The European Union agreed on 18 December to provide Ukraine with €90bn in joint debt over 2026-2027, after failing to reach consensus on an unprecedented plan to tap frozen Russian assets directly.
Key facts about the EU Ukraine loan:
- €90bn interest-free loan for 2026-2027
- Funded through joint EU borrowing on capital markets
- Hungary, Slovakia, and Czech Republic opted out
- Belgium blocked plan to use €210bn in frozen Russian assets
- Ukraine repays only if Russia pays war reparations
- Covers two-thirds of Ukraine's estimated €135bn needs
The compromise delivers urgently needed funds to Kyiv while signaling Europe's resolve to Moscow. German Chancellor Friedrich Merz framed the decision as a warning to the Kremlin: "This sends a clear signal from Europe to Putin: This war will not be worth it. We will keep Russian assets frozen until Russia has compensated Ukraine," he wrote on X.
Why Hungary, Slovakia, and Czech Republic opted out of EU Ukraine loan
Hungary, the Czech Republic, and Slovakia will not participate in the loan scheme under a so-called "enhanced cooperation" mechanism. The summit conclusions explicitly state that any mobilization of EU budget resources as a guarantee "will not have an impact on the financial obligations" of these three countries, Euronews reported.
Hungarian Prime Minister Viktor Orbán, Moscow's closest ally in the EU, opposed providing any new financial support to Ukraine. "To give money means war," Orbán told reporters, describing the rejected reparations loan as a "dead end." Slovakia's Prime Minister Robert Fico has repeatedly opposed fresh military assistance for Ukraine, while the Czech Republic under Andrej Babiš joined the opt-out arrangement.
Why EU chose joint debt over frozen Russian assets
The European Commission had presented two options on 3 December to address Ukraine's financing needs. According to Commission President Ursula von der Leyen's statement, the preferred option was a reparations loan that would tap €210bn in frozen Russian Central Bank assets held in Europe, mostly at Belgium's Euroclear depository. The second option was joint EU borrowing backed by the common budget.
EU leaders initially pushed hard for the reparations loan because it would have made Russia effectively pay for Ukraine's defense. Belgium blocked it, demanding unlimited guarantees against potential Russian retaliation and legal costs — a request other member states found unacceptable.
How Ukraine will spend €90bn EU loan
The €90bn covers roughly two-thirds of what the International Monetary Fund estimates Ukraine needs over the next two years. Von der Leyen outlined two main spending categories on 3 December:
- Budget support: Keep the Ukrainian state and basic services running
- Military support: Boost Ukraine's defense industrial capabilities
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On military spending, the Commission specified a "cascading principle" — funds would be used predominantly to purchase from Ukraine, the EU, and EEA/EFTA countries, integrating Ukrainian defense production into Europe's industrial base.
The loan will be interest-free, and Ukraine would only repay if Russia eventually pays war reparations. European Council President António Costa noted the EU "reserves its right to make use of the immobilized assets to repay this loan."
€210bn in frozen Russian assets stays locked
Though the reparations loan failed, the €210bn in frozen Russian assets stays locked. EU leaders gave the European Commission a mandate to continue working on the technical and legal framework, though deep divisions make progress uncertain.
The decision came as Russian President Vladimir Putin referred to European leaders as "piglets" in an address to military officials, CNN reported. Tom Keatinge, director of the Centre for Finance and Security at the Royal United Services Institute, warned: "The Russians work day and night to fragment Europe, and they are better at doing that than Europe is at remaining cohesive."
