Some 2,500 years ago, so the myth goes, 300 Spartans faced a much larger Persian force at Thermopylae, a small mountain pass in central Greece. Thermopylae is the Latin word for “hot gates,” as there were hot springs in the area. In European history, the “hot gates” battle ended with the 300 Spartans annihilated.

The Persians had opened a second front to the rear of the Spartan line, which thereupon collapsed, wiping them out to a man. The “hot gates” was thus a defeat, although in later mythology it was spun as a strategic victory that bought time for the Greeks to mobilize to fight another day.

This theory is debatable, however, given that the battle of the “hot gates” lasted only three days—not much of a delay. The Greeks then took another year to mobilize, so three days wouldn’t have mattered that much. Thus, the loss of 300 Spartans at Thermopylae was almost certainly the waste of a valuable elite battalion—and Thermopylae by no means a “strategic victory” as Western accounts tend to present it.

Two and a half millennia later, Europe is again at the “hot gates.” And 300 is once more the magic number.

Today, 300 refers to the $300 billion in Russian financial assets seized by NATO countries in 2022 as part of the United States and European Union sanctions imposed on Russia in February that year. According to European Central Bank Director Christine Lagarde, no less than $260 of the $300 billion is held in Europe, most of it in Belgium near Brussels, which is NATO’s home base. Another $5 billion was frozen in the US, with the remainder to be found in banks of various other G7 countries and NATO allies.

Recently, NATO countries began the process of transferring the seized and heretofore frozen Russian assets to Ukraine. The $300 billion, it is argued, will “buy time” for Ukraine to continue the war into 2025—much as how the lives of the 300 Spartans supposedly bought time to mobilize a larger force.

Ukraine’s $200-billion-a-year price tag

Since the war in Ukraine began in February 2022, it is estimated that the US has provided Ukraine with between $200 and $220 billion in military and economic aid. European NATO countries have provided another $100 billion—or more, depending on how one estimates the market value of the various Soviet-era weapons that have been given to Ukraine. Then there’s the (at least) $18 billion supplied by the IMF to prop up Ukraine’s currency, along with billions more in private loans and investments from private sources.

This past spring, the US Congress passed a package of another $61 billion for Ukraine and Europe scrapped up another $5 billion. That combined amount, it is estimated, will fund Ukraine’s war through the end of 2024.

Add up all the foregoing items and that is a cost to NATO countries of roughly $200 billion per year. About half of this amount has come in the form of weapons and the other half to keep Ukraine’s economy afloat. President Zelensky himself has estimated that Ukraine’s economy and institutions need about $8 billion per month simply to continue to function.

But that still leaves the question of how NATO and the West can fund Ukraine’s war costs and keep its economy afloat into 2025 and beyond, since it is clear the US and the NATO countries have no intention of agreeing to end the conflict anytime soon. On the contrary, the events of the past year in particular indicate a NATO strategy of continued incremental escalation by providing Ukraine ever-more-lethal weaponry, more technical assistance on the ground, and approval for increasingly provocative tactics such as missile strikes deep into Russia, attacks on Russian ballistic missile defence radars, use of cluster bombs on Russian civilian populations, and soon-to-be-announced “no fly” zones along Ukraine’s western border.

As a further indicator of US and NATO plans to continue the war in the longer term, the major NATO governments recently signed long-term, 10-year-minimum bilateral defence agreements with Ukraine. This measure is designed to lock in whatever governments replace the pro-war elites currently running the US, the UK, France, and Germany.

According to the Wall Street Journal, the US-Ukraine bilateral security agreement would “establish a long term US commitment to military aid” for Ukraine and require any “future US administration to work with Congress to provide funding and military support for Kyiv.” Or, as Biden’s National Security Advisor Jake Sullivan put it, the US-Ukraine bilateral security agreement was “not just for this month, this year, but for many years.”

In yet another indication of the likelihood of the war continuing beyond 2024, both NATO and Russia are now lining up allies in preparation for what looks like a protracted and possibly wider conflict. Russia’s answer to NATO’s signing of bilateral defence agreements with Ukraine has been to conclude agreements with China, North Korea, Vietnam, Iran, and various countries in Central Asia, including even Afghanistan, to provide contract troops in exchange for Russian military aid.

In this regard, recent events are eerily similar to what took place in Europe in the summer of 1914, as both sides lined up allies in anticipation of the coming conflict which today we call the First World War.

Short of a complete Russian military victory brought on by the collapse of the Ukrainian forces and a NATO decision not to enter the conflict directly despite such a collapse—the latter a very unlikely proposition in the face of an imminent Russian victory—the Ukraine war will drag on well into 2025.

All of which again raises the question of how to pay for it, once current NATO funding runs out after December 2024.

Recently the process of determining how to continue, and to fund, the war was begun—a process that involves the transfer, in whole or part, of Russia’s $300 billion in assets, frozen in 2022 by the Western countries in which they are held.

