Europe’s support for Ukraine: What does it mean for the Lebanese expatriate?

The European Union is going through a pivotal phase marked by major financial and political decisions, as it seeks to strike a delicate balance between supporting Ukraine, controlling inflation, and maintaining economic stability across Europe. This comes amid two key announcements: the approval of a large aid package for Ukraine and the decision by the European Central Bank (ECB) to keep interest rates unchanged.

The European Union approves an aid package exceeding $105 billion for Ukraine… but what comes next?

EU leaders have agreed to allocate €90 billion (approximately $105.5 billion) in support for Ukraine over the 2026–2027 period, following months of intense debate over the funding mechanism. This package carries economic, political, and existential implications for the European Union.

From an economic standpoint, the EU has yet to fully recover from the impact of Brexit. At the same time, Europe’s largest economies, particularly Germany and France, are facing a slowdown in industrial activity, especially in the automotive sector, where China has gained a strong foothold in the European market. These developments have raised doubts among some member states about the EU’s ability to protect their economies from external competition. In parallel, rising political challenges within France and Germany have further increased uncertainty in both countries.

Politically, the approval of this aid package reflects the unity and resilience of the European Union, countering doubts about its capacity to safeguard the interests of its member states. The fact that the decision was reached in Munich, without external interference, reinforces its character as a purely European decision.

On a more existential level, the agreement sends clear messages—most notably to the United States, and in particular to President Donald Trump, who has been conducting dialogue between Ukraine and Russia largely without European involvement. Through this aid package, the EU has asserted itself as a key player at the negotiating table.

These decisions extend far beyond Brussels or Kyiv. For countries deeply connected to the European economy through migration, remittances, and education, Lebanon among them, Europe’s fiscal and monetary choices have direct, tangible consequences. Exchange-rate movements and interest-rate policy shape the daily financial realities of Lebanese expatriates and their families, as transfers between Europe and Lebanon remain tightly linked to euro-area monetary decisions.

How does the European economy affect the Lebanese expatriate?

Lebanese residents in Europe generally fall into two main groups:
- The first consists of workers in European countries who typically convert part of their income from euros into US dollars and send it to Lebanon.
- The second group includes Lebanese students enrolled in European universities, who rely primarily on financial transfers from Lebanon, that is, converting US dollars into euros to cover tuition fees and living expenses.

In both cases, the euro–dollar exchange rate plays a decisive role in determining the value and cost of these transfers, making economic and monetary developments in Europe of direct concern to Lebanese expatriates.

As 2026 approaches, several key factors warrant close attention. Chief among them is the decision by the ECB Governing Council to keep its main interest rates unchanged, while reaffirming that inflation is expected to stabilize around the 2% target over the medium term. This suggests a continuation of the current monetary policy stance. However, what may be overlooked is the potential for the euro to strengthen against the dollar if monetary policy divergence persists should the US Federal Reserve move toward rate cuts while the ECB maintains its current rates. Under such a scenario, the euro could approach the 1.2000 level, a level that would not necessarily be favorable for Europeans or for Lebanese families transferring money from Lebanon to Europe.

Conversely, the euro area continues to face geopolitical uncertainty due to the ongoing Russia–Ukraine war. The EU’s latest support package for Ukraine places the bloc in a sensitive position between the United States, which seeks a solution acceptable to all parties, and Russia, which views itself as acting defensively. An escalation of these tensions could put pressure on the euro and lead to a decline against the US dollar.

Between these two scenarios, the performance of the euro remains a key factor in determining the cost of financial transfers and their direct impact on Lebanese expatriates and families in Lebanon.