COLUMN: Merz, €90 Billion and Associate Status — Germany Returns as a Player

COLUMN: Merz, €90 Billion and Associate Status — Germany Returns as a Player

Introduction: The giant wakes up

A historic reversal

There is a paradox in associating the name Friedrich Merz with geopolitical boldness. Eighteen months ago, when he arrived at the chancellery, observers emphasized his profile as a conservative business lawyer, his presumed pragmatism, his likely caution on sensitive files. And yet, in this month of June 2026, it is he who articulates the most architecturally ambitious proposal for Ukraine's future in the European space — an interest-free loan of €90 billion, backed by frozen Russian assets, combined with an unprecedented "associate member" status for the European Union.

This change should not surprise those who have closely followed German politics since the start of the war. Germany has undergone an arc of transformation since 2022: from Scholz's Zeitenwende — the theoretical "turning point in time" that remained largely symbolic — to Merz's concrete commitment, which budgets €11.5 billion in military aid to Ukraine for 2026 and tirelessly pushes to unlock the colossal European loan. The giant has finally risen. And it is marching east.

The context of this column

I am not writing this column as a neutral analyst. I spent years criticizing German complacency in the face of dependence on Russian gas, hesitation on delivering tanks, delays on sanctions. This column is also an acknowledgment: Merz is changing things. Not perfectly. Not fast enough for Kyiv's liking. But substantially. And in international politics, a country of 84 million people, Europe's largest economy, genuinely committing — that is a paradigm shift.

On June 26, 2026, at the Ukrainian reconstruction conference in Gdansk, Merz was there, alongside Von der Leyen and Zelensky, to announce the release of the first tranche of €3 billion out of the €90 billion. A small gesture on the surface. Gigantic symbolically: it was the moment when the promise of December 2025 became reality. Germany, which had long delayed, was finally delivering.

The €90 billion loan: an unprecedented financial wager

The mechanics of the deal

The €90 billion loan to Ukraine has an original financial architecture. It was approved by European leaders at the December 2025 summit in Brussels. It is interest-free — a considerable advantage for a country at war whose public finances are under extreme pressure. Ukraine will only need to repay it once Russia has paid war reparations. And if those reparations never come, the EU has reserved the right to use the €210 billion in frozen Russian assets held in European banks to cover the loan.

It is an elegant construction: the European Union advances the funds, Ukraine benefits from financing without oppressive conditions, and Russia is placed in a situation where its own reserves serve as collateral. "This is a clear signal from Europe to Putin: this war isn't worth it," Merz had said in December 2025. The phrase is apt. It sums up a logic that changes Russian calculations — at least in theory.

Obstacles overcome: Orbán and the unanimity rule

But this loan did not come easily. Viktor Orbán's Hungary had exercised its veto — citing national interests tied to its close relationship with Moscow. Slovakia and Czech Republic had also refused to participate. Merz had pushed for an alternative solution: use the "enhanced cooperation" procedure of Article 20 of the Treaty on European Union, which allows a minimum of nine countries to proceed without the unanimity of the 27. Twenty-four members ultimately participated — a record for this type of procedure.

This victory deserves emphasis: Merz transformed a unanimity rule — which gave Orbán a paralyzing veto — into a blocking minority with no real power. That is institutional pragmatism in action. It is also an important precedent: if the EU can act with 24 out of 27 on Ukraine, it can do so on other files where recalcitrant member states paralyze collective action. Orbán's electoral defeat in April 2026 has since removed that obstacle — but the enhanced cooperation tool is now established as a viable option.

The associate member idea: audacious and controversial

What Merz proposes

In May 2026, Merz sent a letter to EU leaders — to European Council president António Costa and Commission president Von der Leyen — proposing an unprecedented "associate member" status for Ukraine. The text, obtained by Reuters and the Associated Press, provides for: the participation of Ukrainian representatives in European summits and ministerial Council meetings — without voting rights. A seat at the executive bodies of the European Commission and the European Parliament — without a vote. Extension of the mutual defense clause (Article 42(7) TEU) to Ukraine — a concrete security guarantee. A "rollback mechanism" if Ukraine regressed on its democratic standards.

