EU Agrees €90bn Loan for Ukraine, but Tensions Over Russian Frozen Assets Remain
European Union leaders have approved a €90 billion loan to Ukraine over the next two years, aimed at covering urgent financial needs amid the ongoing...
European Union leaders have approved a €90 billion loan to Ukraine over the next two years, aimed at covering urgent financial needs amid the ongoing war with Russia. While the agreement secures funding, EU nations could not reach consensus on the preferred method of linking the loan to Russia’s €210 billion in frozen assets, leaving some uncertainty over the repayment mechanism.
The Loan Framework
EU Council President António Costa confirmed that the loan will be backed by the EU budget, and Ukraine would repay only once Russia fulfills reparations obligations. Costa added that the EU “reserves its right to make use of immobilized Russian assets to repay this loan,” signaling potential future recourse against Moscow.
The loan will be divided over two years, providing Kyiv with a crucial lifeline to support both military operations and civilian needs, including drone production and other defense capabilities.
Disagreements Over Russian Assets
A major sticking point was whether the loan should be directly secured against Russia’s frozen assets in the EU. Belgium, home to 88% of these funds, demanded unlimited guarantees from other member states in case Russia successfully challenged the seizure.
Belgian Prime Minister Bart De Wever criticized the reparations-linked plan, calling it fraught with “loose ends” that could unravel the agreement. Meanwhile, German Chancellor Friedrich Merz, a strong proponent, stressed that the move sends a “decisive message” to President Putin, emphasizing that EU law would allow Russia’s assets to be used if reparations are not forthcoming.
EU Budget Backstop and Political Maneuvering
Supporters of using the EU budget were initially concerned that unanimity requirements would block funding. However, Hungary, Slovakia, and the Czech Republic agreed to approve the loan as long as they were not financially liable for guarantees. Hungarian Prime Minister Viktor Orbán hailed the trilateral deal with a social media post: “back in business!”
Danish Prime Minister Mette Frederiksen noted the difficulty of getting all 27 member states to agree, highlighting external and internal attempts to divide the EU.
Polish Prime Minister Donald Tusk framed the decision starkly: “money today or blood tomorrow,” underlining the stakes of timely financial support for Ukraine.
International Implications
EU officials had hoped that using Russian assets could prompt non-EU allies, including the UK, Canada, and Japan, to provide additional funding, estimated at €45 billion, to cover Ukraine’s projected €136 billion requirements in 2026-27.
President Volodymyr Zelenskyy called the EU’s funding decision “one of the clearest and most morally justified decisions,” while warning that Ukraine risked running out of money for critical defense projects such as drone production.
The compromise ensures Ukraine receives essential support, though the unresolved question of asset-backed repayment leaves the door open for future disputes over Russian funds.