Europe's Plan B
The European Union has found a way to continue funding Ukraine. After months of hesitation and internal discussions, the EU heads of state and government approved, at the last summit of the year last week, a €90 billion interest-free loan package for Ukraine over two years. To finance it, the EU will jointly incur debt. And this is no small matter. First, because compared to the $800 million that the US defense budget recently approved for Kyiv over the same period, the EU demonstrates that it is very aware of who will foot the bill for Ukraine's reconstruction and is taking the step of assuming the cost. Second, because the chosen solution for obtaining the money is the consolidation of a revolution. Since the end of the taboo on debt mutualization, which collapsed with the urgency of the Covid-19 pandemic, the European Commission's debt has steadily increased, from approximately €50 billion in 2019 to around €700 billion. This rise is the result of a heated debate among the 27 member states, revealing the deep political, legal, and budgetary tensions that divide the European Union from within. The decision adopted in the early hours of Friday departed from Berlin's plan to use the proceeds from Russian assets frozen in Europe to finance aid to Ukraine, demonstrating how things have changed in Brussels. This Union has long since taken on a life of its own, independent of the wishes of a Germany with weakened leadership. It is also a direct warning to Chancellor Friedrich Merz, who has always been criticized for his lack of flexibility in quid pro quo negotiations. While on Thursday the media spotlight was on Belgian reluctance and the outright criticism from Italian Prime Minister Giorgia Meloni, both opposed to the seizure of Russian assets, French President Emmanuel Macron orchestrated the plan's dismantling. Macron negotiated with Hungarian Prime Minister Viktor Orbán, agreeing that if the so-called "reparations loan" failed, Budapest would not veto the alternative solution. And so it was, with the Czech Republic and Slovakia following Orbán's lead. The final outcome was a negotiated shift between Macron and the radical right in Europe. A portrait of how the political and diplomatic center of this Union has shifted.
But all these moves also demonstrate that the future of the EU depends on sharpening political imagination. With the weakening of the traditional Franco-German axis's vast majority, and the difficulty of reaching consensus in an EU of conflicting interests, diplomacy and flexibility are crucial for moving forward. In the end, the 27 member states were able to approve an alternative financing method, Eurobonds, which carries no legal risks and maintains the commitment to Ukraine. The Europe of Plan B is, at this moment, the only possible one. A unity increasingly threatened by Russia's military challenges and the territorial challenges from the United States—which demand the withdrawal of Ukrainian forces from Donbas to cede it to Russia, and which are now resurfacing with Greenland—depends on it. The EU is increasingly out of step with this worldview that conceives of diplomacy as a transaction and sovereignty as a negotiable asset.
2026 could be a crucial year for the resilience of the European model. It's a matter of deciding whether geopolitical capitulation prevails and the limits that constrain the EU between internal divisions and external threats are enshrined, or whether the 27 member states accept that the cost of inaction outweighs the difficulties of finding negotiated solutions.
The European Union faces its own trilemma: how to boost economic growth while finding ways to contain enormous public deficits and increase defense spending, all without austerity further fueling support for far-right parties. There will be plenty of imagination required to find solutions. At stake is the survival of the European model and the political legitimacy that citizens have thus far granted it.