$300 billion for Ukraine

In April earlier this year, the US Congress passed a law that allows President Biden to seize the $5 billion of Russian assets held either in US banks or in real property form, convert it to dollars, and place it in a Ukraine Defense Fund created by the same law. Biden then pressed the European NATO countries to do the same with their $260 billion share.

The Biden proposal was for the US to raise $50 billion immediately (from various US investors) for Ukraine. Private bonds would be issued per the Biden plan, to be purchased by (US?) investors, with the $50 billion placed in the Ukraine Defense Fund and then distributed to Ukraine. The World Bank would act as the distributor of the funds. Ukraine would pay the interest on the bonds every year. The catch per the Biden plan was that if Ukraine defaulted on its interest payments, then the Europeans would be liable to reimburse the investors. What a deal! American investors would make the money while the Europeans would, potentially, get stuck with the bill. Even they choked on it.

So, the Europeans came up with their own plan. Although the details, supposedly, are still to be worked out in coming weeks, the European plan would raise $54 billion in funds “from existing EU programs for Ukraine.” It is not clear if these funds are to come from private investors or if the EU will issue new bonds specifically for Ukraine aid, bonds that would then be bought by EU governments and banks. If the latter, for the European Union to issue its own bonds would represent a further trend toward the creation of a fiscal union alongside the Euro currency/European Central Bank monetary union. Reportedly, the EU plan also requires the US to assume a share of the risk and pay lenders if Ukraine were to default on its payments. Lenders, in the meantime, would be paid interest on the $260 billion annually—an amount estimated at around $4 billion per year. The Europeans also wanted language assuring that European military contractors, and not just the US, would get their share as Ukraine spent the funds.

Both the Biden and EU plans remain highly opaque in terms of details. The Europeans admitted the details of their plan will take weeks to resolve. But there remain interesting gaps in the deal, presumably to be worked out before year’s end. Questions like these:

• Is the $54 billion to be raised from private investors as well as governments?
• Will Ukraine get the entire $54 billion up front or in tranches; and if the latter, how many tranches and over how many years?
• Will governments (EU and/or US) assume liability to lenders if payments are not made?
• Will there be subsequent $54 billion disbursements to follow? Some US media have suggested the deal includes further $54 billion distributions to Ukraine’s economy over three more years. Also, is the $54 billion intended to prop up Ukraine’s economy, paying government salaries, purchases, and pensions through 2027? Or is it intended for weapons purchases as well? And if the latter are separate, how much will that cost?
• What is the lenders’ guaranteed annual interest rate of return on the bond and loan, if private funding—not just government money—is part of the European deal?
• If the interest profits on the $260 billion in seized assets is only $4 billion per year, who will pay lenders the difference? Current interest on the $260 billion in EU banks was virtually risk free. But repayment of the interest on the loan by Ukraine carries a major element of risk. As such, will the lenders not demand a much higher interest rate than before? Private lenders involved in the deal certainly will not buy the bond at normal market interest rates.
• When the bond matures in ten years, how will Ukraine return the principal if it is responsible only for covering the annual interest payments? Where will Ukraine get the cash to pay off the principal, whether annually or at maturity—especially if it loses the war?

Bottom line: it appears that somehow Ukraine will get at least $50 billion. To spend on what is unclear. Unclear also is whether the government will issue the bond that private investors will buy or if it will be a private bond backed by the government if not paid. However the $50 billion is structured, Ukraine will still have to pay back the principal ($300 billion, presumably). Where is it to find the money? Ukraine’s economy is a basket case and currently in a death spiral over its debt. Which means, in the end, that the $260 billion of the Russian funds held in Europe will likely also have to be seized to pay the bondholders-investors at maturity of the bond.

Biden and the Americans wanted simply to seize the full amount and give it to Ukraine (as Biden did with the $5 billion in Russian assets held in US banks). The Europeans balked at that and proposed a financial sleight-of-hand solution, creating a fiction that the interest on the $260 billion will cover annual interest payments to the lenders and that in the end, somehow, Ukraine will be able to pay back the $260 billion principal.

So why are the Europeans so reluctant to jump in with both feet and do what the Biden administration has done and wants them to do as well—i.e., grab the $260 billion outright instead of using it as collateral with which to raise a Euro bond to provide Ukraine with funding? The explanation is that the Europeans are worried about the legality of simply distributing the seized funds (as if skimming the interest and profits was somehow not illegal, but seizing and distributing the principal $260 billion was).

Blowback from diverting the $300 billion

What the Europeans are really worried about is that if they steal the assets too quickly, Russia will no doubt respond in kind. There are still a lot of EU bank assets—cash, securities, and real property—in Russia. What is to stop Russia from seizing them? America has little at risk in Russia in that sense. Europe risks a great deal.

Moreover, Russia is already freezing and seizing assets of Deutsche Bank and Commerzbank for reasons related to sanctions. Many European companies are still operating in Russia. What is to stop Russia from taking over their assets—financial and real property?

