BRUSSELS — Ukraine’s war chest is less depleted than policymakers had feared and the country can sustain itself until early May, four people familiar with Kyiv’s finances told POLITICO. The fear had been that the Ukrainian authorities, who face a budget shortfall of at least $50 billion this year, would start running out of money at the end of March. That’s no longer the case after the International Monetary Fund approved an $8.1 billion loan to the war-torn country last month, disbursing $1.5 billion immediately. EU leaders agreed on a €90 billion lifeline to Ukraine in mid-December to help finance its defense against Russian forces. But Hungary recently blocked the initiative, accusing Ukraine of slow-walking repairs to the damaged Druzhba pipeline on political grounds to influence key elections that could oust incumbent Prime Minister Viktor Orbán. Kyiv has rejected the claims, saying the pipeline is too damaged to carry vital supplies of Russian oil to Hungary following a drone attack in late January. EU officials are scrambling to break the political deadlock ahead of the EU leaders’ summit next week. The extra cash cushion, however, gives the EU more time to overcome Hungary’s veto threats — such as after the Hungarian election next month. Separately, Dutch Finance Minister Eelco Heinen told his peers on Tuesday that his government has made provisions to send Kyiv €3.5 billion a year in bilateral support until 2029, two other diplomats told POLITICO.

BRUSSELS — The right to use Swiss franc banknotes and coins will be enshrined in Switzerland’s constitution after voters on Sunday backed a measure designed to safeguard the use of cash in society. Preliminary official estimates revealed 69 percent of voters backed the legal amendment, which the government proposed as a counter to a similar initiative by a group called the Swiss Freedom Movement. The Swiss Freedom Movement triggered the national referendum after its initiative to protect cash collected more than 100,000 signatures, triggering a national referendum. Its initiative secured only 46 percent of the final vote after the government said some of the group’s proposed amendments went too far. The vote means Switzerland will join the likes of Hungary, Slovakia and Slovenia, which have already written the right to cold, hard cash in their constitutions. Austrian politicians are also debating whether to follow suit, as people’s payment habits become increasingly digital — especially since the pandemic. The trend has fanned Big Brother conspiracy theories that governments aim to control populations by withdrawing cash altogether. The European Central Bank’s plans to issue a virtual extension of the euro have fanned those fears, prompting the EU’s executive arm to propose a bill that will cement physical cash in societies across the bloc. Switzerland, too, has seen a drop in cash payments over the past decade. More than seven out of 10 payments at the till were in cash in 2017. In 2024, cash only featured in 30 percent of in-shop transactions, according to data from the Swiss National Bank. The Swiss Freedom Movement has previously pursued campaigns to sack unpopular government ministers, ban electronic voting, and protect citizens from professional or social retribution if they refuse to be vaccinated against Covid-19 — none of which made it to the ballot box.

The Bank of Russia is suing the European Union for keeping its state assets frozen “for an indefinite period” to serve as collateral against a €90 billion loan to Ukraine. The lawsuit will test rare emergency powers that the European Commission used last year to keep Russian state assets across the bloc, worth some €210 billion, on ice through a qualified majority. The legal loophole nullified vetoes that Kremlin-friendly countries in the EU, such as Hungary, would otherwise have had. EU leaders agreed in mid-December to raise common debt without Hungary, Slovakia and Czechia to finance Kyiv’s defense against Russian forces. Ukraine will only have to pay back the loan once Moscow ends the conflict and pays war reparations. If the Kremlin refuses, EU leaders reserve the right to tap the cash value of the frozen assets to pay itself back. In a statement Tuesday, the Bank of Russia blasted the EU’s “unlawful actions against the Bank of Russia’s sovereign assets,” saying the regulation violates “the basic and inalienable rights to access justice” and the “principle of sovereign immunity of states and their central banks.” The central bank also argued the Council of the EU committed “serious violations” of its own procedures by adopting the measure by qualified majority rather than unanimity. The Commission plans to issue a statement in response to the lawsuit, which the central bank filed at the EU’s General Court in Luxembourg. Russia’s central bank filed a separate lawsuit in Moscow last year against Brussels-based financial depository Euroclear, where the bulk of its assets lie immobilized under EU sanctions after Moscow invaded Ukraine in 2022.