"This would not be a lightweight membership, but would go well beyond the existing Association Agreement," Merz clarified. The idea is to move Ukraine out of a political purgatory in which it has been waiting for years — a candidate member since June 2022, blocked by a formal accession procedure that requires unanimity and reforms that cannot be fully carried out in wartime.

Zelensky's and jurists' reservations

Zelensky's reaction was nuanced — even reserved. The Ukrainian president clearly indicated he wanted "full, complete and equal membership" in the EU, not a substitute. "Associate status must not replace membership," he warned in May 2026 according to the New Union Post. This reservation is legitimate: for Ukraine, the prospect of full membership is a major political objective — and any intermediate status risks becoming permanent if the enlargement dynamic stalls.

EU legal experts also raised questions of legality. Verfassungsblog published an analysis according to which the concept of "associate member" as proposed by Merz — combining participation in institutions without a member vote — "has no legal basis in the EU treaties" and would be "legally impossible under Article 217 TFEU." To implement this idea, one would need either to amend the treaties (a long and uncertain procedure) or create a sui generis agreement. Neither is trivial.

The first tranche of the €90 billion: the symbol of Gdansk

June 26, 2026 in Gdansk

The Ukrainian reconstruction conference in Gdansk on June 26, 2026 marked a concrete milestone: the announcement by Ukrainian Prime Minister Denys Shmyhal of the release of the first €3 billion tranche out of the €90 billion. This tranche was earmarked for post-conflict reconstruction. In the following days, a second tranche of €6 billion dedicated to drone production was to be released, according to Von der Leyen's declaration.

The conference also saw the launch of a Ukraine Capital Fund — an initiative carried by the EU, Germany, Poland, Italy, and France, with an initial public capital of €220 million intended to attract private investment. "We are creating the risk-sharing mechanism that private investors need to engage now," Merz declared. This fund fits the logic of reconstruction as investment — not as charity.

The €200 billion figure: the solidarity debt

To gauge the scale of the European commitment in Ukraine, Von der Leyen recalled at the Gdansk conference that since the start of the full-scale invasion in February 2022, EU countries have provided more than €200 billion in economic, financial, and military support to Ukraine. To which is now added the €90 billion loan for 2026-2027. In four years, Europe has mobilized €290 billion for the Ukrainian cause. It is one of the largest support programs for a partner country in the history of the Union.

These figures do not automatically translate into battlefield victory. But they send a strategic signal to Moscow: Europe is in this conflict for the long haul. It will not grow weary. It will not capitulate financially. And when Putin calculated that winter, economic fatigue, and European internal divisions would eventually break Western solidarity, he was wrong about Europe. Merz's Germany is one of the main reasons for this miscalculation by Putin.

The security architecture: Article 42(7) as a real guarantee

What is Article 42(7) TEU?

Article 42(7) of the Treaty on European Union is the EU's mutual defense clause — its equivalent of NATO's Article 5, but with fewer formal constraints. It stipulates that if an EU member state is the victim of armed aggression, other member states have an obligation to provide it with assistance "by all means in their power." Its precise scope has always been debated — it does not automatically imply military intervention — but it constitutes a solid political commitment.

Extending this article to Ukraine — a candidate country not yet a member — would be politically and symbolically revolutionary. It would mean that the 27 (or 24 out of 27) member states commit to defending Ukraine against aggression. In a context where NATO remains out of reach for Ukraine for as long as the war lasts, this clause would be a credible alternative — if it is politically carried with seriousness.

Political commitment versus legal guarantees

Merz's proposal on the 42(7) clause is, however, political, not legal. It involves what he calls a "political commitment" by member states — not a treaty modification that would make the extension automatically binding. This distinction matters: a political commitment can be withdrawn, circumvented, or simply ignored in practice. A treaty modification, by contrast, creates a legal obligation.

Legal experts note that if the extension of 42(7) to Ukraine were genuinely binding, it would imply that EU member states are already at war with Russia — since Ukraine is under attack. That is not a conclusion most European governments are prepared to assume publicly. Hence the deliberately ambiguous formulation of "associate member" with a "political extension" of 42(7) — enough to signal solidarity, not enough to trigger a formal collective defense mechanism.

