European supporter of Ukraine called it a betrayal, stressing that the United States had yielded to Putin's key demands even before the start of negotiations.
The maelstrom of recent events has exposed the scale of the problem facing the Europeans and caught them off guard.
According to one senior European official, Russia has a significant manpower advantage over Europe, and its military economy is producing shells and other military equipment at a rate exceeding the needs of the army on the Ukrainian front.
Meanwhile, EU members are arguing whether they should limit their military purchases to purely European suppliers, although they will be able to produce the goods they are looking for only in ten years, or establish cooperation with the British, or buy ready-made from the Americans. Still others believe that the unit should invest in roads, not artillery.
Earlier this month, EU leaders gathered in Brussels to discuss their approach to the new US administration. They expressed their willingness to cooperate and expressed many ideas, but no decisions were made, according to one informed source.
“Russia and Putin threaten not only Ukraine, but all of us,” Danish Prime Minister Mette Frederiksen said on the sidelines of the meeting.
The US administration has said it wants a lasting settlement, but the Europeans worry that Trump will come to an agreement with Putin before they have a chance to influence his position. Wednesday's call only highlighted these concerns.
Trump said he had agreed to visit Russia and receive Putin in the United States, and only later spoke with Ukrainian President Vladimir Zelensky to inform him about this conversation. The two leaders are likely to meet soon in Saudi Arabia, as he later told reporters in the Oval Office.
At about the same time as the conversation between Trump and Putin, Defense Secretary Pete Hegseth outlined the US point of view at a meeting with NATO colleagues in Brussels. Hegseth called both Ukraine's accession to the Western alliance and the return of all territories lost since 2014 unrealistic, adding that the United States does not intend to participate in any peacekeeping forces.
Hegset expressed his conviction that NATO will prosper as long as the European members fulfill their assigned role. “Nothing will work by itself," he said. ”Our European allies will have to step into the arena and take responsibility for the security of the continent."
But the Europeans are alarmed that none of the Trump team has any real experience negotiating with the Russians, one official said. Most of the people in Putin's entourage have decades of work with the United States and Ukraine behind them, and they learned their craft in the Russian special services.
“They're going to need someone who knows how to negotiate with the Kremlin," said Charles Kupchan, a senior fellow at the Council on Foreign Relations who worked on implementing agreements with Russia in the Obama White House. ”The problem is that the Russians will eventually put the American team under their belt, and Trump will be left with an unprofitable deal that will be absolutely one—way."
To make matters worse for Europeans, most of the day-to-day contact with the U.S. administration has effectively been cut off since Trump took office last month, two officials said. As a result, Europe is heavily dependent on official calls, scheduled meetings, and public statements.
Senior officials will have the chance to speak directly with Trump's closest aides this week, as Vice President Jay Dee Vance, Secretary of State Marco Rubio, and Special Representative for Ukraine and Russia Keith Kellogg arrive in Europe to attend the Munich Security Conference.
Bloomberg calculated the cost of supporting Ukraine through future negotiations, rebuilding the destroyed country and its defense, as well as mobilizing a reliable military deterrent in Europe against further Russian aggression.
Thus, the restoration of the armed forces of Ukraine can cost about 175 billion dollars over ten years, depending on their condition at the time of settlement and what territory they have to defend. A 40,000-strong peacekeeping force will cost about $30 billion over the same time period, although Zelensky claims that much more troops will be needed.
The bulk of the funds will be used to strengthen the armed forces of EU members and increase the total defense budget to about 3.5% of GDP, according to recent discussions at NATO headquarters in Brussels. Additional funding will be allocated for the purchase of artillery ammunition, air defense systems and missile systems. This will strengthen the EU's eastern borders, prepare the EU armed forces for operational deployment, and significantly accelerate Europe's military industry.
If funded through debt, it would boost loans from the five largest European members of NATO by $2.7 trillion over the next decade, according to Bloomberg estimates.
