A lifeline has been extended to Ukraine, as European Union leaders reached a pivotal agreement to provide a substantial 90 billion euro loan. This financial support is intended to address the nation’s urgent military and economic needs over the next two years, a critical juncture as Ukraine faces the daunting prospect of bankruptcy.
The scale of Ukraine’s financial crisis is immense. Estimates from the International Monetary Fund suggest a staggering 137 billion euros will be required in 2026 and 2027 alone. Kyiv desperately needs these funds to avoid economic collapse, and the pressure to deliver was mounting with each passing day.
Initial discussions centered on a bold, yet contentious, plan: utilizing the 210 billion euros in frozen Russian assets held primarily in Belgium. The idea was to leverage these funds as collateral for a “reparations loan,” directly linking Russia’s financial holdings to the cost of the war it initiated.
However, the path to utilizing these assets proved treacherous. Intense negotiations unfolded, aimed at shielding Belgium from potential Russian retaliation should it support the plan. Concerns centered on Euroclear, the Brussels-based clearing house holding the vast majority of the frozen funds, and a recent lawsuit filed by Russia’s Central Bank.
Ultimately, leaders opted for a more conventional approach: borrowing the necessary funds on capital markets. Despite the setback regarding the Russian assets, EU Council President Antonio Costa declared a “deal” had been struck, emphasizing a firm commitment to Ukraine’s survival.
The agreement wasn’t without dissent. Hungary, Slovakia, and the Czech Republic voiced opposition, reflecting deep divisions within the Union. Hungarian Prime Minister Viktor Orbán, a vocal critic of supporting Ukraine, argued that providing funds equates to fueling the conflict, and dismissed the asset seizure plan as unworkable.
France and Germany championed the loan agreement, recognizing the urgency of the situation. German Chancellor Friedrich Merz highlighted the zero-interest nature of the loan and its sufficiency to cover Ukraine’s needs for the coming years. He also affirmed the continued blockage of Russian assets until Moscow provides substantial war reparations – a figure Ukrainian President Zelenskyy estimates to exceed 600 billion euros.
The decision unfolded against a backdrop of unrest in Brussels, as farmers protested a proposed trade deal with South American nations. Zelenskyy himself had urgently appealed for a swift resolution, emphasizing the dire consequences of inaction. Polish Prime Minister Donald Tusk starkly warned of a choice between providing financial aid now or facing a far greater cost in human lives later.
Belgian Prime Minister Bart De Wever staunchly opposed the use of frozen Russian assets, citing legal risks and potential damage to Euroclear’s operations. He argued that the plan was riddled with uncertainties and could undermine legal certainty globally, ultimately jeopardizing the entire initiative.
Despite abandoning the immediate use of frozen assets, the EU has reserved the right to utilize them in the future to repay the loan, contingent upon Russia fulfilling its obligations to provide war reparations. This leaves open the possibility of a future reckoning, where Russia’s frozen wealth could be directly channeled towards rebuilding the nation it has devastated.
