European leaders have agreed on lending Ukraine an interest-free loan of €90 billion, which is equivalent to $105 billion, over the next couple of years. This move by the European bloc is significant financial assistance for the war between Ukraine and Russia. The move by the European bloc did not involve the frozen Russian sovereign assets.
The agreement was concluded following over a day of negotiations during an EU summit in Brussels. It will apply to the country’s military and economic sectors for the 2026-27 fiscal year. The agreement was confirmed on X by the President of the EU Council, António Costa, who made this post: “We have a deal. Decision to provide 90 billion euros of support to Ukraine approved. We committed, we delivered.”
The decision was welcomed by Ukrainian President Volodymyr Zelenskyy, who described it as a big “boost to Ukrainian resilience.” However, he made it clear that Ukraine is still waiting for Russia’s “frozen assets” to be used for the purposes of reparations.
How the €90 billion EU loan will work
Rather, the EU will borrow from the capital markets, with the loans guaranteed by the unallocatedEU budgetary space—the difference between what the member states can be called on to pay and the amounts currently owed.
Main features of the package:
Interest Free Loans for 2026 and 2027
Financing raised through EU-backed borrowings
Represents about two-thirds of the funding that Ukraine will require over this period
It also happens to be a moment of consensus on joint borrowing, where borrowing commonly meets resistance from financially prudent members.
Why frozen Russian assets were not used
The Ukrainian government has called on the EU several times to spend the over €200bn worth of frozen Russian Central Bank funds it holds on the continent, pressuring the Russian government to pay for the war it has unleashed.
A solution proposed by the European Commission involved the investment of the “frozen funds into zero-interest EU bonds without formally confiscating them and thus violating international law.” Such proposals, however, were not implemented.
“The biggest challenge was Belgium, which accounts for approximately €185 billion in assets through its financial services company Euroclear. Belgium, together with Italy, Malta, and Bulgaria, demanded strong assurances against:
- Legal disputes in Russia
- Financial retaliation
- Long-term liability in case courts decide against the EU
No consensus could be reached on the sharing of such risks, and the measure remains a proposal. The leaders have now asked the Commission to further explore what they call a “reparations loan” mechanism.
Will Ukraine pay back the loan?
The leaders of the EU again stated that Russian assets would remain frozen until war reparations could be paid from Russia to Ukraine. In theory, this money could be used at a later date to repay the loan from the EU.
From all indications, analysts add that this is unlikely to happen in the near future.
The financial markets have reacted to the news with little concern. The yields on the eurozone government bonds have mildly increased, while the euro has been unaffected by the news. The borrowing cost of €90 billion is argued to pose little concern to Europe, especially with the potential risks to the economic markets posed by such actions.
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Political compromise in the face of internal divisions
A compromise demanded a united agreement, which at first met resistance from Hungary, Slovakia, and the Czech Republic. But their fears were allayed when they were assured that these loans would not affect their national budgets.
For the EU leaders, this agreement is a balancing act between supporting Ukraine and the world financial system.
As quoted by Carsten Brzeski, global head of macro research at ING, this move quietly extends Europe’s arsenal of joint borrowing instruments to include:
“We are not allowed to refer to it as a Eurobond, but we are very close. It definitely seems that it’s going to be one of the tools in Europe’s toolkit.”
Why This Matters
The EU loan is a clear signal of continued support for Ukraine, but the inability to access the frozen Russian assets exposes the boundaries of consensus on financial issues in war times in Europe. This gives Kyiv the short-term assurance of money. But for Europe, the key question becomes how long the political solidarity might hold under the continued conflict—and when the harsher financial decisions cannot be delayed. Has this conversation been useful thus far?
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