BRUSSELS — Ukraine’s cash-strapped government received a small reprieve in the early hours of Friday after the International Monetary Fund approved a new $8.1 billion loan to the war-torn country. The IMF will disburse some $1.5 billion from the loan straight away, as Kyiv’s coffers are set to empty in April after years of fighting against Russian invading forces. “It is very important for us that in the fifth year of a full-scale war, against the backdrop of systemic attacks on the energy sector, Ukraine has guaranteed international financial support from partners and a resource for the stable operation of the state,” Ukrainian Prime Minister Yulia Svyrydenko posted on Facebook after the IMF’s announcement. The international lender had initially demanded more assurances over Kyiv’s financial stability before approving the loan — this came when a majority of EU countries agreed late last year to raise €90 billion in joint debt to shore up Ukraine against Russia. But the IMF’s cash cushion is tiny. Kyiv’s budget shortfall is set to widen beyond $50 billion this year, putting pressure on the EU to overcome a dispute with Hungary that’s blocking crucial financial support. The EU’s planned €90 billion loan to Ukraine would help plug the gap. But Hungary is blocking the financing package amid accusations that Ukraine is deliberately slow-walking repairs to the damaged 4,000-kilometer Druzhba pipeline, which carries vital supplies of Russian oil to Hungary, on political grounds. Ukraine has dismissed the accusations. The European Commission has also downplayed the risk of an immediate energy crunch in Hungary, which has 90 days’ worth of oil supplies it can use. In the meantime, Brussels’ top brass is trying to solve the dispute without playing into an anti-EU political campaign that Hungary’s prime minister, Viktor Orbán, is pursuing ahead of a national election in April. The Hungarian leader has also weaponized anti-Ukraine sentiment ahead of the election, with his political party, Fidesz, trailing the opposition, Tisza, in the polls by a wide margin. A loss would see Orbán’s 16-year reign come to an end. GIVE AND TAKE Some diplomats in Brussels had feared Orbán’s veto could hold up the IMF loan. The world’s lender of last resort demanded greater assurances over Kyiv’s financial health before issuing a loan, after four years of war have more than doubled the country’s debt burden to 108.7 percent of economic output. That reassurance initially arrived in mid-December, when 24 EU leaders agreed to raise €90 billion in joint debt to help finance Ukraine’s defense against Russia. Kyiv will only have to repay the money once Moscow ends the war and pays war reparations — an unlikely scenario. If the Kremlin refuses, the EU could use the cash value of frozen Russian state assets across the bloc to pay itself back. None of that matters if Orbán refuses to withdraw his veto. Recent correspondence with European Council President António Costa, however, has suggested Orbán will drop his veto if the EU assesses the damage to the Druzhba pipeline. The Hungarian leader could also relent if Brussels approves Budapest’s application for a €16 billion defense loan, according to some diplomats. The Commission’s lawyers are studying the EU treaties to see whether a legal loophole could be used to nullify the Hungarian veto. That could take time — something Kyiv doesn’t have. “Ukraine and its people have weathered a long and devastating war for over four years with remarkable resilience,” the IMF’s managing director, Kristalina Georgieva, said in a statement. “Nevertheless, the war has taken a toll on economic and social conditions, with slowing growth and the outlook remaining subject to exceptionally high uncertainty.”

