Back to the drawing board
Russia rejects the U.S. peace plan to end the war in Ukraine
This week in the news:
Peace talks between Russia and the U.S. in Moscow on Tuesday produced no meaningful progress toward ending the war in Ukraine.
Belgian Prime Minister Bart de Wever is reluctant to agree to an EU plan that would use frozen Russian assets in Belgium to finance Ukraine.
The Russian government scrapped plans to build the Northern Siberian Railway line due to financial problems.
— Sara Ashbaugh, Editor in Chief
Peace plan stalls
U.S. Special Envoy Steve Witkoff and President Trump’s son-in-law Jared Kushner met with President Putin in Moscow on Tuesday to discuss the U.S. peace plan for Ukraine. While Kremlin foreign policy adviser Yuri Ushakov described the 5-hour-long meeting as “useful” and “constructive,” no meaningful progress was made toward ending the war. Last week, Bloomberg published the transcript of a phone call between Ushakov and Witkoff in which Witkoff appears to coach Ushakov on how to sell Russia’s peace plan to Trump. Despite accusations that Witkoff favors the Russian side in the peace negotiations, Tuesday’s talks produced little results. “Some things were accepted, some things were marked as unacceptable. This is a normal working process of finding a compromise,” Kremlin spokesperson Dmitry Peskov said.
After the White House’s 28-point peace plan was leaked to the media late last month, it received heavy criticism for being slanted toward Russia. In response, U.S. officials traveled to Switzerland, where they revised the plan in collaboration with Ukraine and its European allies. The new plan was “significantly better” for Ukraine, an anonymous senior official told AFP. The revised version, although not yet released to the public, likely removed several of Russia’s most controversial demands, such as the requirement that Ukraine cede the entire Donbas region to Russia. Other provisions in the original document that Ukraine considered unacceptable included a ban on the country joining NATO and restrictions on the size of its army.
While President Putin responded favorably to the original proposal, he spoke poorly of the plan after Tuesday’s talks with the U.S. delegation. Speaking to the Russian media, Putin accused Europe of “thwarting” U.S. attempts for peace by including elements it knew would be unacceptable to Moscow. On Thursday, Putin told India Today that Russia would secure the Donbas region one way or another. “Either we liberate these territories by force of arms, or Ukrainian troops will leave these territories and stop fighting there,” he said in a clip that circulated on Russian state media. Meanwhile, Russian losses are mounting; a joint investigation by BBC Russia and Mediazona found that verified Russian military deaths now number more than 150,000 since the beginning of the full-scale invasion.
Despite the lack of progress, Trump described the talks to reporters in the Oval Office as “a reasonably good meeting” and insisted that Putin “would like to end the war.” Witkoff and Kushner continued their peace efforts after returning to the U.S. by meeting with a Ukrainian delegation in Florida. These talks, which were attended by the Secretary of Ukraine’s National Security and Defense Council Rustem Umerov and Chief of Staff of Ukraine’s Armed Forces Andrii Hnatov, started on Thursday and are expected to run through the weekend.
— Sara Ashbaugh
Key participants in Tuesday’s peace talks included, from left to right, Kremlin foreign policy adviser Yuri Ushakov, Trump’s son-in-law Jared Kushner, Russian Direct Investment Fund CEO Kirill Dmitriev, and U.S. Special Envoy Steve Witkoff. The meeting, which took place in the Kremlin, also involved Russian President Vladimir Putin. This was Witkoff’s sixth meeting with Putin since January, and he has been repeatedly accused of favoring Russia over Ukraine in peace negotiations. However, Kushner and Witkoff walked away from Tuesday’s talks without any significant concessions from Russia. They returned home to meet with Ukrainian representatives in Miami on Thursday. (photo: Kristina Kormilitsyna / POOL / TASS)
German-Belgian talks on seizing Russian assets
German Chancellor Friedrich Merz and the head of the European Commission, Ursula von der Leyen, visited Brussels on Friday in an attempt to convince Belgian Prime Minister Bart de Wever to support a plan to use the value of Russia’s assets frozen in the EU (around $244 billion) to ensure Ukraine’s financing next year. The European Council, the EU’s main decision-making body that unites member states’ heads of government, will discuss the Commission’s plan on December 18.
