Europe is reaching for its credit card to fund Ukraine. But for how long?

The way Europe finances Ukraine has fundamentally changed. It is one of the most significant shifts in the war effort over the past year, yet it has attracted remarkably little attention.

Shortly after his return to office, Donald Trump ended what had been a crucial supply of money and weapons from the United States to Ukraine.

The Europeans – mainly EU states – had to step up their support and have become the main backers of Ukraine since then, providing hundreds of billions of euro to Kyiv.

In the past year, there has been an important change in exactly how they are doing that: by borrowing money.

The idea of the EU bloc taking on common debt had always been opposed by Germany and other fiscally conservative states. That particular Rubicon was crossed at a crunch EU summit last December, where leaders backed a plan for a €90 billion loan for Ukraine.

Wars are expensive. Ukrainian president Volodymyr Zelenskiy has said Kyiv is facing a €70 billion hole in its budget for 2027.

EU leaders in Dublin for back-to-back European summits this week are going to discuss how to come up with €45 billion to cover two-thirds of that shortfall. The most likely way of raising the funds looks to be another loan, borrowed against the EU’s €1.2 trillion budget.

German chancellor Friedrich Merz appears game to repeat the loan arrangement again. A year ago, that would not have been as taken as read.

Observers were surprised when Merz first gave the thumbs up to the initial €90 billion in common borrowing. Berlin backing another loan would signal the extent of the shift that’s taken place inside the EU on this.

[ EU governments scramble to help fill €70bn gap in Ukraine fundingOpens in new window ]

The Netherlands and Denmark, another two countries historically opposed to the EU borrowing money together as a bloc, seem comfortable supporting another loan.

The borrowing is backstopped by €210 billion worth of Russian central bank assets that have been frozen inside European financial institutions since the start of the war.

The original loan was designed so that Ukraine would repay the €90 billion only after Russia paid reparations for the destruction caused by its full-scale invasion. In the event Moscow refuses to cough up compensation, the EU could recoup its money from frozen Russian central bank assets. That is the idea, at least.

Russia, of course, wants its cash back. The frozen Russian state assets, and the prospect of wider relief from EU sanctions choking Russia’s economy, are one big bargaining chip the Europeans hold in negotiations on any peace settlement.

A deal that includes a commitment to returning the funds to the Russian state, perhaps as the price of some important concession from Moscow elsewhere for Kyiv, would leave European governments on the hook for the loans extended to Ukraine.

To cover that eventuality, national guarantees were passed by the Oireachtas and other parliaments. A very rough back-of-the-envelope calculation would put Ireland’s national exposure for the original loan, and a second one, at about €6 billion.

[ Who will succeed Zelenskiy? Ukraine’s war veterans prepare for political lifeOpens in new window ]

Civil servants in the Department of Finance say the exact figure would depend on a couple of factors, “meaning no accurate estimate of costs for Ireland can be provided”, a spokeswoman said.

A new EU loan to give Ukraine another €45 billion, plus financial support from other backers – the UK, Norway, Canada and Japan – would just about shore up Kyiv’s finances for next year.

Perhaps US-brokered peace negotiations will gather serious momentum this time. It looks more likely, however, that they’ll lead nowhere, again.

European governments need to be honest with their citizens that this war could still be raging for several more years. Russian leader Vladimir Putin’s game plan has been to grind Ukraine down and outlast western support.

Presidential elections to replace Emmanuel Macron in France next spring could be a game changer – and not in a good way.

The frontrunner, far-right leader Marine Le Pen, wants to cut off financial support to Ukraine and slash French contributions to the EU budget.

Her most likely opponent in the second-round runoff, hard-left firebrand Jean-Luc Mélenchon, is lukewarm on support for Kyiv, too.

The election of Le Pen to the Élysée would threaten to fracture the European coalition that has proved vital to sustaining Ukraine’s resistance over the last two years since the Trump administration checked out.