Hungarian Prime Minister Viktor Orbán on Monday blamed “an unprovoked act of hostility” from Ukraine to justify his decision to block the EU’s €90 billion loan to Kyiv, according to a letter he sent to European Council President António Costa. Orbán backed the loan in December on the basis that EU leaders exempted Czechia, Hungary and Slovakia from paying down the EU debt. That changed on Friday after Budapest and Bratislava accused Kyiv of slow walking repairs to the damaged 4,000-kilometer Druzhba pipeline, which carries Russian oil to Hungary and Slovakia. “Hungary did not oppose the decision based on the understanding that the loan will not have an impact on the financial obligations” of Prague, Budapest and Bratislava, Orbán wrote in a short letter, dated Feb. 23 and seen by POLITICO. “Recent developments have forced me to reconsider my position.” Costa’s office was not immediately available for comment. Ukraine’s war chest will run out in April without fresh funds, putting Kyiv at a disadvantage against Russian forces and ongoing U.S.-led peace talks with the Kremlin. A Russian drone attack in late January damaged the Druzhba pipeline, which transports Russian oil that is vital to Hungary’s and Slovakia’s energy needs. The European Commission last week said that both countries have 90 days’ worth of oil supplies to avoid an immediate energy crunch. Orbán said Kyiv has refused to restore crude oil supplies via the pipeline since mid-February on political grounds, an accusation Ukraine has dismissed. Hungary and Slovakia are exempt from EU sanctions on Russian product. Russian oil accounted for for 92 percent of Hungary’s energy imports last year, according to the Center for the Study of Democracy, a European policy institute. The Hungarian leader has weaponized anti-Ukraine sentiment ahead of April’s national election, with his political party, Fidesz, trailing the opposition, Tisza, in the polls by a wide margin. He has also used the pipeline issue to justify blocking the EU’s 20th sanctions package against Russia, which requires unanimous support to pass. Brussels had planned to unveil the package on the fourth anniversary of Moscow’s invasion of Ukraine, which is on Tuesday. Hungary can block the €90 billion loan because one of the three bills underpinning the financial aid also requires EU unanimity to expand the cash buffer of the EU’s long-term budget to issue the loan. EU ambassadors will discuss the sanctions package on Monday during the Foreign Affairs Council. Both initiatives remain stuck until the Druzhba pipeline crisis is resolved. “As long as this remains the case, Hungary will not support the amendment of the [multiannual financial framework] regulation necessary for the use of the EU budget headroom for the loan facility,” Orbán wrote.

BRUSSELS ― Hungary has thrown the EU’s planned €90 billion loan to Ukraine into crisis after threatening to block the deal until the flow of Russian gas resumes through the Druzhba pipeline. The Hungarian government issued the warning on Friday evening, as Prime Minister Viktor Orbán tries to weaponize anti-Ukraine sentiment ahead of a key election where he risks losing power after more than 15 years. “Ukraine is blackmailing Hungary by halting oil transit in coordination with Brussels and the Hungarian opposition to create supply disruptions in Hungary and push fuel prices higher before the elections,” Hungarian Foreign Minister Péter Szijjártó wrote on X. “We will not give in to this blackmail.” Hungary’s threat to veto the loan is a major setback for Ukraine, whose coffers will begin running low on cash from April. Kyiv will struggle to sustain its war effort without fresh funds, leaving it at a disadvantage in ongoing peace talks with Russia. The first signs of trouble began earlier in the day on Friday. Hungary’s ambassador to the EU demanded that its national assembly get the standard eight weeks to scrutinize EU legislation during a meeting of envoys in Brussels, three EU diplomats told POLITICO. EU ambassadors were set to give their final approval for the loan ahead of Tuesday, which marks the four-year anniversary of Russia’s invasion of Ukraine. In a fresh confrontation with Kyiv, Orbán is accusing the war-torn country of halting Russian gas to Hungary for political reasons. Ukraine rejects these claims, arguing that Russian strikes have damaged the energy infrastructure. The European Commission convened an emergency meeting earlier this week to solve the dispute over the Druzhba pipeline after Hungary and Slovakia retaliated by halting diesel supplies to Ukraine. EU leaders, including Orbán, agreed to the €90 billion loan in December following months of fraught negotiations. In a major concession, the EU exempted Hungary, Slovakia and Czechia ― who oppose giving further aid to Kyiv ― from repaying the borrowing costs of the loan. Budapest on Friday refused to clear one bill that requires unanimity to expand the cash buffer, known as the headroom, of the EU’s long-term budget to issue the loan. EU ambassadors backed the other two bills underpinning the Ukraine loan that only needed a simple majority for approval. As Russia’s firmest ally in the EU, Orbán has frequently threatened to block the EU’s financial support to Ukraine. UPDATED: This story has been updated to reflect Hungarian Foreign Minister Péter Szijjártó’s comments online.

