For the past four-and-a-half years, the war on Europe’s doorstep has haunted policymakers. Yet they have treated it as a looming threat rather than one already eroding the very foundations on which Europe stands. Russia’s war has devastated much of Ukraine’s south and east, even as the front lines have shifted only slowly.
For Europe, however, the challenge has never been confined to the battlefield. Supporting Ukraine and constraining Russia have tested the continent’s economic resources and political unity. Now, as United States President Donald Trump seeks to force a disadvantageous settlement on Kyiv and repeatedly threatens to withdraw US support, Europe faces the prospect of shouldering even more of that burden alone.
Even if the latest crisis is averted, Europe can no longer assume that Washington will guarantee its security. It must develop the financial capacity to sustain Ukraine’s defence, the industrial strength to defend itself and the economic leverage to constrain Moscow. To meet these challenges, Europe must build a war economy.
The past four years offer lessons in how Europe can finance such an effort, but also warnings about the divisions that could undermine it. The European Union has already been at the forefront of Ukraine’s recent financing, moving from an 18.1-billion-euro ($21bn) share of the G7’s $50bn Extraordinary Revenue Acceleration (ERA) loans in 2024 to finalising a new 90-billion-euro ($100bn) loan this April, one that came without US commitment. Yet internal divisions remain over numerous issues, particularly as they pertain to constraining Russia.
This month, the EU adopted its largest-ever round of sanctions listings. But while the measures added a record number of designations, they did little to broaden the scope of restricted activity and did not accelerate the phase-out of Russian energy imports, with pipeline gas imports still permitted until autumn 2027. European leaders have also expressed concern over Trump’s decision to waive new Russia-related sanctions as he seeks to grapple with the costs his foreign policy has wrought.
However, the US-Israel war on Iran has, if anything, shown that Europe’s measures against Russian hydrocarbons could have gone further. Before February, some 20 million barrels per day (bpd) of crude and oil products and roughly 110 billion cubic metres (bcm) a year of liquefied natural gas (LNG) passed through the Strait of Hormuz. By comparison, Russia exported about 6.5 million bpd of oil and products in September, and some 43bcm of LNG last year – about a third of Hormuz’s oil and two-fifths of its LNG.
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