Europe prepares for direct negotiations with Russia amid burden of supporting Ukraine
US also moves to ease sanctions on Russia, exploring postwar economic cooperation
Slowing growth and fiscal deficit deepen Russia’s economic woes, raising concerns over internal power stability

Europe has raised the prospect of direct negotiations with Russia. As the prolonged war in Ukraine adds to the burden of military and financial assistance, even the United States has left open the possibility of easing sanctions on Russia and pursuing postwar economic cooperation, signaling a shift in Europe’s approach as well. Experts suggest that Russia, weighed down by economic pressures including slowing growth, a widening fiscal deficit and falling energy tax revenues, may also seek a way forward by resuming dialogue with the West.

Europe Shifts Its Approach to Russia

On the 28th (all dates hereafter are local time), Euronews reported that Europe was preparing to actively pursue direct negotiations with Russia. Finnish President Alexander Stubb and Norwegian Prime Minister Jonas Gahr Støre had, in fact, spoken with Russian President Vladimir Putin for an hour and a half on the 27th, urging an end to the war. The two leaders stressed that they were acting not as representatives of Europe but as leaders of countries bordering Russia. Euronews nevertheless assessed that the call had rapidly elevated them into key channels for dialogue between Europe and Russia. The Kremlin also said the three leaders had agreed to maintain direct telephone contact.

The European Union (EU), which has refrained from dialogue with Russia since the outbreak of the war in Ukraine, is also preparing to send a delegation to Ukraine peace talks scheduled for early next month in Abu Dhabi, United Arab Emirates (UAE). This raises the possibility that discussions on ending the war, previously centered on bilateral US-Russia talks or trilateral consultations involving Ukraine, could shift to a multilateral format. The EU delegation is expected to be led by Björn Seibert, chief of staff and a close aide to European Commission President Ursula von der Leyen.

Mounting Burden of Funding the War

The EU’s increasingly flexible attitude toward negotiations with Russia is seen as reflecting the long-accumulating burden of supporting Ukraine’s war effort. Since Russia invaded Ukraine in February 2022, the EU and its member states have spent vast sums on providing military equipment, covering the Ukrainian government’s fiscal deficit, repairing war damage and hosting refugees. According to figures disclosed to the European Parliament on March 25 by Valdis Dombrovskis, European Commissioner for Economy and Productivity, the EU and its 27 member states had provided a total of EUR 194.9 billion (approximately USD 224 billion) in assistance to Ukraine and Ukrainian refugees within their own borders since the outbreak of the war.

European Commission figures provide a detailed breakdown of the spending. As of the end of last year, the EU and its member states had provided Ukraine with more than EUR 103.3 billion (approximately USD 118 billion) in financial, economic and humanitarian assistance, while allocating EUR 69.36 billion (approximately USD 79.6 billion) to military assistance, including weapons, ammunition and air defense systems. They also committed EUR 17 billion (approximately USD 19.5 billion) to help member states host Ukrainian refugees, and used EUR 3.7 billion (approximately USD 4.24 billion) in proceeds from frozen Russian assets to support Ukraine.

Table 1. EU and Member State Assistance to Ukraine

Ukraine’s Requests for Additional Assistance

This trend has continued until recently. In April, the EU gave final approval to a loan package totaling EUR 90 billion (approximately USD 103 billion) to meet Ukraine’s fiscal and defense needs. The funds will be disbursed over the two years of 2026–2027. Of the total, EUR 60 billion (approximately USD 68.8 billion) is allocated to weapons procurement and expanding defense industry production capacity, while the remaining EUR 30 billion (approximately USD 34.4 billion) is earmarked for general budget support, including maintaining public services and restoring key infrastructure such as energy and transportation networks.

The problem is that a recent series of Russian airstrikes has generated substantial additional expenses, making it difficult to cover the costs of the war with the existing loans alone. At the EU summit on the 16th, Ukrainian President Volodymyr Zelenskyy said the cost of waging the war next year was expected to reach EUR 155 billion (approximately USD 178 billion). He added, “We need at least another EUR 70 billion (approximately USD 80.3 billion) to sustain defense, weapons and the country’s resilience,” stressing, “This is a realistic amount, and it will help us stop Russia.”

US Loosens Restrictions on Russia

Changes in US policy toward Russia are also seen as influencing the shift in the EU’s approach. President Donald Trump’s administration has recently been gradually easing economic pressure on Russia. After speaking with Russian President Vladimir Putin on the 9th, Trump announced plans to take immediate delivery of 300,000 metric tons (t) of Russian diesel and secure an additional 500,000 t during November. The following day, the 10th, he announced a halt to attacks on energy facilities between Russia and Ukraine, while criticizing Ukrainian strikes on Russian refineries for driving up diesel prices in the United States.

Discussions on postwar economic cooperation between the two countries are also continuing. On the 27th, the Financial Times (FT), citing sources familiar with the matter, reported that the United States and Russia were considering ways for US oil companies to return to the Russian market as part of negotiations to end the war. Specifically, these include restarting the Sakhalin-1 oilfield development project in Russia’s Far East, in which US company ExxonMobil had participated, and having US energy companies join efforts to restore normal supplies through the Druzhba pipeline, which transports Russian crude to Europe. Other economic cooperation proposals on the negotiating agenda include US investors acquiring overseas assets of Russian oil company Lukoil, joint development of liquefied natural gas (LNG) in Alaska, resuming supplies of Russian titanium and allowing US airlines to use Russian airspace.

Russia’s Economy Pushed to the Brink

Analysts say this shift in the West’s stance could also offer a significant way forward for Russia, where the prolonged war has added to the economic burden. Russia’s economy, which grew early in the war on the back of an expanding defense industry, has recently entered a period of near stagnation. Russia’s central bank forecasts economic growth of just 0.6% this year. Warning signs have also emerged in government finances. Russia’s fiscal deficit is expected to reach 3.2% of gross domestic product (GDP) this year, double the original target of 1.6%. Energy-related tax revenues, a major source of funding, have also contracted. According to Russia’s Finance Ministry, oil and natural gas tax revenues for January–September this year totaled RUB 5.47 trillion (approximately USD 70.1 billion), a sharp decline of about 17% from RUB 6.61 trillion (approximately USD 84.7 billion) in the same period a year earlier.

These economic difficulties and discontent over the prolonged war are threatening Russia’s power base. According to a recording of an April plenary speech published on the website of Russia’s State Duma, the lower house of parliament, Gennady Zyuganov, general secretary of the Communist Party of the Russian Federation, said, “We are doing everything we can to support President Putin and his strategy and policies, but you [the government] are not listening.” He warned, “Unless you [the government] urgently adopt fiscal, economic and other measures, what happened in 1917 [the Russian Revolution] will happen again in the autumn.” In May, CNN and the FT also reported, citing a European intelligence agency report, that the Kremlin had substantially tightened protective and security measures amid concerns over a possible coup or assassination by members of Putin’s inner circle.