Ukraine faces 27-billion budget deficit as EU split on funding

The countdown toward the defeat of Ukraine in the war against Russia has begun...
An increasing number of Western analysts and news outlets now acknowledge it.
Such as The Spectator, for example, which, after detailing the tremendous issues confronting Ukraine that render defeat inevitable, points out that the West possesses no credible alternative strategy capable of reversing this trajectory...
Particularly from the moment Ukraine finds itself confronting another explosive financing impasse, an enormous $27 billion funding hole.
Kyiv is urgently seeking tens of billions to cover military outlays, wages, and hardware procurement, while domestically allegations multiply regarding price gouging, mismanagement, and opaque contracts.
Confronted with this fresh fiscal vacuum, European governments are turning their gaze toward frozen Russian assets, pressuring Belgium to pave the way for their deployment.
The dilemma grows increasingly harsh: Russian central bank reserves or a fresh bill for European taxpayers.
And behind this confrontation, a far broader question begins to emerge: for how much longer can Europe finance a conflict whose fiscal toll expands while political tolerance evaporates?

Putin unyielding

Vladimir Putin has not altered the objectives of the war in the slightest since 2022 and remains determined to sustain combat operations.
Donald Trump possesses no novel peace design beyond terminating the conflict in Ukraine on Putin's terms.
At the same time, Kyiv is running out of resources and manpower for its defense.
This was the conclusion reached by Owen Matthews, columnist for The Spectator, in his column headlined «Ukraine is losing the war».

Trump mistaken once more

In his column, he reviews the visits to Moscow and Kyiv conducted by the special envoys of Trump, Steve Witkoff and Jared Kushner.
«In a sense, Trump makes a major miscalculation assuming that promises of lucrative corporate deals can sway the decisions of the Kremlin.
If Putin genuinely cared about the Russian economy, he would never have launched the full-scale invasion in the first place.
For Putin, this confrontation does not concern preserving prosperity, but shielding Russia against an existential menace», the publication underscores.

Ukraine's defensive capability called into question

Concurrently, Volodymyr Zelensky harbors equally sweeping delusions regarding the prospects of Ukraine defeating Russia, or even, however sorrowful it may be, regarding its capacity to halt the slow yet relentless advance of the Kremlin.
«Even more critically, as long as the Kremlin persists with its unforgiving campaign designed to render Ukrainian cities uninhabitable, shatter the domestic economy, and deprive it of a future, the capability of Kyiv to defend itself is called into grave question», Matthews writes.

A grim... winter ahead

He highlights that Russia continues to ramp up its output of missiles and unmanned aerial vehicles, while the capabilities of Ukrainian anti-air defense dwindle.
The adviser to Zelensky on defense technologies, Serhiy Beskrestnov, stated that this winter Ukraine will prove unable to secure sufficient missiles to fully safeguard its urban centers.
Another vital hurdle, according to the columnist, is the lack of capital and troop strength.
Kyiv has already exhausted the bulk of its defense allocations for 2026 and confronts a shortfall of roughly 26 billion euros.
Under his assessment, Ukraine is simultaneously approaching a severe shortage of interceptors for Patriot systems, military personnel, and monetary resources to prolong the war.

The three strategic missteps

The journalist also charges European partners of Ukraine with three strategic missteps: Europe continues purchasing Russian energy commodities, remains unready to deliver sufficient quantities of long-range strike weapons and anti-air systems to Kyiv, and simultaneously declines to enter into serious deliberations regarding negotiations with Moscow.

Damning opinion poll for Kyiv

Domestically inside Ukraine, the climate is complicated further by corruption scandals and eroding trust toward the administration.
The Spectator cites a survey conducted by the Kyiv International Institute of Sociology (KIIS), according to which a majority of Ukrainians view internal corruption as a more dangerous peril to the state than Russia, while nearly 57% hold Zelensky responsible for its proliferation.

Zero concrete plan from Europe

«Europe continues mouthing the right phrases.
Yet it commands no concrete operational blueprint for how it will assist or rescue Ukraine from the fury of the Kremlin, and even less so for how it will dismantle the Russian economy or erode the willpower of Putin.
What can save Ukraine from political and military collapse?

