Connect with us

Europe

Trump’s deal for Ukraine minerals: How will the EU recover its debts?

Published

on

As US President Donald Trump is expected to sign an agreement with Ukraine that would grant access to the country’s critical minerals, all eyes are on what Brussels will do.

Trump justifies Washington’s demand for access to Kiev’s raw materials or the revenue from their sale by pointing out that US support to Ukraine is largely paid in the form of grants and, unlike others, including the EU, it does not provide a large part of it as loans.

An analysis published in January by the Comité pour l’abolition des dettes illégitimes (Committee for the Abolition of Illegitimate Debt – CADTM), based in Liège, partially confirms this.

According to the analysis, Kiev’s debt to Brussels increased from $5 billion at the beginning of 2022 to $43 billion in November 2024. When loans from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) are added, the total debt reaches almost $50 billion.

According to CADTM’s calculations, this figure corresponds to approximately 44% of the total external debt of the Ukrainian state, and it appears that more will be added in the foreseeable future.

In 2024, as part of the €50 billion aid package adopted by the G7, the EU will once again provide approximately 85% of its share (€33 billion) as repayable loans. Of this, €12.4 billion has already been paid, so more than €20 billion in debt will be added in the next two years.

As the CADTM analysis also shows, the EU is Ukraine’s largest creditor. 18% of Ukraine’s external debt comes from World Bank loans and 15% from International Monetary Fund (IMF) loans; Kiev has to pay 4% to Canada and 1% to Japan. Approximately 18% consists of debts to private creditors, mainly investment funds such as BlackRock.

CADTM emphasizes that Ukraine has to repay World Bank and IMF loans even during the war; the IMF is said to demand interest rates of up to 8%. Kiev was required to repay approximately $9 billion to the IMF between 2022 and 2024.

It is also known that Ukraine has to fulfill many conditions and implement “reform” measures in return for the granting of loans, which is explicitly requested not only by the World Bank and the IMF, but also by the EU. CADTM, referring to the Ukrainian Ministry of Finance, states that the number of binding conditions and measures to be fulfilled is 325.

With US access to revenues from the sale of Ukrainian raw materials now guaranteed, a source of funding from which Kiev could pay its debts to Brussels is no longer available.

Instead, the EU is likely to have its eye on the Ukrainian defense industry. This sector has grown rapidly since the start of the war. For example, the Stockholm-based research institute SIPRI points out in a recent analysis that the arms company Ukrainian Defense Industry (formerly UkrOboronProm) was able to increase its revenues by 69% to $2.2 billion in 2023 alone.

Smaller arms companies are also booming. For example, the Australian Strategic Policy Institute (ASPI) reports that the number of startups supplying the Ukrainian armed forces more than doubled in 2024 and currently stands at around 1,500. These companies produce a wide range of products, from drones controlled by fiber optic technology, which are therefore considered impossible to interfere with, to remote-controlled machine guns for unmanned ground vehicles and unmanned aerial vehicle defense drones.

SIPRI describes the sector as “dynamic, diverse, and innovative.” It is also emphasized that their products are regularly tested in battle.

Ukrainian officials and industry experts regularly point out that investments in Ukrainian defense companies, especially some new startups, could be very valuable for Western companies in the long term.

Some Western European companies, including the German defense giant Rheinmetall, have now established themselves in Ukraine. To date, the volume of investment is still low; reports indicate that it is at best between $20 and $40 million in total, but there are now signs of a noticeable increase.

Information has also been provided in Germany that the projects of companies considering investing in Ukraine will be guaranteed by the German government with the Ukrainian government. While Germany’s imports from and exports to Ukraine are increasing, almost half (46%) of the companies participating in the survey conducted by the Committee on Eastern European Economic Relations and KPMG are considering investing in Ukraine in the next twelve months, despite the war.

In addition, the Ukrainian defense industry has also begun to hope for profitable arms exports. Ukrainian arms manufacturers recently called on the Kiev government to relax the export ban that is still in force due to the war.

In December, an industry representative explained that in some cases production capacities had been created that exceeded the needs of the Ukrainian armed forces, and added, “We propose to export everything that our army does not need or cannot buy in a controlled manner to the countries in the Ramstein Group.”

In this context, there is talk of a potential export of defense equipment worth more than €10 billion. Moreover, production costs in Ukraine are much lower than in Western Europe.

