Historic EU Agreement Provides Vital Support for Ukraine
In a landmark decision reached during late-night negotiations in Brussels, European Union leaders have approved a massive €90 billion loan package for Ukraine to cover its budget needs for 2026-2027. The agreement represents a significant shift from earlier plans to use frozen Russian assets and demonstrates Europe's continued commitment to supporting Ukraine amid Russia's ongoing invasion.
Zelenskyy Welcomes 'Significant Support'
Ukrainian President Volodymyr Zelenskyy expressed gratitude for the financial package, stating on social media platform X: 'This is significant support that truly strengthens Ukraine's resilience. Thank you for the result and the unity. Together we defend the future of our continent.' The Ukrainian leader emphasized the importance of the agreement as his country faces a projected €135 billion budget shortfall over the next two years.
Shift from Frozen Assets to Joint Borrowing
The original plan, championed by European Commission President Ursula von der Leyen, involved using approximately €200 billion in frozen Russian central bank assets held mostly in Belgium to fund Ukraine's reconstruction. However, this approach faced significant opposition from Belgium, which feared legal repercussions and potential Russian retaliation against the Brussels-based Euroclear financial clearing house where the assets are held.
Belgian Prime Minister Alexander De Croo explained the concerns: 'There were too many loose ends. And if you start pulling on them, everything unravels completely.' He added that the alternative solution was 'stable, legally sound, and financially credible. We are not venturing into unknown waters.'
Complex Negotiations and Compromises
The negotiations, which stretched into the early morning hours, saw EU leaders working to address Belgian concerns while maintaining unity. Dutch caretaker Prime Minister Dick Schoof noted: 'We as the Netherlands had a different preferred option, but we can live well with this. For Ukraine, it doesn't matter much where the money comes from, as long as it comes from somewhere.'
According to Reuters reporting, Belgium's approval was crucial to securing the financing deal. The country had warned that using frozen Russian assets could expose it to unprecedented financial and legal risks.
Loan Terms and Conditions
The €90 billion loan comes with favorable terms for Ukraine. The country will pay no interest on the borrowed funds and will only need to begin repayment once it receives war reparations from Russia. The EU retains the right to eventually use frozen Russian assets for repayment, but this remains a future possibility rather than an immediate funding mechanism.
As reported by CNBC, the loan will be backed by the EU's common budget, with stronger economies essentially guaranteeing the creditworthiness of the joint borrowing arrangement. This approach has historically been sensitive in Europe but was deemed necessary given the urgency of Ukraine's financial needs.
Exemptions for Reluctant Members
To secure unanimous approval, the EU granted exemptions to three member states: Hungary, Slovakia, and the Czech Republic. These countries objected to the joint borrowing mechanism but agreed not to veto the agreement in exchange for not having to contribute financially to the loan.
German Chancellor Friedrich Merz defended the compromise, calling it 'a great success' and noting that 'only the order is reversed' since Russian assets could still be used later. This perspective contrasts with Russian envoy Kirill Dmitriev's characterization of the decision as a failure for von der Leyen, whom he labeled a 'war-monger' along with British Prime Minister Keir Starmer and Chancellor Merz.
Broader Context and Implications
The agreement comes as Ukraine faces increasing financial pressure, with funding expected to run short by April 2026. According to Al Jazeera, the total EU support to Ukraine since Russia's full-scale invasion in 2022 now exceeds €187 billion.
EU correspondent Ardy Stemerding observed: 'The fact that they agreed to this shows how great the pressure was and how much everyone saw the importance of coming up with that loan. The worst scenario was that EU leaders would leave quarreling and not deliver. They managed to avoid that 'disaster scenario'.'
The decision represents both a practical solution to Ukraine's immediate financial needs and a diplomatic achievement in maintaining European unity. While it falls short of the original goal of making Russia pay directly for Ukraine's reconstruction through its frozen assets, it ensures continued vital support for Kyiv as the conflict enters its fourth year.