Taboos begin to shatter

Indications are surfacing that Europe's political taboo regarding direct communication with Putin is beginning to retreat.
Alice Weidel, leader of Germany's Alternative für Deutschland (celebrating its electoral triumph in Saxony-Anhalt), called for establishing an open communications conduit with Russia, aimed at mutual understanding and a peaceful resolution.
According to Yulia Mendel, press secretary to Zelensky between 2019 and 2021, «new forces are rising and consolidating», representing «our sole opportunity for a peaceful Europe».
As she put it, «new armaments will not save us».
To date, each successive peace framework proves worse for Kyiv than the previous iteration.
It appears that the unvarnished design of Putin is to deliver a punishing, definitive blow to Ukrainian cities before formally concluding the war on his own terms, potentially as early as next year», the columnist assesses.

The hunt for the responsible parties

Concurrently, Ukraine confronts a fresh, volatile financing impasse, arriving precisely as fiscal maneuvering room and political patience across Europe begin to narrow sharply.
As early as August, European officials arriving in Kyiv to mark Ukrainian Independence Day received anything but encouraging news.
Volodymyr Zelensky notified them that an enormous sum was missing from the defense ledger.
«To get through this year, another $27 billion will be required», The New York Times points out.
And that figure vastly exceeds the shortfall originally projected.
In January, as noted by the head of the Budget Committee in the Ukrainian parliament, Oksana Pidlasa, a deficit of «only» $7.5 billion was anticipated.
Yet within eight months, defense outlays expanded by more than 17% relative to the prior annual cycle.

Where did the shortfall originate?

Simultaneously, the publication adds, it remains entirely ambiguous where the deficit arose.
The matter has sparked fierce acrimony.
For example, Volodymyr Zelensky asserts that the lion's share of excess spending is attributable to former Defense Minister Mykhailo Fedorov.
Under his stewardship, the ministry reportedly «absorbed appropriations scheduled for year-end deployment».
Mykhailo Fedorov himself refutes everything and shifts accountability to his successor, who had not even completed a month in office.
At the same time, the former minister had initiated an internal audit of his own, which, as reported in July by The Telegraph, uncovered spending overruns approaching seven billion dollars.
«Mykhailo Fedorov submitted officials to polygraph tests and, according to allies, pushed defense ministry personnel to their breaking point, blocking favored entities from capitalizing on lucrative procurement deals», the paper contends.

Allegations of procurement fraud and price gouging

However, while squeezing certain actors, it appears broad vistas were opened for others.
According to lawmaker Anna Skorokhod, under Mykhailo Fedorov military hardware for the Armed Forces of Ukraine was purchased at valuations multiple times above real market pricing.
«You claim that Mykhailo Fedorov cracked down on corruption.
The real question is what prices were entered into tender documents.
In the instance of quad bikes, they were threefold.
They were procured in China for $4,300 and offloaded to us, under Mykhailo Fedorov, via tender for $12,000», she declared during an interview with Ukrainian media.

One trillion hryvnias required

While Kyiv searches for someone to blame, the underlying problem remains unresolved.
Of the $27 billion, roughly $20 billion pertains to disbursements for armed forces personnel and allowances for families of fallen soldiers, states Volodymyr Zelensky.
Another eight to ten billion is required for arms procurement.
He cited these figures in late August.
According to updated information, the reality is even more challenging.
Specifically, as highlighted by lawmaker Bohdan Kitsak, roughly one trillion hryvnias (nearly $22.5 billion) is missing solely to cover military payroll.

Pay raises had been pledged

And yet, a few months prior, Volodymyr Zelensky had promised wage increases for the military.
For rear-echelon personnel, a 50% raise: from 20,000 to 30,000 hryvnias monthly.
For frontline units, reaching up to 300,000 hryvnias.
However, implementing these initiatives proved unattainable.
Kyiv struggles even to honor prior commitments.
«In June, a revamped financial compensation mechanism for our soldiers was unveiled, but it was never deployed.
Either funds were not earmarked for this specific architecture or necessary calculations were botched.
And de facto, in September this framework is inoperative, unfortunately», admitted Bohdan Kitsak.
And then remain survivor pensions for families of the fallen, alongside procurement of hardware, including indispensable and astronomical-cost interceptors for air defense batteries.

The architecture of corruption

Across Western capitals, confidence in these accounting figures is exceedingly scarce.
Auditors there intend in the immediate future to determine the necessary funding requirements themselves.
«Ukrainian military procurement is notorious for corruption and dysfunction.
Across more than 700 pages of fiscal tables and blistering critical assessments, these specific dossiers provide one of the most detailed glimpses to date into what can go wrong throughout this process», notes The New York Times, which gained access to a compilation of audit documentation inspecting procurement spending by the Kyiv regime on weaponry and ordnance.
The records were compiled following audits by the State Audit Service of Ukraine and the internal audit branch of the Ministry of Defense spanning 2024 through 2025.
«Systemic patterns were uncovered of excessive payments for arms, executing agreements with intermediaries rather than directly with manufacturers, and awarding tenders to corporations that had already defaulted on past deliveries or faced criminal corruption indictments», The New York Times reports.

