EU leaders agree to $106 bn loan to Ukraine for 2026-2027 amid peace hopes

By Alberto Nardelli and Jorge Valero

 

European Union leaders reached an agreement to loan Ukraine 90 billion euro ($106 billion) for the next two years, aiming to strengthen Kyiv’s hand at the negotiating table and keep the war-torn country afloat. 

The EU will raise joint debt backed by the bloc’s budget, a significant pivot from most EU leaders’ preferred plan to use Russian assets frozen on EU soil.

 

The decision came early Friday morning after marathon talks at a summit in Brussels. The leaders’ conclusions pledge to keep working on the Russian assets plan, while committing to using joint debt now to get Ukraine much-needed aid.

 

EU leaders were under intense pressure to agree to the massive loan for Ukraine at the make-or-break summit after months of talks failed to break the deadlock over the contentious plan.

 

The US has largely cut off its financial support and Kyiv’s funds will run dry by April. Washington is also pressuring the war-torn country to make concessions in peace talks, leaving European officials scared that the entire continent could be put at risk.

 

For the last few months, most EU leaders have said their best option to fund Ukraine was to use the 210 billion euro in frozen Russian central bank assets on EU soil. A US proposal to use those assets instead for postwar investments with Russia only made the issue more pressing for Europe.

 

“In my view, that is indeed the only option,” German Chancellor Friedrich Merz told reporters earlier on Thursday. 

 

Merz has argued that using the assets could strengthen Ukraine’s position at the negotiating table while punishing Moscow. The idea was that the money would only be paid back to Russia if it paid reparations to Ukraine.

 

Ukrainian President Volodymyr Zelenskiy, who joined leaders at the summit in Brussels, said using Moscow’s funds was “the most appropriate” financing option so that “Russia understands that it will have to pay reparations” for destroying his country. 

 

“We need money so that Russia or anyone else cannot use it as leverage against us,” Zelenskiy told reporters. “We want this tool to support us. We feel more confident with this tool than without it.”

 

But Belgium, where most of the assets are housed, led a fierce resistance, arguing that it could face retribution from Russia and legal exposure if Moscow successfully sued to claim back its funds. 

 

Russia has also been ratcheting up efforts to kill the effort in recent days.

 

The Russian central bank last week filed a lawsuit in Moscow seeking 18.2 trillion rubles ($229 billion) from Euroclear, the Belgium-based depository that holds most of the frozen assets. On Thursday, it issued a new warning to the EU, saying it may seek compensation in local courts from European lenders should the bloc proceed with using the assets.

 

The final agreement reached early on Friday specified that any use of the EU’s budget to guarantee a loan won’t impact the financial obligations of the Czech Republic, Hungary and Slovakia, which are all skeptical of offering Ukraine funding.

 

While the result is likely to face criticism, it reflects the urgency EU leaders felt to get Ukraine fresh funds.

 

“Now we have a simple choice, either money today or blood tomorrow,” Polish Prime Minister Donald Tusk told reporters ahead of the summit. “And I’m not talking about Ukraine only, I’m talking about Europe.”