Germany before Merz: decades of timidity

The weight of Nordstream and Ostpolitik

To understand Merz's reversal, one must understand what he was breaking with. Since Willy Brandt and his Ostpolitik of the 1970s — the policy of openness and rapprochement with the USSR — Germany had chosen the path of dialogue, of economic interdependence as a vector for peace. This philosophy was generous in its intentions. It produced Nordstream 1 and Nordstream 2 — the gas pipelines that made Germany more than 50% dependent on Russian gas. And this dependence subsequently paralyzed the German response to the annexation of Crimea in 2014.

Merkel's Germany had resisted arms deliveries to Ukraine, invoking its policy of non-export of weapons to conflict zones. It had minimized economic sanctions to protect its commercial relations with Russia. It had insisted on keeping Nordstream 2 active even after the 2022 invasion. This was not bad faith — it was the legacy of a foreign policy doctrine deeply rooted in Germany's postwar political culture. But it was a doctrine that had failed.

Scholz: the Zeitenwende without transformation

Chancellor Olaf Scholz had proclaimed the Zeitenwende — the "turning point in time" — a few days after the invasion of February 24, 2022. He had announced a special fund of €100 billion for German defense and promised an unprecedented commitment to Ukraine. But his tenure was marked by repeated hesitations: Leopard tanks delivered too late, long-range missiles refused, arms agreements that dragged on. The Zeitenwende was real in rhetoric, incomplete in deeds.

Merz inherited this ambivalence and cut through it. From December 2025, he put his political weight behind the €90 billion loan. He increased military aid to €11.5 billion for 2026. He pushed for enhanced cooperation against Orbán. And in May 2026, he launched the associate member idea — a proposal that goes far beyond anything his predecessors had dared on Ukraine's future in Europe. The Zeitenwende has become an operational reality.

Implications for EU enlargement

The formal accession process: still underway

Merz has been explicit: associate member status is not a replacement for membership. It is parallel and complementary. "All negotiation clusters must be opened immediately and without delay," he insisted. The formal accession negotiations — suspended by the Hungarian veto since 2023 — can now resume with Orbán's fall in 2026. The European Commission has provided technical guidance to Ukraine on the six negotiation clusters. Cluster 1 "Fundamentals" — the most critical — can now be opened.

But full EU membership for a country at war presents immense practical complications. How does Ukraine adopt the entirety of the acquis communautaire — the 35,000 pages of European law — when part of its territory is occupied? How can European structural funds be allocated to regions with uncertain borders? How can democratic elections — a sine qua non condition of membership — be held under current conditions? These are real questions, to which associate member status provides a pragmatic response: allow Ukraine to integrate without waiting for all these conditions to be met.

The model for other candidacies

The concept of associate member, if adopted for Ukraine, could set a precedent for other candidate countries: Georgia, Moldova, the Western Balkans countries that have been waiting in the EU's antechamber for years. It could revitalize an enlargement process that had stalled since Croatia's accession in 2013. But it could also dilute the value of full membership — if "associate member" becomes a permanent stage rather than a transition.

Verfassungsblog is skeptical about legal feasibility. Zelensky is wary of the intentions. But both Costa and Von der Leyen have expressed interest in exploring the proposal. The 2026-2027 timeline will be decisive: if an agreement on the legal framework of associate status can be found before the end of the Irish Council presidency, it is possible that a decision will be made before year's end.

Germany and defense: an ongoing transformation

€11.5 billion for 2026: a breakthrough budget

Merz's Germany inscribed €11.5 billion in military aid to Ukraine in its 2026 budget. To measure the change: total German aid to Ukraine for all of 2022 — the first year of the full-scale invasion — had not exceeded €2.5 billion. The progression is spectacular. It reflects a fundamental political decision: Germany now views the defense of Ukraine as an investment in its own security, not as an external expenditure.

This paradigm shift — from "humanitarian aid to war victims" to "investment in collective defense" — reflects an evolution of German strategic consciousness. Germany has understood, after years of hesitations, that European security is indivisible. If Russia wins in Ukraine, the Baltic states, Poland, Finland — and ultimately Germany itself — will be next on the list of "spheres of influence" that Putin claims.

The capital fund and reconstruction

Beyond military support, Merz has initiated a reconstruction approach that goes beyond conventional aid. The Ukraine Capital Fund, launched in Gdansk, aims to catalyze private investment in strategic Ukrainian sectors — energy, infrastructure, technology. The idea is simple: Ukraine's reconstruction will be colossal (Zelensky estimates damages at over €500 billion). It cannot rest solely on public funds. Private capital must be attracted — and for that, risk-sharing mechanisms are needed.