The Commission’s plan would use the frozen assets, the majority of which are held by Belgium-based Euroclear, as collateral against two 45-billion-euro loans to be disbursed to Ukraine over the next two years. Following an eventual ceasefire or peace agreement, the release of the assets would be contingent on the Russian government agreeing to paying reparations. De Wever opposes the plan due to fears of a legal backlash, as Russia has threatened to sue Belgium under a bilateral investment treaty. There are also concerns about a wider rejection of the EU and Belgium as safeguards of assets in the future if the plan passes. The Belgian Prime Minister has demanded financial guarantees from the EU as well as legal guarantees that other institutions holding Russian assets would fall under the same consideration as Euroclear. Merz seems to be willing to make concessions on these issues.
The EU is hard pressed for time, not only because Ukraine’s continued financing is not guaranteed beyond the end of this year, but also because the recent “peace plan” sponsored by the U.S. government contains provisions regarding Russia’s frozen assets. Under that arrangement, part of the funds would be used to finance reconstruction projects in Ukraine and the rest would go into U.S.-Russian joint ventures, with the U.S. also obtaining a share of the profits. While the EU would be able to block the execution of this provision even if Russia and the U.S. agreed to it, the U.S. government would then likely put pressure on the EU. Also, the EU currently has no alternative plan to ensure the financing of Ukraine other than common EU borrowing, which most member states have been reluctant to support beyond using money unallocated in the EU’s seven-year budget.
Making a final decision on the loan this month could also help the EU’s efforts to appear as a serious player in ongoing talks about an eventual ceasefire or peace agreement. For a long time, the EU as a whole has been unable to come up with a workable plan either to push for peace talks or to support Ukraine’s war effort to achieve a better negotiating position under the current circumstances. Russia likely wants the situation to remain this way. In this context, it is understandable that, as journalist Farida Rustamova reported on Friday, Kremlin officials are signaling that they would be “open” to considering the plans contained in the original U.S. proposal.
— Andras Toth-Czifra
A video published by the Russian Defense Ministry shows Russian soldiers hoisting their flag over Shybankova Square in the Ukrainian city of Pokrovsk. The Kremlin announced the capture of the city on Monday during a briefing by Chief of the General Staff Valery Gerasimov. Pokrovsk, which had a pre-war population of 60,000, is located on critical road and rail lines in the Donetsk region. Its capture, if confirmed, would mark a significant victory for Russian forces. The General Staff of Ukraine’s Armed Forces denied Russia’s claim, asserting on Tuesday that fighting in the northern part of the city was still ongoing. According to President Zelenskyy, Russia has amassed 170,000 troops in the area in its attempt to take the city. (photo: Russian Defense Ministry / AFP)
Another railway abandoned
According to the Kommersant business daily, the Russian government has decided to abandon plans to build the Northern Siberian Railway (SSM) line due to financial problems that make the construction “unfeasible.” The line, already planned in Russia’s 2008 railway development strategy, would have connected Nizhnevartovsk, an oil industry hub in the Western Siberian Khanty-Mansi Autonomous District, with Urumqi, the largest city in China’s Western Xinjiang-Uyghur Autonomous Region. Estimates put the price tag of the more than 1,200-mile-long line at around 50 trillion rubles.
The rationale for the project was that Russia’s forced pivot towards Asian markets put an unsustainable burden on the so-called “Eastern Polygon,” the network of railway lines connecting Russia’s Siberian and Far Eastern Regions with Far Eastern ports and China. The new line would also have connected the Transsiberian Railway with the Northern Sea Route via the Ob River in Nizhnevartovsk and would have made it cheaper for struggling coal producers in the Kemerovo Region to send their coal to Chinese markets.
However, the same financial crunch that prevented the timely execution of plans to expand the capacity of the Eastern Polygon now seems to have forced the Russian government to shelve these alternative plans too. Two years ago, the government had to postpone the construction of another grand railway project, the Northern Latitudinal Railway, for similar reasons. The situation has not improved since. Russian Railways (RZhD) will reportedly have to cut its investment program to less than one trillion rubles in 2026, while recently requesting another financial injection from the government to ensure continued operations. Earlier investment cuts impacted the planned third phase of the Eastern Polygon’s upgrade.
The repeated failures to carry out plans to improve Russia’s transit infrastructure in the Eastern direction show the double pressure that the war against Ukraine has put on Russia’s political economy. The war and the related decoupling from Western markets both make the execution of these plans more important and prevent the allocation of sufficient funds, all while China continues to show a cautious and reserved attitude towards investing in major shared infrastructure projects.
— Andras Toth-Czifra
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— Andras Toth-Czifra