Trump blasts Ukraine for ‘zero gratitude’ as Germany says deal to end war unlikely by Thursday deadline – live

Trump blasts Ukraine for ‘zero gratitude’ as Germany says deal to end war unlikely by Thursday deadline – live

Former US President Donald Trump criticized Ukraine's leadership on social media, accusing them of a lack of gratitude for American aid. This statement coincided with German Chancellor Friedrich Merz's assessment that a peace deal to end the war is unlikely to be reached by an upcoming Thursday deadline. These developments are unfolding as Ukrainian officials engage in emergency talks with European security officials in Geneva.

Context & What Changed

The war in Ukraine, initiated by Russia’s full-scale invasion in February 2022, has evolved into a protracted war of attrition, heavily dependent on sustained Western military and financial support for Ukraine. The United States has been the single largest contributor of military aid, providing critical capabilities that have enabled Ukraine to resist Russian aggression (source: Council on Foreign Relations). However, the conflict has reached a strategic stalemate, with immense human and economic costs, and political support for continued aid has become increasingly contentious in several Western nations, notably the US.

What has changed is the convergence of two critical signals indicating a potential paradigm shift in the Western approach to the conflict. First, a direct and critical statement from the presumptive next US President, Donald Trump, targeting Ukrainian leadership, signals a strong likelihood of a significant reduction or complete cessation of American aid. This is not new rhetoric, but its timing during the presidential transition gives it immediate policy weight. Second, the concurrent pessimistic assessment from a senior political figure in Germany, Europe's largest economy, underscores the lack of a clear, near-term diplomatic resolution. This dual development suggests the Western coalition's unity and strategy are under severe strain, forcing European nations and Ukraine to confront the imminent possibility of a dramatically altered strategic landscape without the US as the primary security backstop.

Stakeholders

Ukraine: The primary stakeholder, facing a potential withdrawal of its most critical military and financial lifeline. The government in Kyiv must navigate immense diplomatic pressure and a deteriorating position on the battlefield, potentially forcing it to accept unfavorable peace terms.

United States (Incoming Administration): The key driver of the potential policy change. The administration's objectives appear to be reducing foreign financial commitments, forcing a negotiated settlement, and compelling European allies to assume a greater share of the security burden, consistent with an 'America First' foreign policy.

Russian Federation: A potential strategic beneficiary. A reduction in Western support for Ukraine would ease military pressure and provide Moscow with significant leverage in any negotiations, potentially allowing it to consolidate territorial gains and achieve its key war aims.

European Union & Key Member States (Germany, France, Poland): Face the most direct consequences of a US policy shift. They would be confronted with an immediate and substantial increase in the financial and military burden of supporting Ukraine, alongside a heightened security threat on their eastern border. This situation could exacerbate existing internal divisions within the EU on fiscal policy and foreign affairs.

NATO: The credibility and cohesion of the alliance are at stake. A unilateral US pivot would challenge the principle of collective defense and force a fundamental re-evaluation of the transatlantic security relationship, potentially leading to the development of a more independent European defense pillar.

Global Energy Markets: Heightened uncertainty about the conflict's duration and outcome could trigger renewed volatility in oil and natural gas prices, particularly impacting Europe's energy security, which remains fragile despite diversification efforts since 2022.

Defense Industry: US defense contractors, who have seen a surge in orders, face uncertainty. Conversely, European defense firms (e.g., Rheinmetall, BAE Systems) are positioned for significant growth as their governments are compelled to ramp up military spending and domestic production.

International Financial Institutions (e.g., IMF, World Bank): These institutions are deeply involved in providing non-military financial assistance to maintain Ukraine's macroeconomic stability. A change in the conflict's trajectory would profoundly impact Ukraine's solvency, debt sustainability, and the eventual scale and funding of post-war reconstruction.

Evidence & Data

Scale of US Aid: Between January 24, 2022, and January 15, 2024, the United States committed approximately $74.3 billion in total assistance to Ukraine, including over $46 billion in military aid (source: Council on Foreign Relations). This level of support has been crucial for Ukraine's defense.

