Italy 2-Germany 0. The most decisive European summit in recent times ended at dawn, with a significant political agreement for Ukraine and a boost in the agreement with Mercosur. After more than 16 hours of negotiations, EU heads of state and government, meeting in Brussels, agreed to issue Eurobonds worth €90 billion to finance Ukraine’s needs. Without this money, the country invaded by Russia could run out of funds by March next year. It’s a quick solution, to respond to the most urgent needs. Ultimately, the leaders agree to continue exploring the “reconstruction loan” using Russian assets frozen by EU sanctions. The refusal of Belgium, the country where the majority of these reserves is kept, and the doubts of the rest of the partners regarding the offer of the white check demanded by the Belgian government, blocked the measure.
German Chancellor Friedrich Merz clearly appears to be the loser of this meeting; as well as the President of the European Commission, the conservative Ursula von der Leyen: Europe is clearly changing. And the national-populist governments are winning their case. Berlin favored the use of Russian assets as leverage to ensure the financing of Ukraine, against the wishes of Hungary of the ultra Viktor Orbán and Belgium of Flemish nationalist Bart de Wever. And Berlin wanted to conclude the trade pact with Latin America. Ultimately, this agreement with Mercosur is postponed until January, and it will be European taxpayers, not Russian assets, who will ensure that Ukraine can continue to fight on the front lines.
“There will be no Eurobonds in my lifetime,” former Chancellor Angela Merkel said a few years ago. “The objective is to use Russian assets” and not to issue common debt, conservative Merz has repeated in recent days. It won’t be like this: the EU is resorting to Eurobonds for the second time in less than five years. The first time was with the pandemic. Today, with this existential risk posed by Ukraine’s bankruptcy, its defeat on the battlefield at the hands of Putin’s Russia.
The summit lasted all day Thursday and had some nice surprises in store. While Brussels was paralyzed by farmers, France and Poland opposed Mercosur, but it was ultimately Italy’s Giorgia Meloni who pushed to postpone the agreement until January. Meloni spoke with Luiz Inácio Lula da Silva, assured him that he agreed with the support for Mercosur, but asked for a few days, a maximum delay of a month, to quell the internal pressure against this agreement.
But the highlight of the day was Ukraine. Kyiv will have its money but not all the symbolism. The EU has failed to mobilize the Central Bank of Russia’s assets which remain frozen in the EU due to sanctions. However, member states will borrow €90 billion on capital markets, guaranteed by the EU fiscal space, to finance Ukraine over the next two years.
Furthermore, the Kremlin Trojans are getting away with it and will not participate. The plan “will not entail any financial obligations on the part of the Czech Republic, Hungary and Slovakia,” the leaders agreed.
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