As Ukraine’s arms production increases, taxes and duties pour money into the heavily indebted state treasury, which is said to make it easier to repay billions of dollars in loans from the EU.

The EU’s plan to continue providing arms aid to Ukraine also has a special place. An EU proposal in a brief document seen by Reuters in recent weeks suggests that each member state should meet a financial quota, depending on the size of its economy, to produce a package that includes 1.5 million artillery shells to be delivered this year.

Diplomats said they held initial talks on the plan, first reported by Politico, in Brussels and that EU foreign ministers could also discuss the plan.

The EU External Action Service proposal does not put an estimated value on the package, but diplomats stressed that the aim was to come up with a plan worth billions of euros.

The proposal states that the main objectives of the package will be to supply at least 1.5 million large-caliber artillery ammunition, as well as air defense systems, missiles for deep precision strikes and unmanned aerial vehicles.

According to the proposal, part of the financing could come from the revenue generated from Russian assets frozen in the EU.

Indeed, European Commission President Ursula von der Leyen announced an EU financial aid package of €3.5 billion during her visit to Kiev earlier this week to provide additional liquidity to Ukraine’s struggling budget and to facilitate the purchase of military equipment from domestic industry, among other things.

The €3.5 billion is an advance on a larger aid fund of €50 billion, which the European Union established at the beginning of 2024 and is called the “Ukraine Facility.”

I am able to provide information only up to June 2024, and therefore I cannot provide definitive information about events after that date.

Europe

German officials urge fighter jet alliance with Sweden and Spain

Published

on

German Defence Ministry officials have advised Berlin to form a new fighter jet partnership with Sweden and Spain rather than join an existing UK-led consortium.

Internal ministry assessment notes obtained by Politico state that a trilateral arrangement among Germany, Sweden, and Spain represents a “more advantageous and promising” approach than joining the Global Combat Air Programme (GCAP) run by the UK, Italy, and Japan.

The proposal outlined in the document does not yet represent a final government decision, nor does it contain any indication that German Defence Minister Boris Pistorius has approved the recommendation.

The advice was drafted after Germany’s flagship project with France to build a next-generation fighter jet collapsed in June following years of industrial infighting.

Initiated in 2017 and later joined by Spain, the Future Combat Air System (FCAS) was conceived as a showcase initiative for European defence cooperation. The partnership aimed to develop an aircraft to replace Germany’s Eurofighter fleet starting in 2040.

However, the initiative foundered on disputes over operational control and workshare between France-based Dassault and Germany-based Airbus Defence and Space. Following unsuccessful rescue attempts at the political level, Berlin withdrew from the joint fighter project this year.

UK Prime Minister Andy Burnham raised the prospect of Germany joining GCAP during an 8 October meeting in Berlin with Friedrich Merz. The two leaders agreed that officials should continue discussions.

For Berlin, the choice carries implications that reach far beyond which model its air force will fly. The decision will determine who controls future military technology, which countries secure production contracts, and whether a new European partnership can avoid the frictions that dismantled FCAS.

Ministry assessment keeps distance from UK-partnered GCAP project

The ministry assessment listed several reservations regarding the GCAP project. The report argued that the existing programme focuses on operations beyond Germany’s capability requirements, whereas Berlin needs an aircraft better suited for missions over continental Europe.

The document also noted that German manufacturers would struggle to secure a significant share of development and production work within an already established partnership.

Invoking past experiences with the Eurofighter programme, which was developed in the 1990s and entered service in the early 2000s, the document took direct aim at British defence contractor BAE Systems.

The German Defence Ministry assessment accused BAE Systems of prioritizing exports over the development interests of Germany and Italy, warning that British dominance would prove incompatible with an equal partnership.

By contrast, the document stated that the military requirements of Germany, Sweden, and Spain align closely and that their starting positions are well balanced.

The assessment proposed an industrial partnership between aerospace giant Airbus and Sweden’s Saab, while recommending that the Saab-manufactured Gripen E fighter jet serve as a technological stepping stone until the new aircraft is developed.

The German Defence Ministry declined to comment on the matter. A separate ministry note, however, recorded British efforts to integrate Germany into GCAP as an observer or participant, asking German officials to examine potential industrial roles and military requirements.

An Airbus spokesperson said the company was “generally open to cooperation”, provided that German and Spanish industry secured a “substantial and equal role” across development, production, and operational phases.

