Financial markets greeted the EU’s €90 billion ($105 billion) Ukraine funding deal with a collective shrug.
German Bunds—government bonds that serve as Europe’s benchmark for safe debt—dipped slightly in Asian trading Friday. The euro eased marginally against the dollar.
Misplaced calm
“While the geopolitical landscape has eased in H2 2025, there is also a risk that this recent détente is making markets complacent,” George Boubouras, head of research at K2 Asset Management, told Reuters. “This is a risk for 2026 that is not priced in.”
Hours before the deal, Ukrainian President Volodymyr Zelenskyy warned that failing to use frozen Russian assets would embolden Putin. “If Ukraine doesn’t have this money, it’s in a weaker position, and Putin’s temptation to seize us grows,” he said. “It’s absolutely clear he definitely won’t want any diplomacy, any dialogue.”
EU leaders did exactly what Zelenskyy cautioned against—borrowing fresh money rather than touching Russia’s €210bn ($245bn).
German Chancellor Friedrich Merz had been the loudest voice pushing to use frozen Russian assets. As the leader of the EU’s largest economy, his failure to deliver stung. German media were blunt: Die Welt called it “a black day” for Merz. T-online wrote that “Putin will be pleased” by the compromise, which avoids open confrontation with the aggressor.
The China factor
One market analyst explained why investors aren’t panicking: the alternative was worse.
“The big risk of using Russian assets to fund Ukraine’s war effort is that it would cheapen European government paper,” Kyle Rodda of Capital.com explained to Reuters. If Beijing concluded that European holdings could be seized for political reasons, “it’s not worth buying European debt.”
So the EU chose to borrow instead—and European taxpayers, not Russia, will foot the bill. Markets may be calm now. Whether European businesses stay calm in the long run as the debt mounts is another question.