European Contributions: The European Union and its member states have collectively emerged as the largest provider of total aid, with commitments exceeding €148.5 billion as of early 2024, including financial, humanitarian, and military support (source: EU Council). However, the US has remained the predominant supplier of high-end military hardware.

Economic Impact on Ukraine: The war has contracted Ukraine's economy by an estimated 29.1% in 2022, and the country is running a massive budget deficit, largely financed by external partners (source: World Bank). Any disruption to aid flows would trigger a severe fiscal crisis.

European Defense Spending: While many NATO members have increased defense spending, only 11 of the 31 members met the 2% of GDP target in 2023 (source: NATO). Germany recently met the 2% target for the first time since the Cold War, but compensating for a US withdrawal would require sustained spending well above this threshold.

Reconstruction Costs: The estimated cost of Ukraine's reconstruction and recovery has continued to rise. A joint assessment by the Government of Ukraine, the World Bank Group, the European Commission, and the United Nations calculated the cost at $486 billion over the next decade as of February 2024 (source: worldbank.org).

Scenarios (3) with probabilities

Scenario 1: Precipitous US Disengagement (Probability: 45%)

Description: The new US administration moves swiftly within its first 100 days to halt or drastically reduce military aid to Ukraine, conditioning any further support on immediate peace talks. The US uses its leverage to force a ceasefire, largely on Russia's terms, and pressures European allies to assume the full financial burden for Ukraine's state functions and future reconstruction.

Outcome: Ukraine's military position degrades rapidly, forcing it to accept a disadvantageous peace settlement involving significant territorial concessions and neutrality clauses. Russia secures a strategic victory. NATO's credibility is severely damaged, triggering a crisis of confidence and a frantic, uncoordinated push for European re-armament. This scenario would likely lead to significant market volatility and a refugee crisis.

Scenario 2: Managed Pivot & Burden Shifting (Probability: 40%)

Description: The US reduces its aid more gradually, using the threat of a complete withdrawal as leverage in a 'good cop, bad cop' strategy. The administration engages in transactional diplomacy, pushing European allies to meet specific, higher defense spending targets and take the lead in arming Ukraine in exchange for continued US logistical, intelligence, and niche capability support. The diplomatic track is pursued more aggressively, with the US acting as a broker for a settlement.

Outcome: A 'Europeanization' of the conflict's support structure occurs. European nations, led by Germany, France, and Poland, significantly increase defense budgets and industrial output. A fragile, likely unfavorable, peace deal is eventually reached. NATO adapts, forming a stronger European pillar, but persistent transatlantic tensions and questions about the reliability of US security guarantees remain.

Scenario 3: Status Quo with Increased Friction (Probability: 15%)

Description: Despite the President's rhetoric, a combination of factors—including resistance from a bipartisan coalition in Congress, advice from the national security establishment, and the complexities of disengagement—prevents a radical policy shift. US aid continues, but at reduced levels and with more conditionality. The administration's public criticism of allies and Ukraine creates constant diplomatic friction and uncertainty.

Outcome: The war continues in a prolonged stalemate. The underlying strategy of the Western coalition does not fundamentally change, but its effectiveness is hampered by political infighting and unpredictability. This sustained uncertainty damages investor confidence and complicates long-term fiscal and industrial planning for governments and corporations.

Timelines

Short-term (0-3 months): Post-inauguration, expect immediate policy reviews on Ukraine aid. High market volatility, particularly in energy and defense stocks. Emergency summits of NATO and the EU to formulate a unified response. Intense diplomatic activity as allies seek clarity from Washington.

Medium-term (3-12 months): Concrete changes to US aid packages are implemented. The impact on the battlefield becomes apparent by mid-year. European governments pass supplementary defense budgets and place major new orders with their domestic industries. Negotiations between Russia and Ukraine could begin under new, intense pressure.

Long-term (1-3 years): A new security architecture in Europe begins to solidify. This could range from a frozen conflict with a heavily militarized border to a formal peace treaty. The long-term financing and governance model for Ukraine's reconstruction is established. Shifts in global energy supply chains and defense industrial bases become entrenched.

