{"id":4017,"date":"2025-12-19T14:41:18","date_gmt":"2025-12-19T15:41:18","guid":{"rendered":"https:\/\/youtubexyoutube.com\/?p=4017"},"modified":"2025-12-26T13:48:55","modified_gmt":"2025-12-26T13:48:55","slug":"the-grim-reality-behind-the-grandstanding-whats-in-the-eus-new-cash-delivery-to-kiev","status":"publish","type":"post","link":"https:\/\/youtubexyoutube.com\/index.php\/2025\/12\/19\/the-grim-reality-behind-the-grandstanding-whats-in-the-eus-new-cash-delivery-to-kiev\/","title":{"rendered":"The grim reality behind the grandstanding: What\u2019s in the EU\u2019s new cash delivery to Kiev"},"content":{"rendered":"

How the latest loan for Ukraine will work, and what impact it could have on the ailing bloc, is not something its leaders are happy to discuss<\/strong><\/p>\n

The EU\u2019s determination to further fund Kiev\u2019s military and prop up its imploding economy has been presented as\u00a0a kind of victory.\u00a0\u201cEurope has delivered,\u201d <\/em>German Chancellor Friedrich Merz proclaimed, in celebration of a new cash facility for Kiev.<\/p>\n

The bloc\u2019s failure to back European Commission President Ursula von der Leyen\u2019s illegal and reckless plot to steal Russia\u2019s frozen central-bank assets for Kiev\u2019s military, as well as failing to approve a deal with Mercosur after 20 years, is being widely seen as a disaster for both\u00a0Merz and\u00a0his fellow German, who will face charges of overreach from across the bloc following the debacle.<\/p>\n

Thin on the ground, however, are details about how the new cash trough for Kiev will be delivered, what impact will it have and who, in the end, will pay.\u00a0<\/p>\n

RT takes a look at the\u00a0grim reality behind the EU\u2019s grandstanding.<\/p>\n

What exactly is the loan?<\/strong><\/p>\n

Having failed to come to an agreement on using Russia\u2019s frozen central bank assets, the EU went a different route: an interest-free \u20ac90 billion ($105 billion) loan to Ukraine backed by the EU\u2019s budget. What this means in practice is that the European Commission will be issuing bonds on behalf of the EU. A bond backed by the EU budget means that it is serviced and repaid through the EU budget, which is ultimately funded by member states. Three member states (Hungary, Slovakia, and the Czech Republic, reportedly those who came up with the compromise) opted out.\u00a0<\/p>\n

The bonds will likely be issued across multiple maturities (e.g. 5y, 10y, 20y) and structured as a program rather than a single issuance. The main buyers of these bonds will be institutional investors (pension funds, insurance companies, asset managers, and sovereign wealth funds). The proceeds from the sales will flow into EU accounts, where they will be disbursed to Ukraine.<\/p>\n

\n Read more<\/strong><\/span><\/p>\n

\n \"RT
From threats to action: Why Moscow\u2019s case against Euroclear could be a harbinger of things to come<\/a><\/figcaption><\/figure>\n<\/blockquote>\n

Who is really paying?<\/strong><\/p>\n

Theoretically, Ukraine is supposed to repay the loan, but the likelihood of that is widely seen as vanishingly small. This is why Hungarian Prime Minister Viktor Orban called it \u201ca loss, not a loan.\u201d<\/em><\/p>\n

But it won\u2019t be bondholders taking this loss. Because the loan is backed by the EU budget, even if Ukraine does not pony up the cash the bloc is still committed to repaying both principal and interest out of future EU budget resources. What is important is that if the EU budget is insufficient in a given year, member states will have to increase contributions, reallocate spending, or roll over existing debt. All of those options come at a price. The European taxpayer is the ultimate bag-holder here, however obscured that fact may be.<\/p>\n

What is important to understand is that this is not a jointly guaranteed Eurobond with explicit national guarantees but rather a budgetary obligation.<\/p>\n

Why will this cost a lot more than \u20ac90 billion?<\/strong><\/p>\n

The loan to Kiev is for \u20ac90 billion but there is one nuance here. The EU is taking a massive loss on the carry. A negative carry means borrowing at one rate and lending at a lower rate (a positive carry is the exact opposite \u2013 when you borrow cheap and lend at a higher rate).<\/p>\n