The €220 million public fund serves as a catalyst: it absorbs the first potential losses, making private investments less risky. This model — public sector guaranteeing, private sector investing — is one that has worked in other post-conflict reconstruction contexts. It is also a political signal: investors entering Ukraine now will be best positioned for the post-war economic boom. Merz is playing both the short term (supporting the war effort) and the long term (positioning German industry in the reconstruction).

European reactions: between approval and skepticism

Allies: Paris, Warsaw, Stockholm

The Merz proposal on associate membership received a broadly positive reception from France, Poland, and the Nordic countries. Emmanuel Macron, who had himself developed the concept of "European sovereignty," sees in the Merz proposal a materialization of this vision. Poland — the top supporter of Ukraine proportionally to GDP — is naturally favorable to any rapid integration measure for Ukraine. The Baltic and Scandinavian countries, whose security is directly linked to the conflict's outcome, also support it.

Resistance comes from traditionally Eurosceptic countries and from Central European countries that fear a dilution of structural funds if Ukraine joins the EU in its current dimensions. Ukraine, with its 44 million inhabitants (pre-war) and its significant agricultural economy, would be the largest beneficiary of cohesion funds and the CAP if it became a full member — a prospect that worries several member states whose agricultural and regional subsidies would be redistributed.

The institutional reform challenge

The Merz proposal also highlights a long-discussed but never resolved need: institutional reform of the EU to allow enlargement. The European Union at 27 members is already difficult to govern. At 35 members — with Ukraine, Moldova, the Balkans — the unanimity rule on foreign and security policy decisions would become a permanent brake. The question of qualified majority voting — long blocked by member states jealous of their veto — becomes urgent.

Merz seems ready to push on this subject too. His associate member proposal can be read as a test: if the EU can create a sui generis status for Ukraine without modifying the treaties, it is proof that innovative solutions are possible. If this test succeeds, it opens the way to other equally necessary institutional reforms. Postwar Germany had built the economic Europe. Merz's Germany could contribute to building the geopolitical Europe.

The Merz-Zelensky axis: a relationship of trust

The Berlin meeting of April 2026

On April 14, 2026, Merz welcomed Zelensky in Berlin with full military honors — a powerful symbolic gesture for a country that had long hesitated on the level of protocol to accord the president of a country at war. At this meeting, Merz explicitly called for rapid unlocking of the €90 billion loan. A few days earlier, Orbán's defeat in the Hungarian elections had lifted the last institutional obstacle. The timing was perfect.

The relationship between Merz and Zelensky is described by observers close to both chancelleries as founded on mutual respect and a realistic understanding. Zelensky knows that Merz cannot politically afford everything that Kyiv asks. Merz knows that Zelensky is defending not only his country but the principles that underpin the legitimacy of the European order. This mutual understanding is the basis of a productive relationship — even when positions diverge on associate membership.

The limits Merz will not cross

Honesty requires acknowledging the limits. Merz has not provided Taurus cruise missiles to Ukraine — a repeated request from Zelensky that would allow striking deep targets on Russian territory. The reason cited: escalation risk, fear of Germany's direct involvement. This limit is consistent with German institutional caution, but it frustrates Ukrainians who see comparable systems provided by other allies without triggering World War Three.

Merz also remains cautious about anything resembling a promise of NATO membership during the war — a red line that Washington and many allies maintain to avoid direct conflict with Russia. His EU associate member proposal is partly a substitute: giving Ukraine a clear institutional anchor to the West without going through the NATO door that remains closed. It is clever, but it is not what Zelensky is primarily asking for.

Merz in history: breaking the Zurückhaltung

The concept of Zurückhaltung

There is a German term that summarizes decades of German foreign policy: Zurückhaltung — restraint. The conviction, founded on the historical guilt of the Second World War, that Germany should never be the first to act on the international stage, that it should always wait for European consensus before moving forward, that it should minimize its power so as not to alarm its neighbors. This culture of restraint was virtuous in its motivations. It became paralyzing in its effects.