Christine Lagarde said her “baseline” is that she will stay at the European Central Bank until her term as president ends in October 2027. “I think that we have accomplished a lot, that I have accomplished a lot,” she said in an interview with The Wall Street Journal, published on Friday. “We need to consolidate and make sure that this is really solid and reliable. So my baseline is that it will take until the end of my term.” Her comments come two days after a report in the FT, sourced to a single person “familiar with her thinking,” suggested the opposite. The article triggered controversy, implying that the appointment of the next ECB president could be moved up to deny a possible far-right president in France any say in the matter. President Emmanuel Macron is due to step down in April next year. Lagarde played down suggestions she would be complicit in undermining the independence of the ECB from political influence by going along with any such plan. “The ECB is a very respected and credible institution, and I hope that I’ve participated in that,” she said. Lagarde’s comments to The Wall Street Journal are the latest in a series of carefully caveated statements about her future that have generally left her some wiggle room. She confirmed that she is already thinking about her next move, telling the paper that “one of the many options” she is looking at is to take over running the World Economic Forum. The WEF’s founder Klaus Schwab said last year he had discussed the possibility of her leaving the Bank early to succeed him in Davos.

FRANKFURT — The head of Germany’s central bank has called for the EU to issue more joint debt, putting him at odds with Chancellor Friedrich Merz who wants to keep it strictly as a response to emergencies. “To make Europe attractive also means to attract investors from outside,” the German central bank governor, Joachim Nagel, told POLITICO ahead of an informal summit of EU leaders on Thursday to address the bloc’s economic challenges. “A more liquid European market when it comes to safe European assets would support that.” Eurozone central bankers — who have for the first time coalesced around support for joint debt — have sent EU leaders a wish-list of reforms to ensure that Europe’s economy can reform and keep pace with the U.S. and China. The European Central Bank’s policymakers, Nagel said in an interview on Friday, see “the benefits of creating a common European, highly liquid, euro-wide benchmark safe asset. Action is necessary.” But Nagel’s break from Germany’s traditional opposition to joint debt comes at an awkward time for Berlin. Earlier this week, the German government rebuked a rallying call from French President Emmanuel Macron to issue more eurobonds to boost certain sectors, such as artificial intelligence, European defense, semiconductors and robotics. The EU could also exploit U.S. President Donald Trump’s erratic foreign policy goals and lure global investors across the Atlantic. “The global market … is more and more afraid of the American greenback. It’s looking for alternatives. Let’s offer it European debt,” Macron told a group of reporters on Monday. Joint debt, known by the market shorthand of “eurobonds,” has long been a divisive topic. Since the sovereign debt crisis, southern European governments have pushed for eurobonds to spread the burden of national debt more evenly across the region. Frugal northern states, by contrast, have warned they risk undermining fiscal discipline — and have refused to put their taxpayers on the hook for debts racked up elsewhere. The Bundesbank has long been the de facto leader of the skeptics in northern and central Europe who believe eurobonds are best suited to isolated crises that require drastic action. These include an €800 billion post-pandemic recovery plan and a €90 billion loan to Ukraine to finance its defense against Russia. The last thing the so-called frugal bloc wants is for the EU to get into the habit of raising common debt to solve all of its issues. But times are fast changing. “Tradition is something that is a reflection of the reality of the past,” Nagel said when asked about the Bundesbank’s shift, stressing that Europe’s security has not been as threatened as today since World War II. “Now we have a different reality.” EUROBONDS, WITH LIMITS Support for joint debt does not mean the Bundesbank is dropping its commitment to ensuring sound fiscal policies. A European asset would only support “specific purposes,” and “how it is controlled by the European authorities and the Member States should be equally clear,” the 59-year-old said. Eurobonds must also be accompanied by debt reduction at the national level. “European debt is not a free lunch. And doubts about fiscal sustainability should not jeopardize the chances for improved common policies,” he said. Nagel stopped short of saying how much EU debt is needed to achieve real change. “I won’t give you a number,” he said, but added that “if you want to create something liquid, you have to give the markets an indication about the volume that you will supply over a certain period of time and for a certain purpose.” The central banker would not be drawn into whether Berlin might also adjust its views to reflect the new reality. “I see my role as giving advice on what could be a way out of a complicated situation that we are confronted with in Germany and in Europe,” he said. AUTONOMY, NOT SUPREMACY But a more efficient euro capital market is only one front in the battle to secure Europe’s economic independence and autonomy, Nagel said, adding that it will be equally important to ensure that the continent’s payment system can function independently from outside pressure. “Payment solutions, in an extreme scenario, could be weaponized,” he said.  