The agreement reached by European Union leaders provides a €90 billion loan to Ukraine for 2026–2027, aimed at supporting both the military and civilian budget needs of the country grappling with the war against Russia. The loan was approved after a summit marked by deep disagreements over how to raise and secure these resources.
The structure of the loan
The €90 billion package is not a gift or a direct transfer of funds, but rather a European Union loan granted on concessional terms. Kiev will not have to repay immediately or pay interest: the repayment is tied to the receipt of any war reparations from Russia, or, in the future, the use of frozen Russian funds if Moscow fails to fulfill its obligations.
To enable the loan disbursement, the EU will issue common debt securities on the capital markets, i.e. bonds guaranteed by the EU budget. In practice, the EU will collectively borrow to raise the necessary €90 billion, drawing on the so-called “fiscal margin” available between commitments and payments in the current European financial framework. This scheme avoids the direct infusion of funds from individual member states and does not immediately burden national budgets.
Where will the money come from?
Issuance of common EU debt. The main source of funds will be the Union’s collective borrowing on the financial markets. Institutional and private investors will purchase the issued bonds, providing liquidity to the EU, which will then be lent to Kyiv.
Potential future use of frozen Russian assets. In theory, approximately €210 billion in Russian assets, mainly held at institutions such as Euroclear in Belgium, have remained frozen since 2022 in response to the invasion. The European Commission had proposed using them as the basis for a “reparation loan” directly to Kyiv, transforming these assets into working capital.
However, this option was abandoned at the decision-making stage due to legal, political, and market concerns: Belgium, which holds most of those assets, strongly opposed it due to the risk of retaliation and lawsuits from Moscow, while other countries feared a negative impact on investor confidence in the eurozone.
Why Germany is called a “defeat”
The term “defeat” applied to Germany stems from the fact that Berlin had initially pushed strongly for the direct use of frozen Russian assets as the primary source of lending, a position also supported by Chancellor Friedrich Merz. This approach would have alleviated the need for new debt issuance and reduced the burden on European budgets.
However, strong political opposition, particularly from Belgium, concerned about financial and legal liabilities related to Euroclear, and from other member countries, led to the suspension of the plan based on Russian assets. Germany was thus forced to accept a compromise based on common debt, a solution less favorable to Berlin from certain political and economic perspectives.
The outcome is interpreted by some analysts as Berlin’s surrender to the resistance of other member states, marking a setback to Germany’s vision of financing support for Kyiv using “non-European” resources frozen for sanctions reasons.
Strategic Implications
From the member states’ perspective, the loan represents a pragmatic solution to maintain financial support for Ukraine, preventing a collapse of Kyiv’s resources by 2026. On the other hand, the use of common debt strengthens the EU’s role as a supranational actor capable of operating on global markets, while highlighting political and legal limitations in managing the frozen assets of third-party states in conflict.
In short, the €90 billion loan is an initiative of great financial and symbolic significance, combining European solidarity, budgetary challenges, and complex geopolitical dynamics.
