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EU Leaders Approve €90 Billion Loan for Ukraine, Sourced from Capital Markets After Frozen Asset Plan Dropped

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EU Finalizes €90 Billion Loan Package for Ukraine

"We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-27 approved. We committed, we delivered."
— EU Council President António Costa

European Union leaders have finalized an agreement to provide Ukraine with an interest-free loan of €90 billion ($106 billion) to support its military and economic needs for 2026 and 2027. The funds will be raised through capital markets via common EU debt, rather than utilizing frozen Russian assets as initially proposed. The agreement was reached in principle at a Brussels summit and finalized by EU ambassadors on Wednesday. The first tranche is expected to be disbursed by early April.

Funding Mechanisms and Operational Details

Loan Structure

The €90 billion loan is divided into two primary components: approximately €30 billion for budgetary aid and €60 billion for military assistance. This balance is subject to revision if the conflict concludes.

  • For 2026: €45 billion is allocated — €16.7 billion for financial support and €28.3 billion for military aid.
  • For 2027: The remaining €45 billion is planned, covering approximately two-thirds of Ukraine's estimated funding needs. Western allies are expected to cover the remaining third.

Disbursements are contingent on strict conditions, including sustained anti-corruption measures in Ukraine. Any regression in this area would lead to a suspension of aid.

Loan Repayment Terms

Ukraine will only be required to repay the loan if Russia ceases its military actions and agrees to compensate Kyiv for war damages. Ukrainian President Volodymyr Zelenskyy has estimated total damages at over €600 billion ($700 billion). Given Russia's stated opposition to reparations, EU officials anticipate the debt may be rolled over indefinitely.

The European Commission retains the right to use approximately €210 billion in immobilized Russian Central Bank assets to cover the loan in the absence of Russian reparations.

Member State Obligations

Hungary, Slovakia, and the Czech Republic are excluded from all financial obligations, including joint borrowing and annual interest payments. The remaining 24 member states will collectively contribute an estimated €2 billion to €3 billion annually in interest costs.

Procurement Rules for Military Assistance

The military component of the loan includes specific procurement provisions:

  • A "cascading principle" requires weapons and ammunition to first be sourced from Ukraine, the EU, Iceland, Liechtenstein, Norway, and Switzerland.
  • If unavailable from these sources, Ukraine may procure from other markets, including the United States.
  • Countries with security and defense partnerships with the EU — including the United Kingdom, Japan, South Korea, and Canada — will receive procurement priority if they contribute a "fair and proportionate" share to the borrowing costs.

Frozen Russian Assets: Proposal and Rejection

A parallel proposal to use approximately €210 billion in frozen Russian assets — primarily held in Belgium — as collateral for a "reparations loan" was not adopted. The European Commission had planned to release details of this scheme on December 18, but the plan was abandoned after discussions concluded without consensus.

Belgian Concerns

Belgium formally rejected the frozen assets proposal, citing significant financial and legal risks. Foreign Minister Maxime Prévot stated that Belgium views the reparations loan option as the least favorable due to its "unprecedented" nature and "consequential economic, financial and legal risks." He noted that the Commission's proposals did not alleviate Belgium's concerns and that utilizing the funds without addressing Belgium's risk exposure was "not acceptable."

Belgium expressed concern that Euroclear — the Brussels-based financial clearing house holding €193 billion ($226 billion) in sanctioned Russian assets — could face legal action from Russia, potentially damaging its reputation and operations. Russia's Central Bank has initiated legal action against Euroclear in response to the potential use of these funds. Belgium generates tax revenue from interest accrued on these assets, which currently contributes to a G7-organized loan program for Ukraine.

Response from Other Member States

"We understand the Belgian concerns, and we are willing to at least make sure that they are not alone in this."
— Dutch Minister David van Weel

Belgium's EU partners expressed understanding of its position. German Foreign Minister Johann Wadephul described Belgium's concerns as "serious" and "justified," stating the issue is "resolvable" through collective responsibility. Dutch Foreign Minister David van Weel acknowledged the significance of these funds for Ukraine and indicated willingness from several member states to provide financial guarantees in case of adverse outcomes.

European Central Bank Concerns

The European Central Bank expressed apprehension that the proposed EU reparations loan could impact confidence in the euro currency on international markets.

Statements from Leaders

EU and National Leaders

  • EU Council President António Costa announced the agreement, stating: "We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-27 approved. We committed, we delivered."
  • Belgian Prime Minister Bart De Wever noted that proceeding with a loan through borrowing, rather than utilizing frozen Russian assets, maintained unity among EU leaders.
  • German Chancellor Friedrich Merz confirmed the finalization of the financial package, describing it as a zero-interest loan. He stated: "If Russia does not pay reparations we will — in full accordance with international law — make use of Russian immobilized assets for paying back the loan."
  • French President Emmanuel Macron described borrowing on capital markets as "the most realistic and practical way" to fund Ukraine's efforts.
  • Hungarian Prime Minister Viktor Orbán stated: "To give money means war," and characterized the proposal to use frozen Russian assets as a "dead end."
  • Cypriot Finance Minister Makis Keravnos stated that the agreement demonstrates EU support for Ukraine, emphasizing the signal regarding respect for state sovereignty and territorial integrity under international law.

Ukrainian Leadership

  • President Volodymyr Zelenskyy stated that the package "will strengthen our army, make Ukraine more resilient, and enable us to fulfill our social obligations to Ukrainians." He expressed hope that the first tranche would be available by May–June and noted that without financial support by spring, Ukraine would need to reduce drone production.

Further Diplomatic Developments

Separately, French President Emmanuel Macron expressed his view that it would be "useful" for Europe to re-engage in discussions with Russian President Vladimir Putin, adding that finding a framework for such re-engagement in the coming weeks would be in the interest of both Europeans and Ukrainians.

A White House official informed AFP news agency that US and Russian officials are scheduled to meet in Miami for further talks on a peace plan. Kremlin envoy Kirill Dmitriev is expected to participate in discussions with US envoys Steve Witkoff and Jared Kushner.

President Zelenskyy announced upcoming talks between Ukrainian and US delegations in the United States, scheduled for Friday and Saturday, specifying a desire for Washington to provide further details on potential security guarantees to protect Ukraine from future invasions.

Next Steps

  • The finalized legal texts await approval from the European Parliament, which has committed to an expedited process.
  • The European Commission aims to disburse the first payment by early April.
  • EU leaders are scheduled to further discuss Ukraine's economic and military requirements at a summit in Brussels on December 18.