EU "Russia Confiscation" Summit Ends In Failure As Brussels Quietly Paves Way For Eurobonds
Submitted By Thomas Kolbe
The EU summit held in Brussels on December 18–19 was supposed to deliver two fundamental decisions. First, it was meant to address the expropriation of frozen Russian assets held at Euroclear. Second, it was expected to ratify the Mercosur trade agreement. In both cases, the EU’s bureaucratic elite around Ursula von der Leyen failed—paralyzed by its own dysfunction and ultimately by a lack of real power.
What had been grandly announced as a “summit of decisions” ended in a fiasco for Brussels. Neither was the Mercosur agreement approved, nor did the EU manage to convert the Russian central bank assets held at Euroclear into a substantial loan to extend Ukraine financing.
Let us first examine the Euroclear affair. That the EU bowed to growing pressure from several member states such as Belgium, Hungary, and Slovakia—as well as from the U.S. government—is telling. Despite all its ambitions, the EU remains a paper tiger in the global power struggle.
A Typical EU Solution
The solution to Ukraine’s massive financing gap looks as follows: the European Union will provide Kyiv with an interest-free loan of €90 billion for the next two years. Repayment will only be required if Russia pays reparations—which it will not. In that case, the EU plans to fall back on frozen Russian assets to cover the deficit.
That immediate expropriation did not occur is largely due to Belgium’s insistence—given that Euroclear is legally domiciled there—on a collective assumption of liability risks. As so often when consequences might arise from its own actions, Brussels opted for a diluted compromise.
Through the back door, this effectively introduces Eurobonds—a joint debt issuance—without explicitly saying so.
German Chancellor Friedrich Merz hailed the construct as a major success. National budgets would not be burdened, he argued, since the financing would be handled entirely at the EU level. Moreover, the loan would be secured by Russian assets. What Merz conveniently omitted is that EU member states ultimately remain liable for Brussels’ maneuvers.
In reality, Brussels achieved one thing above all: the politically and legally explosive issue of expropriating the Russian central bank was postponed. At the same time, the EU once again used the opportunity to cleverly circumvent its own rules—specifically the prohibition of joint debt issuance.
Enormous Financial Needs
Ukraine’s financial requirements are immense. In view of the war of attrition in the Donbas, the European Commission expects roughly €81 billion to be needed next year alone to close Ukraine’s budget gap, which currently stands at 18.5 percent of GDP. The newly approved EU loan will be supplemented by national contributions.
Germany alone will finance €11.5 billion for Ukraine’s military equipment from its federal budget—funded through new debt and charged to the taxpayer, who, needless to say, has no say in the matter.
Within EU budget planning, grants of up to €50 billion are earmarked for next year. According to plans by Commission President Ursula von der Leyen, this amount is to be expanded to €135.7 billion over the following two years. This bottomless pit threatens to plunge economically weakening EU states—with already ballooning deficits—into severe turbulence unless the course is changed swiftly.
Restoring Military Striking Power
So what is the concrete alternative now that the raid on Euroclear’s balance sheet is temporarily blocked? EU and UK officials have repeatedly made clear in recent months that they intend to restore their military capabilities by 2028.
The signal to Russia is unmistakable: this is neither about lasting peace nor a genuine resolution of the conflict. A ceasefire—something Russia learned during the Minsk Agreement episode—would merely serve military consolidation.
When Friedrich Merz claims that Ukraine financing over the next two years serves exclusively to equip the Ukrainian army and not to prolong the war, this statement reveals one thing above all: a deliberate semantic separation of what is politically and militarily inseparable. Anyone who rhetorically decouples arms deliveries from war prolongation is not informing the public—but pacifying it.
Eurobonds or War Bonds
Brussels will now seize the moment to push ahead with a rapid expansion of Eurobonds. During the COVID lockdowns, the European Commission already ventured into this forbidden territory by issuing several hundred billion euros under the “NextGenerationEU” bond program.
The procedure is now being repeated. The Commission will issue bonds officially secured by Russian assets, but for which all member states ultimately bear proportional liability. Put differently: the EU is concealing yet another gigantic debt program, for which taxpayers will be on the hook in the end.
A large portion of this money will flow back into the European and American military-industrial sectors.
We are witnessing a classic EU solution: the existing rulebook is systematically undermined, while the representatives of the so-called “rules-based order” continue their erosion campaign—until even the last residue of trust in the integrity of EU institutions is ground down.
From Ukraine Conflict to Credit Accelerator
Regardless of one’s view of the historical background of the Ukraine conflict—of the 2014 Maidan coup or the years-long Donbas conflict—the principle of neutrality beyond humanitarian aid has been systematically abandoned.
Once it became clear that the Ukraine conflict could be turned into a credit accelerator, state-backed banks such as the European Investment Bank were heavily integrated into the process.
What has long been evident about Brussels hardliners is now plain to see: megalomania combined with personal career ambition. In the cases of Ursula von der Leyen and Friedrich Merz, this toxic mix produces political strategies and outcomes that drag the EU and its member states ever deeper into a spiral of fiscal obligations and looming military escalation.
Mercosur Postponed
The European Union’s historic task was to create and legally safeguard a competitive internal market. This attempt at limited competence transfer has now definitively failed.
On Thursday, the EU summit also failed to ratify the Mercosur agreement with South America. At the insistence of France and Italy, the decision was postponed by one month.
Negotiations have stalled for a quarter century. A finalized draft is on the table, providing for a phased tariff reduction over 15 years and covering Brazil, Argentina, Paraguay, and Uruguay. With 780 million people, a significant integrated market could emerge.
The agreement aims to boost European exports in automobiles and mechanical engineering while reducing tariffs on agricultural imports from South America—blocked primarily by the French farm lobby. Once again, the EU refuses to ease regulatory burdens on domestic farmers in order to balance competing interests.
What Remains?
In sum, the European Union keeps its debt machinery alive for another two years—while remaining incapable of making substantive moves on the international stage. The politics of postponement, and the costs of delayed decision-making, will ultimately be passed on to European taxpayers.