Accordingly, he argued, the bloc needs to break the duopoly that U.S. credit card giants Mastercard and Visa hold over Europe’s payment rails across its borders. The key to payment security, he went on, is to mint a virtual extension of euro banknotes and coins that can settle transactions across the EU in seconds. The twin projects of the digital euro and perfecting the euro capital market may help boost Europe’s strength and autonomy, but still don’t amount to a masterplan to steal the dollar’s crown. And Nagel added that last week’s hint by the ECB about expanding its liquidity lines to central banks around the world, securing companies’ access to euros in times of stress, should not be seen as motivated by a political desire to boost the euro. “It is about monetary policy,” he said. Since last summer, Lagarde has urged Europe to seize a “global euro moment” as cracks began to appear in U.S. dollar dominance. While Nagel believes that “the euro could play here a significant role” as investors rebalance their portfolios to adjust to the new reality, he is not a fan of quick shifts. “I’m not in favor of fast tracking, jumping from one level to the next,” he said. “Often, such a development is not a very healthy one. I’m comfortable with gradual progress on the international role of the euro, as long as it’s moving in the right direction.”

BRUSSELS — Ukraine’s war chest stands to get a vital cash injection after EU envoys agreed on a €90 billion loan to finance Kyiv’s defense against Russia, the Cypriot Council presidency said on Wednesday. “The new financing will help ensure the country’s fierce resilience in the face of Russian aggression,” Cypriot Finance Minister Makis Keravnos said in a statement. Without the loan Ukraine had risked running out of cash by April, which would have been catastrophic for its war effort and could have crippled its negotiating efforts during ongoing American-backed peace talks with Russia. EU lawmakers still have some hurdles to clear, such as agreeing on the conditions Ukraine must satisfy to get a payout, before Brussels can raise money on the global debt market to finance the loan — which is backed by the EU’s seven-year budget. A big point of dispute among EU countries was how Ukraine will be able to spend the money, and who will benefit. One-third of the money will go for normal budgetary needs and the rest for defense. France led efforts to get Ukraine to spend as much of that as possible with EU defense companies, mindful that the bloc’s taxpayers are footing the €3 billion annual bill to cover interest payments on the loan. However, Germany, the Netherlands and the Scandinavian nations pushed to give Ukraine as much flexibility as possible. The draft deal, seen by POLITICO, will allow Ukraine to buy key weapons from third countries — including the U.S. and the U.K. — either when no equivalent product is available in the EU or when there is an urgent need, while also strengthening the oversight of EU states over such derogations. The list of weapons Kyiv will be able to buy outside the bloc includes air and missile defense systems, fighter aircraft ammunition and deep-strike capabilities. If the U.K. or other third countries like South Korea, which have signed security deals with the EU and have helped Ukraine, want to take part in procurement deals beyond that, they will have to contribute financially to help cover interest payments on the loan. The European Parliament must now examine the changes the Council has made to the legal text. | Philipp von Ditfurth/picture alliance via Getty Images The text also mentions that the contribution of non-EU countries — to be agreed in upcoming negotiations with the European Commission — should be proportional to how much their defense firms could gain from taking part in the scheme. Canada, which already has a deal to take part in the EU’s separate €150 billion SAFE loans-for-weapons scheme, will not have to pay extra to take part in the Ukraine program, but would have detail the products that could be procured by Kyiv. NEXT STEPS Now that ambassadors have reached a deal, the European Parliament must examine the changes the Council has made to the legal text before approving the measure. If all goes well, Kyiv will get €45 billion from the EU this year in tranches. The remaining cash will arrive in 2027. Ukraine will only repay the money if Moscow ends its full-scale invasion and pays war reparations. If Russia refuses, the EU will consider raiding the Kremlin’s frozen assets lying in financial institutions across the bloc. While the loan will keep Ukrainian forces in the fight, the amount won’t cover Kyiv’s total financing needs — even with another round of loans, worth $8 billion, expected from the International Monetary Fund. By the IMF’s own estimates, Kyiv will need at least €135 billion to sustain its military and budgetary needs this year and next. Meanwhile, U.S. and EU officials are working on a plan to rebuild Ukraine that aims to attract $800 billion in public and private funds over 10 years. For that to happen, the eastern front must first fall silent — a remote likelihood at this point. Veronika Melkozerova contributed reporting from Kyiv.

