Volodymyr Zelenskyy and European leaders (Photo: Ludovic Marin/Pool via REUTERS)
President Volodymyr Zelenskyy’s recent statement that
Ukraine faces an unexpectedly large $27 billion defense budget
shortfall through the end of 2026 has surprised and alarmed Kyiv’s European
allies, The New York Times reported
on Sept. 9, citing European diplomats.
The $27 billion figure was first mentioned last month, when
scores of European officials arrived in Kyiv to mark Ukraine’s Independence Day
on Aug. 24.
“In private, some have questioned whether money is being
spent efficiently, two European officials said, or whether needs are being
overstated,” the report said.
European officials are now seeking to determine how the
shortfall arose, its exact size, and whether additional funds should be
provided in 2026, and, if so, how. Kyiv has also approached the UK, Canada, and
Japan for help covering the gap, according to The New York Times.
“The surprise request threatens to complicate Ukraine’s
relationship with allies at a moment it needs their support,” the article adds.
“The United States has stepped back from backing Kyiv
financially, making European money more essential. But national leaders must
balance their support for Ukraine with domestic spending priorities, or risk
angering voters.”
The Ukrainian budget shortfall also serves as a “stark
reminder” that the cost of supporting Ukraine is rising, NYT noted.
“The nation faces relentless attacks from Russia, including
strikes on ports that have deprived it of a major source of revenue,” the
report said.
“It is also critically low on U.S.-made interceptor missiles
capable of shooting down ballistics, and is trying to scale up development of
its own alternatives.”
In April, the European Union approved a EUR90 billion ($105
billion) loan for Ukraine after a contentious political process. The assistance
is to be distributed over two years: half in 2026 and the remainder in 2027.
“Paying it out faster may be the only workable option for
getting Ukraine more cash quickly, eight European diplomats and officials
agreed,” NYT said.
“Some European officials have suggested that momentum is
building behind such a plan.”
Ukraine is also urging the EU to confiscate roughly $200
billion worth of frozen Russian assets, currently held in the Belgian clearing
house Eurocelar. The last time the move was debated, last-minute opposition from
Belgium forced Europe to settle on a joint loan instead.
“Belgium remains skittish, worried that seizing a foreign
nation’s assets could trigger a financial crisis by sending a signal that
foreign cash can be seized for political reasons, causing those savers to pull
their money out of Euroclear and other European financial institutions,” the
newspaper said.
“Given such barriers, any agreement to use the frozen money
would take months, if one is possible at all.”
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