Merz has not abandoned the culture of multilateral cooperation — he remains deeply Europeanist. But he has abandoned restraint as an absolute value. He is ready to take initiatives. To advance a proposal others have not yet formulated. To push within the EU when the process bogs down. This is a break with Zurückhaltung — and it is necessary if Europe is to survive as a geopolitical actor in a world that neither Washington, nor Beijing, nor Moscow will view with indifference.

The signal for the rest of the world

When Germany — Europe's largest economy, the country whose vote is essential on virtually every EU file — decides to act with determination on Ukraine, the message received in Moscow, Beijing, and Washington is identical: Western solidarity toward Ukraine is structural, not circumstantial. It does not depend on a particular American administration. It does not fluctuate with national electoral cycles. It is inscribed in the politico-economic architecture of the European Union itself.

This may be Merz's most lasting contribution: having demonstrated that Europe can be an independent strategic actor, capable of major initiatives without waiting for a green light from Washington. In a world where Trump's America is unpredictable and distant, this European autonomy is not a luxury — it is an existential necessity. And a Germany that chooses to be its engine, rather than its brake, is a Germany taking its place in history.

The Bundeswehr in transformation: from numbers to real capabilities

German rearmament: between announcements and operational realities

Merz's Germany has broken with the rearmament taboo by announcing a massive increase in its defense budget. But the gap between budget announcements and actual operational capabilities is considerable. Military experts estimate it will take several more years before the Bundeswehr effectively possesses the capabilities corresponding to its new ambitions. Equipment delivery delays, recruitment difficulties, and the need to train new qualified personnel create a time gap between political investment and operational reality on the ground.

Orders placed for new Leopard 2 tanks, additional air defense systems, precision munitions — all of this will take two to five years to be delivered and integrated into units. Germany of 2027 or 2028 will be militarily stronger than Germany of 2025. But today's Germany is still contending with the legacies of decades of underinvestment. This is the reality that NATO partners must keep in mind.

The logistical infrastructure challenge: the rear of the theater

German rearmament has highlighted a frequently overlooked problem: military logistics infrastructure. Decades of budget cuts have left the Bundeswehr with insufficient ammunition depots, undersized maintenance workshops, railways and bridges that cannot always bear the transport of heavy tanks. These logistical deficits are less spectacular than new arms deliveries — but they are equally important to Germany's actual capacity to play its role in NATO's collective defense.

The Merz government has identified these gaps and launched remediation programs. But here again, timelines are long. Rehabilitating degraded military infrastructure requires coordinated civilian and military investments that take time to plan and execute. Germany of 2026 is a power on the rise — but not yet at the level of its declared ambitions.

German public opinion: sustaining support for Ukraine

Polling trends: from reluctance to engagement

In 2022, German public opinion was deeply reluctant about any military involvement. Post-Cold War pacifist culture, dependence on Russian gas, and memories of the Second World War created massive resistance to the idea of militarily supporting Ukraine. But polls conducted in 2025 and 2026 show a significant evolution: a majority of Germans now supports military aid to Ukraine, even if reservations persist about sending certain specific weapons systems such as Taurus missiles.

This evolution of public opinion is one of Merz's least visible but most important achievements: he committed Germany in a direction that public opinion followed with hesitation, and he gradually succeeded in bringing a majority of Germans along. This political pedagogy work on security is not spectacular, but it is fundamental to the durability of German engagement.

Political resistance: AfD, BSW and discordant voices

Consensus is not universal. The far-right AfD party and Sahra Wagenknecht's BSW movement maintain a pro-Russian or at least pro-rapid-negotiation position that together collects between 20 and 25% of German voting intentions. These political forces denounce the economic cost of rearmament, criticize aid to Ukraine as "escalation," and call for peace negotiations that would inevitably return Russian-conquered Ukrainian territories to Putin.

The rise of these currents does not invalidate Merz's policy — but it complicates it. It requires constant communication on the reasons and objectives of German engagement, limits budgetary room for maneuver, and creates permanent electoral pressure. Over the long run, maintaining support for Ukraine in a democracy subject to electoral cycles is a political challenge as real as the financial or military challenge.

