THE DEAL
Despite Russian efforts that permeated Czechia, Slovakia and especially Hungary, they have failed to prevent the loan agreement proceeding. It is seen in Russia as a strategic failure in the Z-blogger realm, and the Russian government itself is said to have been deeply angry that it failed to win this battle. Many see it as an end game move that Russia simply cannot compete against.
They are not wrong. Without this money Ukraine would likely have been bankrupt by the middle of summer and forced to accept an end to the war making severe concessions, just as Russia is reaching the point of breaking.
Ukraine’s GDP was never vast, in 2014 it took a severe hit when Putin stole Crimea and began the Donbas war. Even now Ukraine needs at least €30 billion of these monies to finance state pensions, wages, infrastructure and public services. Its total GDP based on the last published figures was just short of $191 billion (€167 billion), an increase from the 2022 disaster of $124 billion. 2025’s is expected to reach $210 billion. The €90 billion is vital to maintain budget stability given the costs in fighting the war which amount to about the same per year.
In effect the EU is providing a €30 billion per year arms buying credit line. The weapons must come from the EU/EEA or Ukrainian sources (they can’t spend the money buying British equipment but they can buy it from the UK to save time if needed, or from their own resources). They can only buy US equipment through PURL – which is not covered by the EU funding but via NATO nations funding purchases for or on behalf of Ukraine. The fact many of those NATO nations are the same ones in the EU providing the loan, well thats just the way this works.
The loan is considered a non-recourse loan. Ukraine repays principal only upon receiving Russian war reparations post-conflict. Until then, the EU rolls over debt via budget guarantees. Frozen Russian assets (€210 billion in Belgium), serve as potential collateral without direct confiscation, avoiding legal risks. The EU reserves rights to use the Russian asset revenues for ultimate repayment if needed.
There’s a little bit of an unintended incentive to Russias wealthiest elites in the way this is managed. If they were to ditch Putin, end the war and agree reparations – they get their money back over time. If there are no reparations – or they agree them and then don’t pay them, they money is lost.
It’s a bit of an aside, but I am not keen on the concept of reparations. They were a massive issue in the 1920’s post WW1. They triggered hyper inflation in Germany, a dangerous debt and loans spiral that collapsed the world economy like nobody has ever seen before or since, political resentment that led to Nazism and a world war. Don’t tell me Russians would not be sure to resent what they were paying.
There are some special requirements in the loan deal. Funds require Ukraine’s adherence to the rule of law, human rights (including minorities), democratic reforms, and anti-corruption efforts, with a “no rollback” clause suspending payments for reversals (e.g., weakening agencies). Defence spending mandates oversight and “Made in Europe” preferences; disbursements are conditional and monitored via EU accession-linked benchmarks. It therefore incentivises the Ukrainians to continue what they’re doing in the way of reforms and anti-corruption campaigns, as they head towards EU membership. It also punishes them for undoing any of the advances they make.
THE REASON THIS MATTERS
Forget the obvious fiscal stability, issues – even fighting the war itself. Think more big picture. Russia is now faced with a financially stable Ukraine, unburdened by having to struggle to finance the war against it. Russia is facing an increasingly desperate struggle to protect strategic assets and fund anything very much at all. The war is driving it to bankruptcy. Everyone is looking at Ukraine as the next great power and a military-technological powerhouse. From almost any perspective you care to look, Russia is looking increasingly doomed, not even sanctions lifted on oil and a high oil price are capable of saving Russia now because Ukraine’s kinetic sanctions are making it impossible to export.
It is also something even more fundamentally important to all of our futures in Europe, as the EU, as European NATO, and its extended alliances with Japan, Australia and Canada. It proves that the European West is not weak. It has and is doing something, it has worked out a solution. It is investing money in Ukraine, in its own defence, in its cooperative partnerships. It demonstrates a depth of fiscal power and industrial capability vastly greater than Russia could ever achieve.
