Ukraine deal: EU leaders agree €90bn loan, but without use of frozen Russian assets

Original article by Jennifer Rankin in Brussels

EU leaders have pledged a €90bn loan for Ukraine to meet urgent financial needs, but failed to agree on the preferred option for many of securing that loan against Russia’s frozen assets in the bloc.

After talks ended in the early hours of Friday, the president of the European Council, António Costa, told reporters: “We committed and we delivered.” He said EU leaders had approved a decision to make a €90bn loan to Ukraine for the next two years backed by the EU budget, which Kyiv would repay only once Russia pays reparations.

Costa added: “The union reserves its right to make use of the immobilised assets to repay this loan.”

The Ukrainian president, Volodymyr Zelenskyy, wrote on X that the deal “is significant support that truly strengthens our resilience”, adding: “It is important that Russian assets remain immobilised and that Ukraine has received a financial security guarantee for the coming years.”

EU leaders entered the summit on Thursday with many wanting to secure the urgently needed loan against some of Russia’s €210bn frozen assets on the continent. But the plan hinged on the demand of Belgium, which hosts 88% of the Russian funds in the EU, to have unlimited budget guarantees from other member states if Moscow won a successful claim for damages.

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Belgium’s prime minister, Bart De Wever, said the reparations loan had not been a good idea. “When we explained the text again, there were so many questions that I said, ‘I told you so, I told you so.’ There are a lot of loose ends. And if you start pulling at the loose ends in the strings, the thing collapses.”

Euroclear in Brussels is being sued by the Russian central bank for $230bn while its top executives have also faced a campaign of intimidation orchestrated by Russian intelligence, the Guardian reported this week.

The German chancellor, Friedrich Merz, a strong advocate of the reparations loan, said the agreement was “a decisive message because [Vladimir] Putin will only make concessions once he realises his war will not pay off”.

He said he was delighted with the outcome and that it still fulfilled his goal of using the Russian assets, because they would be used to repay the loan if Russia refused to pay reparations to Ukraine.

“We just changed the timeline a bit,” Merz told reporters. “It remains the case that Russian assets will be used as a securitisation for the loan and then also for paying back the loan.”

As the loan will be raised on capital markets, it will also be available more quickly to Kyiv, whereas the Russian assets plan would have required a potentially complicated sequence of legal steps. Merz said he expected the funds to be available from mid-January – well ahead of Ukraine’s cash crunch forecast for April.

Merz and other supporters of the reparations loan plan had argued that funding Ukraine via the EU budget was impossible because it required unanimity.

But the path was cleared when the three nationalist governments in central Europe indicated they would approve the use of the EU budget to fund Ukraine, as long as they did not have to contribute to the loan guarantees. The leaders of Hungary, Slovakia and the Czech Republic were pictured in a trilateral meeting by the Hungarian prime minister, Viktor Orbán, who tweeted: “back in business!”

According to the final text of the agreement, the EU guarantees for the loan “will not have an impact on the financial obligations” of these three countries.

The Danish prime minister, Mette Frederiksen, said it was “quite something” to get 27 countries to agree on a €90bn loan for another. She said: “There are a lot of people outside the European Union and unfortunately also inside the European Union who tries to divide us. It is getting more and more difficult and I think this will continue.”

Italy’s prime minister, Giorgia Meloni, said she was glad that common sense had prevailed and that resources for Ukraine had been agreed on “a solid legal and financial basis”. She said the most important decision had already been taken a few days earlier when the EU decided to freeze the Russian assets indefinitely.

The European Commission president, Ursula von der Leyen, also said the indefinite freezing of assets was “the big win”.

In a post on Telegram, the Kremlin’s top economic negotiator, Kirill Dmitriev, welcomed the failure to “illegitimately use Russian assets to finance Ukraine”, adding that “for the time being, the law and common sense have won a victory”.

The Ukraine finance decision had been cast as “money today or blood tomorrow” by Poland’s prime minister, Donald Tusk. EU officials had hoped that if the union went ahead with using frozen assets for Ukraine, other western allies , such as the UK, Canada and Japan, would follow suit. Now it is not clear how they will respond. But Brussels has called on non-EU allies to provide about €45bn to cover the rest of Ukraine’s estimated €136bn needs for military and civilian finance in 2026 and 2027.

Writing on X, the former head of the Foreign Office in the UK, Lord Ricketts said: “In the face of [Donald] Trump’s disdain and Russian intimidation, the EU has shown it can act even if at the last moment. But if a reparation loan had been agreed, UK was set to put its £20bn or so of frozen Russian assets into the pot. How does UK contribute now?”