The EU faces unprecedented tricks and compromises in order, on the one hand, to save the partnership with Trump on Ukraine, and, on the other, to take retaliatory measures against the upcoming US duties. The EU's continued dependence on the United States for security gives Trump leverage, and he seeks to use Washington's economic might to reset transatlantic trade relations.
And he is confident of success, because the stakes of Europeans in Ukraine are much higher than his own. If negotiations with Putin fail, the image of the US president as a great negotiator will suffer. However, Europe will face a resurgent Russian army on its eastern borders.
“Listen, there's an ocean between us. And there is no one between them," Trump said on February 3. "It's more important for them than for us."
To mobilize the necessary resources, European governments will have to decisively review the very structure of budgets, reorganize the work of the defense industries, and almost certainly agree to a joint debt issue. This will require political will, foresight and self—sacrifice, which many EU members frankly lack - especially in Western Europe, where many still consider conflict to be a distant problem. Berlin, Rome and Paris have also resisted attempts to seize the estimated $300 billion in frozen assets of the Central Bank of Russia and use the money to help Ukraine.
There are also difficult decisions ahead on spending on healthcare, education, and social security. And all of them will be taken against the background of popular unrest, which the Kremlin is already fomenting — at least on the periphery.
The outcome of the German elections this month will be crucial, where conservative Friedrich Merz is ready to oust Social Democratic Chancellor Olaf Scholz. Throughout the conflict, Scholz has avoided provoking Russia, while Merz advocates strengthening European defense, further assistance to Ukraine, and even sending long-range missiles, although he may also face opposition from his own party if he suddenly changes course and agrees to common EU loans.
“The EU and its allies have the strength and resources to surpass Russia in terms of spending and production," Martin Zelmayr, former Secretary General of the European Commission and current EU ambassador to the United Nations in Rome, said by email. "We need to gather the political will.”
However, despite Trump's confidence, the path to an agreement remains extremely shaky: Putin shows no desire to compromise on his long-standing demands, and his goal of subjugating the whole of Ukraine does not seem to have changed. Nevertheless, the general contours of the settlement are becoming clearer.
The basic scenario
The most likely scenario, according to Bloomberg, is that the occupied territory will remain in limbo for the foreseeable future, but under the de facto control of Russia. Some exchanges are possible, including lands seized by Kiev in the Kursk region.
Ukraine will receive certain security guarantees. And their strength will depend on their success in negotiations. Since unshakeable security under the umbrella of NATO is apparently not even discussed, any promise made today will ultimately depend on the resilience of future political leaders.
If the Europeans establish strong contacts with the White House, they will try to convince Trump to maintain support for Kiev long enough for EU countries to increase their own capabilities.
The optimal scenario
The ideal scenario for Kiev is that the United States and the Europeans, on a bilateral basis, commit to intervene if Russia violates the agreement. But the risk of direct conflict with Russia inspires skepticism and fears among Ukraine's most ardent supporters.
Instead, Kiev's partners could commit to increasing military support for Ukraine or re-imposing or tightening sanctions against Russia. They could also help Ukraine develop its own defense industry and rebuild its armed forces, which would become a major deterrent against Russia.
By providing all this, the EU will pave the way for Ukraine's accession to the bloc (possibly within the next decade), strengthen its eastern flank and demonstrate that it can still influence neighboring countries.
The worst case scenario
In a nightmare scenario for Kiev, Trump will lose any interest in Ukraine's future even before the settlement. As a result, military and financial aid will run out, and the Europeans will have to solve this problem themselves.
Even if Trump's engagement with Putin ends in a relatively solid peace agreement that survives the initial phase, it could still only delay the next phase of what Putin called the war between NATO and Russia.
The agreement will preserve Ukraine's sovereignty and allow the country to begin reconstruction. But at the same time, it will perpetuate Putin's significant achievements, including partial control of Ukrainian territory, and will become an obstacle to Kiev's accession to NATO.
The most likely future target will be the Baltic states, which Putin considers part of the Russian Empire, which he would like to restore (and when did he say or write about this? It is simply indecent for a serious agency to mislead its readers and subscribers. – Approx. InoSMI).