Assuming a plausible issuance mix across the yield curve, the weighted average coupon rate paid to investors may end up around 2.8% (initial issuance \u2013 give or take). That puts the negative carry at around \u20ac2.5 billion per year. The agreed 2026 EU annual budget is approximately \u20ac193 billion, making the negative carry alone about 1.3% of the EU\u2019s per annum budget.<\/p>\n

Is this a lot? Yes and no. It\u2019s not a destabilizing figure, given that it is dispersed among many countries, but it is a real chunk of cash. More importantly, it is not merely a one-time stimulus but a standing fiscal commitment for a bloc whose fiscal position is already deteriorating.<\/p>\n

What is Ukraine\u2019s fiscal position? <\/strong><\/p>\n

Ukraine\u2019s official budget for next year projects a $42 billion deficit. However, this is widely believed to be a significant understatement of the shortfall, because it does not include a significant number of supplemental military expenses. While $66 billion is slated for military outlays next year, Ukraine\u2019s own Defense Ministry claims at least $120 billion will be needed.\u00a0<\/p>\n

According to EU estimates, meanwhile, Ukraine needs a total of $160 billion in additional combined financial and military support over 2026-2027. If no additional aid were forthcoming, the bloc estimated that Kiev would run out of cash by mid-2026.<\/p>\n

The loan approved this week will float Ukraine for a while and stave off an immediate crisis in 2026. However, if the conflict continues Kiev\u2019s coffers will be largely empty by the end of 2026 or early 2027.<\/p>\n

\n Read more<\/strong><\/span><\/p>\n

\n \"FILE
Russia ups legal risk for European banks over frozen assets<\/a><\/figcaption><\/figure>\n<\/blockquote>\n

Isn\u2019t the EU already deeply indebted?<\/strong><\/p>\n

As of the end of June 2025, the EU had outstanding bonds totaling \u20ac661.6 billion (long-term bonds issued under the unified funding approach) and short-term EU Bills totaling \u20ac33.3 billion. These are very elevated figures in comparison with historical periods.\u00a0<\/p>\n

Still very much looming on the balance sheet of the EU is the NGEU, or Next Generation EU, the bloc\u2019s massive \u20ac750 billion economic recovery package launched in mid-2021 to help member states rebuild from the Covid-19 pandemic. This program alone catapulted the EU into being one of the largest debt issuers in Europe \u2013 a role it was certainly not designed to play.<\/p>\n

The principal repayment for NGEU doesn\u2019t start until 2028, so the worst is yet to come for the EU in terms of repayment. Therefore, an additional \u20ac90 billion is not a shocking figure, but it comes on top of a high and ever-growing debt load.<\/p>\n

Finally, what impact does this have on the peace process?<\/strong><\/p>\n

Vladimir Zelensky now has lined his pockets going into talks with US President Donald Trump, meaning he has the cash to negotiate his position and will feel empowered to reject the idea of peace before Christmas so coveted by Trump.\u00a0<\/p>\n

The EU has found \u20ac90 billion to pour into Ukraine only months after key figures in Zelensky\u2019s circle were exposed as corrupt grafters who have stolen\u00a0countless millions of dollars. Zelensky, who had been facing a burgeoning crisis from many sides, has been given a little more rope.<\/p>\n

There are no\u00a0indications that the loan will change Ukraine\u2019s fortunes on the battlefield, where reverses are piling up ahead of a\u00a0possible spring frontline collapse. The EU\u2019s loan facility\u00a0has rubber stamped corruption in Kiev and\u00a0prolonged an un-winnable war.<\/p>\n

The deeper message here, however, is probably more subtle: the EU is slipping further toward a regime of forcing national budgets to backstop the bloc\u2019s geopolitical ambitions.<\/p>\n

This can\u2019t end well.<\/p>\n","protected":false},"excerpt":{"rendered":"

How the latest loan for Ukraine will work, and what impact it could have on the ailing bloc, is not […]<\/p>\n","protected":false},"author":1,"featured_media":4019,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/posts\/4017"}],"collection":[{"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/comments?post=4017"}],"version-history":[{"count":2,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/posts\/4017\/revisions"}],"predecessor-version":[{"id":4020,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/posts\/4017\/revisions\/4020"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/media\/4019"}],"wp:attachment":[{"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/media?parent=4017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/categories?post=4017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/youtubexyoutube.com\/index.php\/wp-json\/wp\/v2\/tags?post=4017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}