Investments in Ukrainian reconstruction: Germany as economic partner

The reconstruction fund: between solidarity and economic opportunity

The German €90 billion loan to Ukraine is not only an act of political solidarity — it is also an investment in the long-term bilateral economic relationship. German companies are at the forefront of participation in Ukrainian reconstruction: infrastructure construction, industrial rehabilitation, agricultural modernization, renewable energy network development. Germany's industrial fabric — Siemens, Volkswagen, BASF, the hundreds of specialized Mittelstand firms — has exactly the competencies that Ukraine needs for its reconstruction.

The coincidence of economic interests and political solidarity does not invalidate the latter — it reinforces it. Lasting economic partnerships create incentives to maintain peace and stability. A Ukraine rebuilt with German capital will become a major economic partner for Germany — and therefore an additional reason for Berlin to defend its sovereignty and European integration.

German SMEs in Ukraine: pioneers of economic normalization

Some German SMEs have not waited for the end of the war to begin investing in Ukraine. Companies specializing in agricultural equipment, modular construction, renewable energy, or war debris recycling have already established presences in Ukrainian regions furthest from the front. These economic pioneers play an important symbolic role: they signal that economic normalization is possible, that Ukraine is not only a theater of war but a market of the future.

Government support for these initiatives is a natural complement to the €90 billion loan. War risk guarantees, export insurance instruments, expertise exchanges between German training centers and Ukrainian companies — all of this builds the bilateral economic relationship that will outlast the war well beyond its end. This is Merz's vision for Germany in Ukraine: not a passing donor, but a permanent strategic partner.

Conclusion: Germany marching east

What Merz's record reveals

In less than two years, Friedrich Merz has transformed Germany's relationship with Ukraine and with its own geopolitical power. The €90 billion loan — concrete, delivered, being disbursed. The €11.5 billion in military aid — the largest ever committed by Germany for a foreign partner. The associate member proposal — bold, controversial, but which reignited an essential debate about Europe's future. The bypassing of Orbán — legally elegant, politically courageous.

This record is not perfect. The Taurus missiles are still undelivered. The associate member status raises legitimate reservations. And the outcome of the war in Ukraine remains uncertain. But Merz has laid concrete milestones where his predecessors left vague intentions. And in international politics, concrete milestones matter more than declarations of intent.

What Europe must take from this

The lesson that Germany's European partners should draw from Merz's commitment is simple: when the largest and most hesitant country in the Union decides to act, the rest can and must follow. European solidarity toward Ukraine is no longer hostage to the lowest common denominator. It can be built around a willing coalition of determined countries — and this coalition can act without the paralyzing unanimity of 27. That may be Merz's most lasting contribution to the architecture of geopolitical Europe: having proven that political will can overcome institutional obstacles. It now remains to institutionalize this political will so that it outlasts its first instigator.

By Maxime Marquette, columnist

Columnist's transparency note

My biases on this file

I am in favor of Germany's strong commitment to Ukraine and the rapid integration of that country into European structures. This bias influences my positive reading of Merz's policy. I have tried to balance this position by reporting the legitimate reservations of Zelensky and legal experts on associate member status. My primary sources are: ABC News, Reuters, Bloomberg, Euronews, Ukrainska Pravda, RBC-Ukraine, and Verfassungsblog.

What I do not know

I do not know the precise roadmap that Merz envisions for associate member status, nor the ongoing discussions with the European Commission. I do not have access to the EU's internal negotiations on this subject. And I do not know whether Zelensky will ultimately accept an intermediate status or maintain his refusal of anything that resembles second-class membership.

Sources

Primary sources

ABC News — EU releases 3 billion-euro loan package for Ukraine's recovery as part of 2-year commitment — June 26, 2026

RBC-Ukraine — Merz urges EU to allocate €90 billion to Ukraine, ignoring Orbán's veto — March 18, 2026

Euronews — Merz proposes 'associate EU membership' for Ukraine — May 21, 2026

Bloomberg — Merz Says EU €90 Billion Loan for Kyiv Should Be Disbursed Now — April 14, 2026

Secondary sources

Straits Times — Germany's Merz pitches 'associate' EU membership for Ukraine — May 21, 2026

Ukrainska Pravda — German Chancellor Merz reiterates idea of associate EU membership for Ukraine — June 11, 2026

ABC News — EU leaders agree on 90 billion euro loan to Ukraine — December 19, 2025

Verfassungsblog — Towards an "Associate Membership" Status for Ukraine? — May 28, 2026