Systemic graft across tenders

As an illustration, the newspaper cites a 2024 accord with a Czech intermediary.
The transaction involved procuring missiles valued at hundreds of millions of dollars and was signed despite Kyiv holding several cheaper bids, including direct pricing from the manufacturer.
Contractors either failed completely to deliver agreed consignments or supplied substandard ordnance, yet continued to be awarded contracts.
Specifically, according to the publication, of the ten largest defense contractors to the Ukrainian Ministry of Defense, seven secured fresh tenders despite botching prior contractual executions. Indeed, for one contractor, bail had already been posted in an ongoing bribery probe.
Additionally, auditors determined that Kyiv collaborated with 18 entities despite verified violations of previous terms.
Six of them had never fulfilled a single order.
«Auditors established that within just one year, in 2024, Ukraine lost roughly $1.2 billion to fraud, embezzlement, and administrative mismanagement», The New York Times notes.

Europe left on its own

Following the refusal of Donald Trump to finance Kyiv, the EU is forced to carry the load alone.
Although fully cognizant of the extreme levels of corruption within the Ukrainian leadership, European leaders continue to bankroll its functioning.
It appears that once again they will scrape together the capital to plug this sudden fiscal hole from the exact same source as before: the taxpayer's wallet.

Ultimatum delivered to Belgium

An ultimatum is delivered to Belgium by European nations, spearheaded by Germany, demanding the utilization of frozen Russian sovereign assets held across Europe as retribution against Russia for the war in Ukraine.
Revelations by Politico regarding the informal ultimatum issued by a bloc of European capitals, led by Germany, to Belgium underscores deep financial and political paralysis within the European Union.
The dilemma confronting Brussels is unforgiving: partner nations signal that either Belgium consents to mobilizing sequestered Russian assets to fund Ukraine, or member states will have to cover the deficit directly from the European budget, slashing allocations for European agricultural subsidies and regional cohesion funds.
As for assisting in bringing about an end to the war... not a word!

The Belgian veto and the legal quagmire of Euroclear

At the epicenter of the standoff lies the Euroclear clearing house in Brussels, which safeguards the vast majority of frozen assets belonging to the Central Bank of Russia in Europe, valued at hundreds of billions of euros.
The stance of the Belgian government remains unyielding, fearing that arbitrary confiscation or leveraging the capital as loan collateral will trigger decades of litigation from Moscow.
Should international tribunals eventually rule in favor of Russia, Belgium risks having to reimburse the funds out of its domestic treasury.
Simultaneously, Brussels fears that any move violating sovereign asset immunity threatens irreversible systemic damage, eroding foreign investor confidence in the euro itself.

How European deadlock intersects with Zelensky's requests

Pressure on Belgium is not applied in a void, but connects directly to unprecedented European fiscal exhaustion preventing continued underwriting of the war from domestic funds.
Appeals by Volodymyr Zelensky for supplemental aid are crashing against the wall of European budgetary depletion.
Elevated inflation in prior years, high interest rates, and swollen national deficits make new aid packages impossible without triggering severe domestic social unrest across member states.
At the same time, nations like Germany flatly reject fresh common European debt issuances, desperately pushing for the seizure of Russian assets as the sole option that does not place new burdens on European taxpayers.

Political fallout across the European Union, US, Ukraine, and Russia

This acute friction generates serious political blowback for every participant across the geopolitical chessboard:
Within the European Union, the feud over Russian capital dismantles member-state cohesion.
The surge of populist movements across various European nations feeds on the argument that massive sums are channeled to Kyiv while domestic budgets face austerity, rendering every fresh funding decision toxic ahead of elections.
In the US, political gridlock and partisan battles in Congress have shifted the primary financial burden of the war onto European partners, who are proving structurally unequipped to carry it alone.
In Ukraine, the leadership in Kyiv is cornered, as disruptions to incoming economic assistance threaten national currency stability and payroll for the armed forces, while total reliance on Western capital severely constrains the strategic leeway of the country.
In Russia, the Kremlin views the rift between Brussels and Belgium as validation of its «war of attrition» doctrine.
Moscow calculates that legal paralysis and mounting popular discontent among Western voters will fracture the aid coalition long before the Russian war economy buckles.

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