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Putin is betting on a European retreat

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By Belgian MEP Johan Van Overtveldt (Belgian Finance Minister between 2014 and 2018, Chairman of the European Parliament’s Budget Committee)  

The new peace plan for Ukraine is not a plan, and it is certainly not meant to bring peace. The Trump Administration has done nothing less than rephrased and refined Putin’s Diktat on Ukraine and Europe at large. The European Union is once more sidelined, and we have only ourselves to blame for that.

Europe once again took its wishes for reality. The past weeks the belief grew in European capitals that American President Trump had really come around to the European view that only increased pressure on the Putin regime could lead to peace in Ukraine. His sanctions on Russian oil companies and renewed arms sales to Ukraine underpinned that belief. But flip-flopping remains the cardinal ingredient of the second Trump presidency.  That has already become clear in the days following the presentation of the President’s peace plan. The 28-point Ukraine-Russia peace plan drawn up by the Trump Administration in close collaboration with Moscow – or was it written in Moscow and just taken over by Washington? – indeed shows unequivocally that Washington is squarely back on Putin’s side. The critique on this plan can be summarized in seven points.

First

The timing of the coming out of this plan is not coincidental. Two factors played a crucial role. First there is the obvious weakening of President Zelensky’s position, internally and vis-à-vis the European Union, due to the corruption scandal that is closing in on the President himself. So, the chances of having to deal with a Zelensky ready (or forced) to offer major concessions have not been better since the start of Russia’s war of aggression. Secondly, American President Donald Trump is facing stark increases in his unpopularity – just check his disapproval ratings – and is probably facing additional tricky challenges following the release of the Epstein files. Bringing about peace between Ukraine and Russia would not only be a powerful diverter of attention but also jack up the man’s prestige, internally and on the world stage. The man’s obsession with the Nobel Peace Prize is becoming all-consuming and increasingly resembles, as the editorial board of the Financial Times phrased it, an “obsessional quest”. The plan foresees the installation of a Peace Council in charge of monitoring and guaranteeing the agreement, headed by President Donald J. Trump.

Second

Once again it is blatantly obvious that the Russian President is playing games with his American partner. Remember the Alaska meetings and their aftermath? While the new peace plan is on everybody’s minds and lips, the Russian army is intensifying its attacks on Ukraine’s energy and civil infrastructure with mounting death numbers among Ukrainian civilians. It is a devilish way of Putin showing that whatever comes of this peace plan, he and only he, and not Donald Trump, will decide what Russia will do next.

Third

The imbalances in the 28-point plan are undeniable. Just a few examples. Only Ukraine is forced to hold elections in 100 days. Ukraine has to halve its army and renounce on the possession of long-range missiles and NATO membership. Kyiv also has to hand over to Russia those areas of the Donbas region that the Russian army in the close to four years fighting has not even been able to conquer. I didn’t check in detail but it must be an absolute first in the history of peace settlements that the aggressor is so abundantly rewarded that he gets even unconquered territory thrown at him. To think in such terms is shameful, to actually insert them in a peace plan is beyond shameful and an open invitation to the aggressor to just go for it again. And Russia’s obligations? They are basically limited to several things that Putin is “expected” to do. That is about as vague and meaningless as are the American security guarantees for Ukraine.

“It must be an absolute first in the history of peace settlements that the aggressor is so abundantly rewarded that he gets even unconquered territory thrown at him”

Fourth

Trump’s transactional focus is all over the peace plan. The US, so the plan foresees, will receive compensation for its quasi-non-existent security guarantees for Ukraine. The US will also have the absolute lead in the eventual use of Russian frozen assets to rebuild Ukraine. It is worth quoting the plan here at length: “$100 billion in frozen Russian assets will be invested in US-led efforts to rebuild and invest in Ukraine. The US will receive 50% of the profits from this venture. Europe will add $100 billion to increase the amount of investment available for Ukraine’s reconstruction. The remainder of the frozen Russian funds will be invested in a separate US-Russian investment vehicle that will implement joint projects in specific areas” (my italics). No kidding, this is word for word part of the new plan.

Fifth

China is completely absent in the 28-point plan. The reality on the ground is that China’s support for Russia remains absolutely essential to keep Putin’s war machine going. The soundtrack coming out of Beijing is that China’s support for the Putin regime is unwavering. This support will allow Putin to reshape and re-strengthen his army in no time once peace in Ukraine is brought about. Getting the opportunity to reshape and re-strengthen his armed forces is the only reason why Putin his interested in a peace deal (on his terms) that will last for the time he considers to be optimal for his broader strategy to be further implementable.

“ Getting the opportunity to reshape and re-strengthen his armed forces is the only reason why Putin his interested in a peace deal (on his terms)“

Sixth

In the improbable case that this plan brings about peace, the European Union and its member states should look through the façade of it all. It would be a major mistake to start coming back on the initiatives taken to shore up European defense and security. If we are serious about democracy, personal freedom and open societies there is no turning back on this road. Vladimir Putin is betting on such a European retreat reaction because his grand strategy cannot and will not end with Ukraine. In that strategy Russia would become the leading and terms-dictating power on the European Continent. The man hates everything we stand for. We have to show firmly that we are not the cowards and weaklings that Putin is convinced we are.

Seventh

This latest initiative of Donald Trump should be the final wake-up call for Europe. We are not into the ‘game’ because we lack the power to bang on the table and because we are still ambiguous about our support for Ukraine. The whole discussion on the frozen assets illustrates this point perfectly. All countries want to use in one way or another the 140 billion euros immobilized at Euroclear. That’s to say, all countries but Belgium, because this country hosts Euroclear and has to face, as Prime Minister Bart De Wever has meticulously explained to his colleagues in the European Council, the potentially extremely high cost that can follow from a use of these immobilized funds for the support of Ukraine. For the sake of clarity: I’m a Belgian too and belong to the same party as the Prime Minister.

But if all other EU members co-guarantee, as most claim to be willing to do, the additional financing needed to keep Ukraine on its feet in the battle with Russia, why then do such a reckless and risky manoeuvre as using the Euroclear funds?

“The final wake-up call for Europe”

If there is real solidarity with Ukraine and within the group of EU member states then it is much more obvious and tactically more sound to just go to the capital market and borrow collectively the funds needed to shore up Ukraine in a guaranteed way for several years (and keep the Russian assets immobilized and untouched until further notice).
Combine that with an intelligent refinancing of the Recovery and Resilience Facility (RRF) debt – that is, the 700+ billion euro that the EU borrowed on the capital market to finance the post-Corona recovery and resilience plans of the member states. Such refinancing should push out in time the capital repayments of that debt and hence create for the first years extra space on the EU budget.

With such an initiative, Europe would show real determination and decisiveness in its support for Ukraine. Europe would then automatically be at the table when real peace talks start because Trump and Putin (and China) will have to face up to that determination backed up by powerful action. Even more than that, Europe would then be in a position to lay out its own plans for peace.  

 

Originally published on the blog of Johan Van Overtveldt. 

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