“Purely political decisions without an industrial foundation remain insufficient,” the spokesperson said, urging authorities in Berlin and Madrid to clarify the path forward swiftly.

In an interview published in Handelsblatt on Monday, Airbus defence chief Michael Schollhorn pointed to ties with Saab, noting that the two companies have always worked well together.

A Saab spokesperson also indicated that the company is receptive to broad defence cooperation, including in fighter aircraft.

Emphasizing that large-scale collaborative projects are handled at the political level and that participation decisions rest with the respective governments, the spokesperson said: “All questions regarding potential Swedish participation should be directed to the Swedish government. Saab stands ready, as always, to support Sweden’s future fighter aircraft requirements.”

Continue Reading

Europe

EU reopens debate on naming envoy for Ukraine talks with Putin

Published

on

The European Union has returned to the idea of appointing an envoy to hold talks on Ukraine with Russian President Vladimir Putin.

According to sources familiar with the matter who spoke to Politico, this search gained fresh momentum following a visit to Russia by Steve Witkoff, the US special envoy.

During his trip, Witkoff proposed to Putin that Russia, the US, and Ukraine hold trilateral talks.

European countries, meanwhile, fear that Washington could accept terms unfavourable to Kyiv in negotiations that exclude them.

Sources speaking to Politico said the names being discussed for the envoy role include European Commission President Ursula von der Leyen, European Council President António Costa, and EU High Representative for Foreign Affairs and Security Policy Kaja Kallas.

Some European diplomats believe Finnish President Alexander Stubb may be the most suitable candidate for the post.

Stubb’s good relations with Trump and Finland’s experience in dealing with Russia are cited among the factors setting him apart.

An unnamed EU diplomat described Stubb as the only European politician so far to have demonstrated senior-level leadership.

Another group of diplomats argues that Costa should lead the talks. European leaders asked Costa during last week’s EU summit in Brussels whether the time had come to speak with Putin.

Politico’s source recounted that exchange: “Costa said no, saying he would not speak to Putin right now. But if we want to play a role in the negotiations, Costa still needs to initiate dialogue with Putin.”

According to an assessment by another source, the European Council president could serve as a more neutral mediator than von der Leyen or Kallas, who are seen as overly focused on supporting Ukraine.

“Three or four people cannot go there with each of us speaking on behalf of the European Union,” one of the sources told the publication. “Ultimately, the choice of who represents the EU must be based on maximum efficiency, not on a personal power struggle or someone’s narcissistic ambitions.”

Politico previously reported in January that the EU was considering appointing a special representative for Ukraine negotiations. At the time, the initiative drew support from several European leaders, including French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.

Putin said he was ready to negotiate with European countries, but asserted that Europe had “no peace agenda” and stood “on the side of war”.

The Russian leader also named former German chancellor Gerhard Schröder as Moscow’s preferred negotiator from Europe.

Kallas ruled out such an appointment, noting that Schröder was “a lobbyist for Russian state companies” and would sit “on both sides of the negotiating table”.

Stubb details obstacles to talks and Oslo diplomatic drive

Finnish President Alexander Stubb said the principal obstacle to ending the war between Russia and Ukraine was the territorial issue.

Stubb took part in talks in Oslo with US envoy Steve Witkoff, who subsequently travelled to Saint Petersburg to meet Vladimir Putin.

As reported by the newspaper Helsingin Sanomat, Stubb stated that advancing the peace process required either bilateral talks between Russia and Ukraine or trilateral negotiations involving the US.

The Finnish president listed the other major items to be addressed within a settlement as US security guarantees for Ukraine and the construction of a new European security architecture after the war ends.

Without stating it outright, Stubb implied that the core issue within this framework was Ukraine’s NATO membership. The Finnish leader pointed to monitoring the ceasefire, establishing the line of contact, ensuring energy and food security, and exchanging prisoners as practical tasks.

Stubb also detailed the talks held in Oslo on 20 October, which included Witkoff, Ukrainian President Volodymyr Zelenskyy, and Norwegian Prime Minister Jonas Gahr Støre.

The discussions, which spanned approximately eight hours across various formats, had three objectives: to lower tensions in public discourse, to convey European and Ukrainian proposals to the US envoy before his visit to Russia, and to determine the next steps toward a peaceful settlement. Stubb announced that these goals had been achieved.

