European Union leaders have decided to provide a massive interest-free loan to Ukraine to meet its military and economic needs for the next two years, after failing to agree on using frozen Russian assets, diplomats said in the early hours of Friday.
“We have a deal. Decision to provide €90bn ($106bn) of support to Ukraine for 2026-27 approved. We committed, we delivered,” EU Council president Antonio Costa said in a post on social media.
With public finances across the EU already strained by high debt levels, the European Commission had proposed using frozen Russian central bank assets to secure a huge loan to Kyiv, with joint borrowing against the EU budget as a second option.
Belgian prime minister Bart De Wever said EU leaders had avoided “chaos and division” with their decision to provide Ukraine with a loan through borrowing cash rather than using the frozen assets. “We remained united,” De Wever said after the late-night talks.
German chancellor Friedrich Merz said Ukraine would have to repay the loan only if Russia paid reparations for its war, and that the EU reserved the right to use Russian assets immobilised in the EU for repayment if Russia fails to pay compensation.
Merz had pushed hard for the frozen asset plan – but still said the final decision on the loan “sends a clear signal” to Russian President Vladimir Putin.
The EU estimates Ukraine needs an extra €135bn ($159bn) to stay afloat over the next two years.
Ukraine’s President Volodymyr Zelenskyy had told EU leaders at the start of the summit on Thursday that using Russian assets was the right way to go. “Russian assets must be used to defend against Russian aggression and rebuild what was destroyed by Russian attacks. It’s moral. It’s fair. It’s legal,” Zelensky said.
A draft text of the summit’s conclusions, seen by Reuters, said the funding would come from borrowing on capital markets, secured against the EU budget.
The deal will not affect the financial obligations of Hungary, Slovakia and the Czech Republic, which did not want to contribute to the financing of Ukraine, the text said.
Moscow-friendly Hungary had previously said it would oppose the deal, just as it opposed the use of Russian assets.
EU governments and the European parliament would continue working on setting up a loan for Ukraine that would be based on the frozen Russian central bank assets, the draft text of the summit’s conclusions said.
The decision on a funding deal for Ukraine had been cast by Poland’s prime minister, Donald Tusk, as a choice between “money today or blood tomorrow”, amid opposition from Belgium to a loan secured against Russia’s frozen assets.
“It’s good in the sense that Ukraine will secure funding for two years,” one EU diplomat told Reuters.
The move follows hours of discussions among leaders on the technical details of a loan based on the frozen Russian assets, which turned out to be too complex or politically demanding to sort out at this stage, diplomats said.
“We have gone from saving Ukraine, to saving face, at least that of those who have been pushing for the use of the frozen assets,” a second EU diplomat said.
The main difficulty in the use of the Russian money was providing Belgium, where €185bn of the total €210bn of Russian assets in Europe are held, with sufficient guarantees against financial and legal risks from potential Russian retaliation for the release of the money to Ukraine.
Russia’s central bank announced on Thursday that it would pursue damages against European banks “for the illegal blocking and use of its assets”, after its claim for $230bn in damages from Euroclear. Euroclear, the Brussels depository where €185bn Russian assets are parked, has been subject to an intimidation campaign, security officials told the Guardian.
With Reuters, Associated Press and Agence France-Presse
