Europe’s War Bet Is Coming Due

Europe built its Ukraine policy on a wager.

Not simply that Ukraine would survive. Not simply that Russia could be weakened.

The wager was broader and more hazardous. It assumed the world itself had not changed. It assumed American underwriting remained permanent. It assumed sanctions still delivered decisive outcomes. And it assumed Europe could finance a long war without ever being forced to confront the full cost.

That wager is now failing, slowly but visibly.

The United States remains the most formidable military and financial power in the system. But hegemony is not a possession. It is a relationship between power and consent, between guarantees and credibility. What is eroding is not American capability, but American predictability and willingness to underwrite open ended commitments.

Allies no longer assume Washington will absorb burdens indefinitely. Rivals no longer assume American pressure is final. Middle powers no longer treat alignment as destiny. They hedge. They diversify. They build options.

The system has shifted from command to negotiation.

Europe behaved for too long as if it had not.

The Rise of Parallel Power

BRICS is not a replacement empire. It is not a coherent bloc with a single currency, army, or ideology. Its importance lies elsewhere.

It functions as a coordination platform for states seeking insulation from Western leverage. Its expansion matters not because it displaces existing institutions, but because it normalises plural alignment.

States that once treated Western finance, custody, and settlement as unavoidable now treat them as optional. They continue to use them, but they plan around them.

This is how hegemonies actually weaken. Not through collapse, but through erosion.

The dollar remains dominant. Western markets remain deep. But the direction of travel is clear. More trade is settled in local currencies. More financing bypasses traditional channels. More states resist being drawn into enforcement regimes they did not design. Sanctions still bite, but they also instruct. Each round of coercion accelerates the search for alternatives.

Europe underestimated this dynamic because it mistook the existing order for something natural rather than constructed. It assumed the pipes would always work, and that no one would object when those pipes were turned into instruments of pressure.

Europe’s Strategic Blind Spot

Europe’s post Cold War settlement rested on three pillars. American security guarantees. Open global trade. And the belief that integration could neutralise geopolitical conflict.

The Ukraine war struck all three simultaneously.

Rather than reassess, Europe doubled down.

It framed the conflict as a moral contest to be resolved by unity and endurance. It assumed sanctions would hollow out Russia’s state capacity. It assumed American support would remain structural rather than discretionary. And it assumed, quietly but decisively, that defeat was not a plausible outcome.

It failed to price duration. It failed to price dependency.

By 2024, Ukraine was reliant on external financing for basic state functions. Europe stepped in at scale. Budgets were rewritten. Fiscal rules were stretched. Dedicated instruments were constructed to channel grants and loans on a scale previously considered politically untenable.

This was not charity. It was necessity.

But necessity depends on foundations. And those foundations were not under European control.

The Schism: When the Guarantee Became Conditional

The decisive rupture did not arrive with a declaration. It arrived with an act.

On 3 March 2025, following a public confrontation between President Trump and President Zelensky, the United States paused military assistance and intelligence cooperation with Ukraine. The pause was brief. Assistance resumed after talks mediated in Saudi Arabia.

That detail is irrelevant.

What mattered was that the pause occurred at all. For the first time, European governments saw confirmation that American support could be suspended unilaterally, without consultation, and without any rule they could rely upon.

Within days, European leaders convened emergency consultations. On 6 March 2025, the European Union held an extraordinary summit focused explicitly on the possibility that US support could no longer be assumed.

Once a guarantee is revealed as discretionary, it does not fully recover.

From that point onward, the United States did not resume the role of unquestioned anchor. Assistance continued, but increasingly through pipelines already in motion, ad hoc measures, sales, and bargaining. The message was unmistakable. Washington would price risk. It would not automatically absorb it.

Scrambling for a Replacement

Europe cannot replace American military power quickly. Defence spending can rise. Procurement can be reorganised. Industrial capacity can be rebuilt. These are multi year undertakings in a continent with weak growth and fragile politics.

Europe therefore moved where it could. Finance.

From early 2025, the question quietly shifted. Not whether to support Ukraine, but how to sustain support if Washington could no longer be relied upon.

This is where immobilised Russian sovereign assets moved from symbolism to necessity.

Approximately three hundred billion euros in Russian central bank reserves were frozen, the majority held within European custody, with a heavy concentration at Euroclear in Belgium.

Initial policy focused on using the profits generated by those assets. This was presented as legally defensible and politically palatable.

That approach did not scale.

As Ukraine’s financing horizon extended into 2026 and beyond, Europe began exploring more aggressive measures. Leveraging principal as collateral. Borrowing against contested assets. Using custodial mechanisms as a substitute for a missing guarantor.

Frozen Assets Are Not Free Money

The frozen assets strategy rests on a fragile legal foundation.

Central bank reserves have long been treated as inviolable under the logic of sovereign immunity. Europe’s initial approach attempted to preserve that norm by avoiding outright seizure. But using principal as collateral moves materially closer to effective appropriation.

This is why internal European disagreement has intensified. Belgium’s caution reflects liability concentration, not abstraction.

Russia has already initiated legal proceedings. Retaliation risks are openly discussed. Market participants are observing closely how far Europe is prepared to stretch legal norms to avoid fiscal choice.

From Frozen Assets to Sovereign Stress

European banks are not primarily exposed because they lent directly to Ukraine. Most exposure resides on public balance sheets.

The real transmission channel runs through sovereign risk.

If frozen assets cannot be used at scale, the funding gap migrates to public borrowing, expanded guarantees, or reduced support.

European banks remain tightly linked to sovereigns. They hold government bonds. Their funding conditions reflect national risk premia.

This is not about imminent collapse. It is about accumulating strain.

The Post War Reckoning

The most dangerous phase will not be during the war, but after it.

Emergency measures are tolerated in wartime. They are scrutinised in peace.

If the conflict concludes with Russia holding territory and Ukraine remaining dependent on external finance, Europe faces a difficult reality.

Reconstruction does not erase debt. It intensifies it.

A Multipolar World, an Unprepared Continent

Multipolarity does not mean the end of American power. It means the end of automatic underwriting.

Europe sits uncomfortably between worlds. Too dependent to act alone. Too exposed to assume protection.

Its response has been improvisation. Stretching law. Borrowing from the future. Hoping necessity justifies risk.

That is not strategy. It is drift.

When the bill arrives, it will not be labelled Ukraine. It will arrive through funding costs, legal rulings, political fracture, and pressure on the sovereign bank nexus.

Multipolarity does not forgive miscalculation. It exposes it.