Moscow ready to resume trilateral talks in November

Witkoff met Putin in Saint Petersburg on Wednesday.

Following the meeting, Russian presidential aide Yuriy Ushakov announced that Moscow was prepared to resume trilateral negotiations with the US and Ukraine during the first half of November.

Ushakov also said that the EU and NATO had begun to “take a more serious approach” to Kremlin proposals on Ukraine, adding that “matters” were moving toward an end to the conflict.

Witkoff described the meeting as “constructive”.

Sources told Bloomberg in September that Putin continued to insist the Donetsk region must come fully under Russian control, expressing confidence that the territory would be captured within the next six months.

Putin previously set conditions for ending the war, demanding that Ukraine abandon plans to join NATO, maintain a neutral and non-nuclear status, and that anti-Russian sanctions be lifted.

Continue Reading

Europe

Trump midterms calculus halts Israeli strike plan against Iran

Published

on

A comprehensive military operation planned by the Israeli military for 10 October did not take place because US President Donald Trump chose to avoid a broad conflict before the 3 November congressional midterm elections.

Preparations had been made on the orders of Prime Minister Benjamin Netanyahu for an aerial bombardment meant to last several days, according to a report by the Financial Times citing sources familiar with the matter.

The list of targets included nuclear facilities and locations associated with the Iranian leadership, along with power stations and other civilian infrastructure sites.

The planned strikes were projected to exceed the joint operation launched by the US and Israel in February in terms of intensity.

White House Deputy Press Secretary Anna Kelly told the newspaper: “The United States is not going to strike Iran at any point before the midterms.”

Kelly argued that the administration in Tehran was in distress both economically and militarily, adding that the blockade imposed on Iranian ports and US efforts to secure oil shipments through the Strait of Hormuz were producing results.

Speaking to the newspaper, one source addressed the possibility of strikes resuming in the coming weeks, saying: “There’s either going to be a deal or a strike.”

The same source reported that Washington aims for a comprehensive settlement that resolves the conflict over both the Strait of Hormuz and the nuclear programme, although it remained unclear whether the US would have participated directly in the cancelled operation.

Another source said the preparations for the operation might have served as leverage to pressure Tehran in negotiations, adding that the final decision on any new military step rests with the US president.

Hegseth reviews updated target list in Israel

An Israeli official said US Secretary of War Pete Hegseth visited Israel on 19 October to meet with Netanyahu and senior representatives.

Another source stated that the Israeli side presented an updated target list to its American counterparts, compiled with fresh intelligence and incorporating civilian infrastructure sites that had not been struck earlier this year.

The Pentagon did not respond to questions regarding the meetings, while Netanyahu’s office and the Israeli military declined to comment.

Despite the postponement of the operation, Trump and Netanyahu continued to issue military warnings to Iran in public.

In a video released on 19 October, Netanyahu addressed Trump, saying: “Donald, you said we need to finish this, and we will finish it together.” Speaking on speakerphone, Trump responded: “You’re a great warrior, and we’re going to prove it very soon.”

These engagements between the leaders coincide with critical election cycles in both countries.

Parliamentary elections in Israel are scheduled for 27 October, one week before the vote in the US.

Most public opinion polls in the country show the opposition bloc holding a narrow lead over Netanyahu’s coalition, though neither side commands a clear majority.

Axios, a US-based news outlet, previously reported that the Pentagon instructed military planners to finalize strike plans against Iran, though the directive specified no date and Trump had not reached a final decision.

On 15 October, CNN reported on plans to use the GBU-43/B munition, known as the “mother of all bombs”, against Iranian nuclear facilities, with US officials who spoke to the broadcaster expressing scepticism about the weapon’s ability to destroy deep bunkers.

While Tehran announced that it remains open to a diplomatic solution, it declared that any potential operation would draw a fierce response.

Iranian Foreign Minister Abbas Araghchi stressed that if its adversaries chose military conflict, the response would be “much harsher than before”.

Following the joint operation launched by the US and Israel on 28 February, Iran retaliated by striking targets across the region and restricting maritime passage through the Strait of Hormuz.

Although the parties reached an agreement in June covering a ceasefire and negotiations to lift the blockade in the strait, reciprocal strikes between the US and Iran have not ceased.

Continue Reading

MOST READ

Turkey