Quantified Ranges

European Defense Spending: To compensate for a full US military aid withdrawal (Scenario 1), major European NATO economies would need to increase defense spending from the 2% GDP target towards 2.5-3.0%. For Germany, with a 2023 GDP of approximately €4.12 trillion (source: destatis.de), an increase from 2.1% to 3.0% would represent an additional annual expenditure of over €37 billion.

Industrial Production: Ramping up European artillery shell production to 1-2 million rounds per year—a level needed to support Ukraine and replenish stocks—requires an estimated investment of €5-10 billion in new production lines and could take 18-24 months to reach full capacity.

Reconstruction Funding Gap: With reconstruction costs estimated at $486 billion and rising, a US withdrawal from a leading funding role would create a massive gap. The EU would be pressured to provide the bulk of this, potentially through joint borrowing mechanisms similar to the NextGenerationEU fund, which totaled €806.9 billion (source: ec.europa.eu).

Risks & Mitigations

Risk: Military collapse of Ukraine, leading to a state failure, a major humanitarian crisis, and millions of new refugees entering the EU.

Mitigation: European nations must immediately create a robust, independent financial and industrial mechanism for supporting Ukraine. This includes joint procurement initiatives, scaling up ammunition and drone production, and establishing a multi-year funding facility insulated from short-term political shifts.

Risk: A critical transatlantic schism, undermining NATO's collective defense guarantee (Article 5) and encouraging further Russian aggression.

Mitigation: European leaders must engage the new US administration proactively, framing continued European stability as a core US national interest. Demonstrating a credible and substantial increase in European defense investment is a prerequisite for this dialogue.

Risk: Escalation of the conflict through Russian miscalculation, believing the West is divided and weak.

Mitigation: While pursuing diplomacy, NATO must simultaneously bolster its eastern flank with credible combat forces and communicate unambiguous red lines to Moscow to maintain deterrence.

Sector/Region Impacts

Defense Sector: Long-term, structural bull market for European defense companies. US contractors may face short-term headwinds but will likely benefit from increased spending by NATO allies seeking interoperable equipment.

Energy Sector: Renewed price volatility is likely. The strategic imperative for Europe to accelerate its green transition and diversify away from all volatile fossil fuel sources will be reinforced. Investment in LNG infrastructure, renewables, and nuclear power will increase.

Financial Sector: Increased political risk premiums for assets in Central and Eastern Europe. A major challenge and opportunity will arise in structuring and financing Ukraine's reconstruction, likely requiring novel public-private partnerships and risk guarantees from multilateral institutions.

Infrastructure & Construction: The eventual reconstruction of Ukraine will represent one of the largest infrastructure programs in modern history. However, the timing and security conditions remain highly uncertain. In the interim, logistics and transport infrastructure in neighboring countries like Poland and Romania will continue to see high investment.

Recommendations & Outlook

For Governments (EU/NATO): Immediately commission a 'no-US' contingency plan for Ukraine support and European defense. This plan must include concrete, funded proposals for industrial mobilization and a sustainable financing vehicle. Initiate a strategic dialogue with the incoming US administration to negotiate a new transatlantic burden-sharing agreement.

For Large-Cap Industry Actors:

Defense: European firms must prepare for a surge in multi-year government contracts and invest in expanding production capacity and securing supply chains. (Scenario-based assumption) Assume defense budgets will structurally increase, regardless of the specific scenario.

Energy: (Scenario-based assumption) Assume continued geopolitical instability will underpin energy markets. Companies should accelerate investments in European-based renewable energy generation and LNG import infrastructure to capitalize on the policy drive for energy security.

Finance/Infrastructure: Begin developing frameworks for participation in Ukrainian reconstruction. (Scenario-based assumption) This market will materialize only after a stable security settlement is reached. Engagement now should focus on advisory roles and structuring potential financing vehicles with multilateral development banks to mitigate political risk.

Outlook: The current geopolitical signals represent a critical inflection point. The era of US-led, open-ended support for Ukraine is likely over, forcing a fundamental and painful realignment of European security policy. (Scenario-based assumption) The most probable path forward is a turbulent transition toward greater European strategic responsibility, culminating in a negotiated settlement to the war that reflects the new balance of power. This transition will be the defining feature of the European political and economic landscape for the next three to five years, creating profound risks for the unprepared and significant opportunities for agile public and private sector entities.