Then there’s the potential impact on the European currency, the Euro, and the deposits in EU banks by many countries of the Global South. Outright seizure of assets raises the question: whose assets in EU banks will be next? Countries will take their currency and other liquid assets out of the EU banks, an outflow that will depress the value of the Euro. The European Central Bank will then have to raise interest rates in Europe to keep the Euro’s value from dropping further. That will slow an already sluggish and stagnant European economy. The consequences of just grabbing and distributing a country’s sovereign assets thus carries significant risk of economic contagion, in other words. The Europeans know this. Hence their current plan to work around the outright seizure and distribution of the $260 billion principal, skim the profits from it, and use it all as collateral to fund a loan—i.e., their $54 billion government bond plan.

The US neocons are too foolish, perhaps, to foresee (or perhaps even care about) such an impact on the US dollar arising from their outright seizure of Russian assets. As the arrogant global economic hegemon, the US and the Biden administration believe they are largely immune to economic blowback from seizing another country’s assets. Of course, they are wrong. The Europeans are perhaps more aware of the consequences, but America’s neoliberal elites simply seem not to care. By the time they do, it will be too late. By then, the ongoing expansion of the BRICS bloc, and the emerging alternative global financial structure that it brings with it, will have done mortal harm to the US dollar and American global hegemony. There is even talk about the expanding BRICS creating an alternative political structure, a kind of BRICS global parliament. Institutional “dual power” is always a sign of revolution and it is becoming increasingly clear that almost the entire Global South is now in a state of revolt against the US/G7 empire.

Thermopylae 2.0: Will the $300 billion “buy time”?

Public opinion within the US and the European members of the G7 is shifting. The recent elections for the European Parliament, followed by the stunning defeat of Macron’s party in France’s National Assembly elections and the Conservative Party debacle in Britain soon after, are all harbingers of shifting political winds in Europe. Germany’s weak SPD-Green coalition government is also apparently in trouble, as the right-wing AfD party continues to make gains both in terms of seats in the legislature and public opinion.

Then there are the dramatic events in the US in the wake of Biden’s disastrous presidential debate as well as the surge in public voter support for Trump following the recent failed assassination attempt. In US federal elections, popular voter support is irrelevant. In America, one-person-one-vote democracy simply does not exist. What matters are the electoral college votes, cast by the state electors. The electors in at least 40 of the 50 states are virtually predetermined—locked in either for Biden or for Trump. The seven swing states (by now maybe ten) up for grabs by either party are the strategic exception.

The recent outcomes of elections in Europe and those pending in the US are by no means a guarantee that the NATO funding schemes for seizing the Russia’s $300 billion assets will collapse, but the momentum politically is certainly shifting. Zelensky clearly believes that NATO financing of the war is secure for at least another year, as a result of the latest US and EU arrangements to tap the $300 billion in Russian assets.

But the political momentum on the war is clearly shifting. Public support in the West for the NATO elites’ war-financing policies is beginning to look like the kind of liquefaction of the soil that occurs in earthquakes. What was once solid ground may quickly turn to liquid mud. No building can resist, however tall or solid, when the earth itself moves. The recent electoral developments in Europe and the US may be the initial seismic shock in a collapse in public and political support in the West for continuation of the war.

Wars on the scale of the one in Ukraine are determined by which side can out-produce the other in weapons and material, which population is larger, which has the greater number of, and better trained, troops, whose economy is strongest, and whose populace is most united behind the effort and committed to the outcome. Ukraine is at a disadvantage in all the above categories.

Like the 300 Spartans at Thermopylae, the West’s distribution to Ukraine of Russia’s $300 billion in assets will not be enough to prevent eventual defeat. The Ukraine war will almost certainly be resolved within the next 12 months—on the ground, not with bank accounts. Like the Spartans at Thermopylae in 480 BCE, time may run out for Ukraine even before Europe can buy some more of it using its share of the $300 billion.

Moreover, the price paid by Europe for its $54 billion war loan to Ukraine may result in a net loss. With such a bad investment, Europe could open itself to all sorts of negative consequences. As Saudi leader Mohammed bin Salman recently warned, should Europe go ahead and distribute its share of the $300 billion to Ukraine, Saudi Arabia will withdraw its assets and Euros from European banks—especially French banks.

With “Project Ukraine,” Europe again stands at the “hot gates.” And once more, as in the distant past, this new “300” promises scant military advantage at the cost of a historic economic loss.

Dr. Jack Rasmus is the author of several books on the United States and the global economy, including The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump (2020), Systemic Fragility in the Global Economy (2016), and The Twilight of American Imperialism (forthcoming later this year form Clarity Press). He is a host for the radio show Alternative Visions on the Progressive Radio Network, a journalist, a playwright, and a former professor of economics at St. Mary’s College (retired). He worked for 20 years for various tech start-ups and global companies, prior to which he served for 15 years as an organizer and local union president with several American unions.