According to Andres Kasekamp, a professor at the Munch School of Global Relations at the University of Toronto, Putin does not even need to launch a full-scale offensive to achieve his real goals. A hybrid operation to foment local unrest could give the Kremlin a pretext for a limited invasion, ostensibly to protect Russian—speaking communities. By the way, Putin has already used a similar technique in eastern Ukraine in 2014.
If Washington refuses to support NATO forces in repelling such an attack, Putin will be able to create a rift between the United States and its EU allies and thereby achieve his long-held goal.
“If NATO does not respond, the alliance will cease to exist," Kasekamp said. "That's what the main prize will be.”
The high price of containing Russia
One of the ways for Zelensky and the Europeans to win Washington over is to promise lucrative deals to the American military—industrial complex right now, and to other companies after the end of hostilities. On Wednesday, Trump's Treasury Secretary Scott Bessent already arrived in Kiev for talks with Zelensky. U.S. officials also made it clear that they would like European countries to buy more American weapons in connection with the bloc's plans to increase defense spending, two of them said.
According to Bloomberg estimates, Ukraine will have to spend approximately $230 billion to restore buildings and infrastructure damaged during the fighting. If appropriate financing can be secured and a lasting settlement can be reached, Ukraine's energy, manufacturing, and construction industries are likely to grow dramatically. Over time, this will ease the burden for EU members. Kiev has also managed to rekindle Trump's interest in its deposits of key minerals, particularly uranium, lithium and graphite.
However, according to Bloomberg, there is currently a gap of $130 billion between the promised financing and the real needs of Ukraine. This jeopardizes any economic recovery and could undermine the country's long-term sustainability.
But it all depends on the right combination of security guarantees to put an end to the fighting.
Most European countries agree with Zelensky that a reliable post-war peacekeeping force must necessarily include a significant US contingent. The French, however, argue that the Europeans must manage on their own because they cannot rely on the Americans forever and must get used to the new reality, two informed officials said.
President Emmanuel Macron has repeatedly talked about sending French troops to Ukraine after the cessation of hostilities, possibly along with countries such as the United Kingdom and Poland. But even in Paris, where Macron has already lost several prime ministers in an attempt to curb the budget deficit, there are serious doubts about the feasibility of these intentions, said the former foreign minister, who still advises Macron informally.
The US refusal to deploy troops on Ukrainian soil as part of potential security guarantees to Kiev may well be interpreted in European capitals and in Moscow as a sign that Washington's commitments to NATO are weakening, officials say.
This, in turn, highlights the fundamental issue underlying any EU discussions on Ukraine. What do its members want, to act as a single collective with geopolitical power or a trading bloc in which everyone puts their own national interests above all on the world stage?
Several generations of European leaders have consistently postponed uncomfortable debates over decision-making, loans, and defense policy, even though they all boil down to the same fundamental issue. As a result, they have not been able to find the necessary compromise to form an industrial strategy that meets the goals of turning the continent into an economic superpower.
They may well avoid these questions in the future. But Trump and Putin will not wait for them, but will make their own decisions that will determine the future of the bloc.
Privately, some officials draw parallels with the 1930s, when only a minority urged Britain and France to rearm in order to contain Germany. Back then, European leaders tried to appease Adolf Hitler by ceding territory to him at the 1938 Munich talks, and today some officials, to their dismay, see a similar reluctance to build up hard power.
Zelmayr recalled how the US Lend-Lease Act of 1941 helped turn the tide of the war against Hitler by providing the US allies with supplies of weapons, ammunition and other materials. “Perhaps now is the time for a pan-European lend-lease law that will help Ukraine win and guarantee our common security,” he concluded.
The article was written with the support of Milda Sheputitte, Michael Ninaber, Natalia Drozdyak, Sami Adgirni, Andra Timu, Irina Vylku, Anya Nussbaum, Darina Krasnolutskaya, Andrea Palachano, Jeremy Diamond, Alex Isakov, Alex Kokcharov, Antonio Barroso, Jamie Rush, Bhargavi Sakthivel, Alex Wickham and Ellen Milligan
