December 12, 2025 - 7:00am
Ukraine peace negotiations are not going the way the Europeans want them to. The issue is what will happen to Russian assets, which is a potential peace dealbreaker.
As the Wall Street Journal reported this week, the Trump administration is considering using frozen Russian assets for projects in Ukraine but believes the funds would be exhausted too quickly without substantial private investment. The proposed approach would use the assets as collateral for a loan to cover Ukraine’s fiscal deficit. The US plan involves enlisting private equity billionaires to leverage the Russian funds into much larger private investments, reportedly totaling $800 billion, all under US management.
The US is correct in that the European loan won’t go far. The US scheme is five times larger. But behind these alternatives stand two diametrically opposed attitudes to finance: the loan versus the equity investment. It pitches US and European interests against one another.
This is also consistent with draft documents published by the Washington Post, according to which the peace deal is no longer a single document, but three separate agreements: the narrow peace deal itself, the long-term security arrangements, and a post-war economic recovery plan. In the draft obtained by the Post, the critical idea for the narrow peace plan would be a Korea-style demilitarized zone around the yet-to-be-agreed border. Behind the DMZ, there would be a deep buffer zone where heavy weapons would be banned.
This report must be taken with a pinch of salt. There are some suggestions that a DMZ would be a dealbreaker for Russia, like Nato Article 5 security guarantees for Ukraine. Another rather strange item on the list is that Ukraine’s EU membership is targeted for 2027. That is most likely a leaked Ukrainian proposal. Even the officially envisaged date of 2030 is a stretch. EU membership would not only require Ukraine to tackle widespread corruption, but it would also necessitate changes to the EU budget and voting procedures. This represents a significant administrative and bureaucratic challenge.
What is likely true, however, is that the peace plan is being negotiated along three separate but related questions. It is also plausible that as these talks progress, the economy would become the most important issue, since security guarantees are out of the question.
So this is not a final-stage document, and the peace process will go on for a while yet. But we have moved beyond the snakes-and-ladder phases where the Europeans come up with their own proposals merely with the view to shoot down what the Trump administration is negotiating.
The Europeans have, unfortunately, maneuvered themselves into a bad position, with no realistic plan for war or peace. If a deal is agreed, it would leave the US and Russia with business opportunities, and the EU with the costs of funding Ukrainian EU membership.
If there is no deal, Ukraine can expect to lose more land, while Russia increases gray war attacks on European infrastructure. And without the support from the US, the Europeans would struggle to help Ukraine and rebuild their own militaries. In either scenario, they lose.
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