BRUSSELS — The U.S. and EU are hoping to attract $800 billion of public and private funds to help rebuild Ukraine once Russia ends its full-scale invasion, according to a document obtained by POLITICO. The 18-page document outlines a 10-year plan to guarantee Ukraine’s recovery with a fast-tracked path toward EU membership. The European Commission circulated the plans with EU capitals ahead of the leaders’ summit Thursday evening where the document, dated Jan. 22, was addressed, according to three EU officials and diplomats who were granted anonymity to talk about the sensitive topic. While Brussels and Washington are lining up hundreds of billions of dollars in long-term funding and pitching Ukraine as a future EU member and investment destination, the strategy hinges on a ceasefire that remains elusive — leaving the prosperity plan vulnerable as long as the fighting continues. The funding strategy stretches until 2040 alongside an immediate 100-day operational plan to get the project off the ground. But the prosperity plan will struggle to attract outside investment if the conflict rumbles on, according to the world’s largest money manager, BlackRock, which is advising on the reconstruction plan in a pro-bono capacity. “Think about it. If you’re a pension fund, you’re fiduciary towards your clients, your pensioners. It’s nearly impossible to invest into a war zone,” BlackRock’s vice chairman, Philipp Hildebrand, said Wednesday in an interview at the World Economic Forum in Davos. “I think it has to be sequenced and that’s going to take some time.” The prosperity plan is part of a 20-point peace blueprint that the U.S. is attempting to broker between Kyiv and Moscow. It explicitly assumes that security guarantees are already in place and is not intended as a military roadmap. Instead, it focuses on how Ukraine can transition from emergency assistance to self-sustaining prosperity. A three-way meeting between Ukraine, Russia and the U.S. will take place in Abu Dhabi on Friday and Saturday, as the all-out conflict nears its fourth anniversary. The U.S. is set to play a prominent role in Ukraine’s recovery. Rather than framing Washington primarily as a donor, the document positioned the U.S. as a strategic economic partner, investor and credibility anchor for Ukraine’s recovery.  The note anticipates direct participation by U.S. companies and expertise on the ground, and highlights America’s role as a mobilizer of private capital. BlackRock’s chief executive, Larry Fink, has sat in on peace talks with Kyiv alongside U.S. President Donald Trump’s son-in-law, Jared Kushner, and his special envoy, Steve Witkoff. SHOW ME THE MONEY Over the next 10 years, the EU, the U.S. and international financial bodies, including the International Monetary Fund and the World Bank, have pledged to spend $500 billion of public and private capital, the document said. The Commission intends to spend a further €100 billion on Kyiv through budget support and investment guarantees, as part of the bloc’s next seven-year budget from 2028. This funding is expected to unlock €207 billion in investments for Ukraine. The U.S. pledged to mobilize capital through a dedicated U.S.-Ukraine Reconstruction Investment Fund, but did not attach a figure.  While Trump has slashed military and humanitarian support to Ukraine during the war, it showed willingness to invest in the country after the end of the conflict. Washington said in the document that it will invest in critical minerals, infrastructure, energy and technology projects in Ukraine.  But business is unlikely to boom before the eastern front falls silent. “It’s very hard to see that happening at scale as long as you have drones and missiles flying,” BlackRock’s Hildebrand said. Kathryn Carlson reported from Davos, Switzerland.