Russia is a mendacious, anti-democratic authoritarian state that will never change at its core, even if the rest of its colonial empire finally rebels and says enough is enough. It has no power over us anymore. We have learned with Ukraine that we can match it and exceed it and win if it really tries to challenge us. If it wants to spend billions on weapons to fight wars it will never win, it needs to know that we know what it’s doing. We have watched the US give up on Ukraine and Russia thought that would be the end of the game. They never once suspected the EU would ever have the guts or the willpower to fight this fight to the end, making sure that Ukraine would not be left to the dogs and Russian imperialism.
Putin it turns out is not, even vaguely or passingly a strategic genius. His failures are so profound they meet Hitler at the top of the list of strategic dimwits. Yes they both had the occasional success, but largely because the people they were up against were too stupid for their own good. Once they came up against men and women of vision and who knew what they needed to do to reverse it, they were both doomed. Neither realized the states they had created would in effect be their ow worst enemy.
The collective West – excluding America – has risen and said no more. Nobody heard it at first because nobody thought it possible. Now it’s being seen and it’s being heard. And so is Ukraine – while Russia slides down the exit chute as a power that nobody really needs. Even Azerbaijan has noticed, along with Armenia. Add to that the Indians and the Gulf States.
China signals its displeasure by not doing things. By not giving Russians favorable terms on payments or exchange rates, by charging them what they would charge anyone else for goods and services – and insisting they’re paid in their own currency. By buying up Russian assets on the cheap and using the country for their own ends.
Everywhere Russia looks nobody wants it or trusts it. It’s a loser and the world is smelling it from miles away. Even the African dictators the Russian ‘Africa Corps’ put in power have failed or are failing and Russias troops are escaping or running away. Putin has absolutely nothing to celebrate – except that he got through another day. And Irans foreign minister came for tea. Almost certainly to ask for missiles and weapons Russia doesn’t have spare.
Does anyone doubt Putin is on the cusp of another major strategic blunder? Whatever he does in May is going to be a mistake. His newspapers, even state propagandists, TV shows, and certainly the bloggers have had enough, his popularity even in official polls is sliding rapidly – another percentage point every week.
He doesn’t know how to get out of this war. Ukraine backed by Europe is never going to give in. It’s just a matter of time now. Time Ukraine has and Putin doesn’t, thanks to a €90 billion loan.
The Analyst
militaryanalyst.bsky.social
The Military Analyst 
Rarely has money been better spent by the EU. Of course the UK should have been on the inside pushing for this. Even without that position today, we have shared values with the EU unlike some other countries I can think of.
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The EU along with the rest of Europe+ are finally getting their act together. Trump made this happen even though it was never his intention to do so. Hopefully a new NATO will be born, that can include the US, but not be dominated by them. Those days are over, and we can thank Trump for that, although it clearly wasn’t his desire at all. He and his fellow idiots Hesgeth and Vance gave the NATO members an impossible task and right now they should exceed it. We now understand that the US cannot be trusted and possibly should never have been. It is now suspected that F35s are fitted with a ” Kill Switch” enabling the Pentagon (i.e. Hesgeth!) to disable the aircraft on a whim if their President demands it. Does the Trident missile also have a Kill Switch or the Patriot missile? NATO was built on trust, and so far the US has shown that they can not be trusted. The only time Article 5 was acted upon was after 911, but Trump has conveniently forgotten that and the thousands of NATO casualties resulting from helping the US in Iraq and Afghanistan. Now, following Trump’s war against Iran, the Gulf states are likely to dump the US as a preferred supplier of munitions in favour of Europe+ and including Ukraine.
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While I really don’t support the jihad groups in Mali, I had quite a nice read yesterday about the Russians in Africa Corps fleeing and leaving weapons, vehicles, and other materiel behind. And, they left the ones that they were supposed to protect to fend for their own.
That might give a few other dictators something to think about before they pay the Russians to protect them. It didn’t work out too well for neither Maduro nor Assad before they now fled in Mali.
Well… a bad day for Russia is a good day for me.
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