EU Leaders Approve €90 Billion Loan for Ukraine, Funds Sourced from Capital Markets

European Union leaders reached an agreement on Friday to provide Ukraine with an interest-free loan totaling €90 billion ($106 billion) to address its military and economic requirements for 2026 and 2027. This decision follows International Monetary Fund (IMF) estimates indicating Ukraine will require €137 billion ($161 billion) in financial support for those years.

Funding Mechanism

The approved funds will be raised through capital markets. An earlier proposal to utilize approximately €210 billion ($246 billion) in frozen Russian assets, primarily located in Belgium, was not adopted. Discussions concerning the use of these assets concluded without agreement, leading to the alternative funding approach.

Belgian Stance on Frozen Assets

Belgian Prime Minister Bart De Wever expressed concerns regarding the legal risks associated with employing frozen Russian assets. He also cited potential adverse effects on Euroclear, a Brussels-based financial clearing house holding €193 billion ($226 billion) in sanctioned Russian assets. Russia's Central Bank recently initiated legal action against Euroclear in response to the potential use of these funds.

Member State Positions

Hungary, Slovakia, and the Czech Republic initially expressed opposition to the loan package. However, a consensus was achieved, preventing them from blocking the initiative, contingent on assurances of protection from potential financial repercussions. Hungarian Prime Minister Viktor Orbán stated, "To give money means war," and characterized the proposal to use frozen Russian assets as a "dead end."

French President Emmanuel Macron supported the decision, describing borrowing on capital markets as "the most realistic and practical way" to fund Ukraine's efforts. German Chancellor Friedrich Merz confirmed the finalization of the financial package, noting the zero-interest loan. Merz also stated that frozen assets would remain blocked until Russia provides war reparations to Ukraine, which Ukrainian President Volodymyr Zelenskyy has estimated to exceed €600 billion ($700 billion).

Merz added, "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."

Statements and Context

EU Council President António Costa announced the agreement via social media, stating, "We have a deal. Decision to provide 90 billion euros ($106 billion) of support to Ukraine for 2026-27 approved. We committed, we delivered." Ukrainian President Volodymyr Zelenskyy attended the Brussels summit and appealed for rapid financial assistance. Polish Prime Minister Donald Tusk emphasized the urgency of aid, remarking on the necessity of providing "either money today or blood tomorrow." The EU leadership affirmed its right to utilize immobilized assets to repay the loan at a later stage, if necessary.