EU Moves to Joint Borrowing for €90 Billion Interest Free Ukraine Loan After Russian Asset Deadlock
European Union leaders meeting in Brussels on December 18–19, 2025, agreed to provide Ukraine with a €90 billion interest-free loan, ending weeks of intense debate over how to finance Kyiv’s war effort. The decision followed the collapse of a more controversial proposal to use €210 billion in frozen Russian sovereign assets, which failed due to legal, political, and economic divisions within the bloc. The EU loan for Ukraine is intended to cover Kyiv’s funding needs for 2026 and 2027, as the war with Russia enters its fourth year.
The agreement was presented by EU officials as a demonstration of unity, even as internal disagreements forced leaders to abandon the direct use of Russian assets.
Brussels Summit Discussions on Ukraine Funding
Talks during the Brussels summit focused on how to meet Ukraine’s projected €90 billion financing gap for the next two years. Earlier proposals envisioned a so-called “reparations loan”, backed by Russian central bank assets frozen after Moscow’s 2022 invasion. Most of these funds are held at Euroclear in Belgium, making Brussels central to the debate.
However, concerns over international law, investor confidence, and retaliatory measures by Russia ultimately derailed that plan. Instead, EU leaders agreed to raise the funds through joint borrowing on international capital markets, with repayment guaranteed by the EU budget. Importantly, the loan will only be repaid once Russia pays war reparations, keeping political pressure on Moscow without triggering immediate asset seizures.
Ukrainian President Volodymyr Zelenskyy, addressing leaders via video link, welcomed the decision and warned that any delay in funding would embolden President Vladimir Putin.
Why the Russian Asset Plan Failed
The proposal to directly use frozen Russian assets required only a qualified majority. Even so, it encountered stiff resistance from several member states. Belgium, which hosts Euroclear, insisted on unlimited legal and financial guarantees to shield itself from lawsuits and Russian retaliation. Other countries warned that asset expropriation could set a precedent that undermines global financial stability.
Legal experts advising EU governments also cautioned that outright confiscation could violate established principles of sovereign immunity. As a result, leaders opted for a safer, budget-backed debt instrument, despite acknowledging that it fell short of earlier ambitions.
Countries Opposing Russian Asset Seizure
Seven EU states were central to blocking the use of frozen Russian assets: Belgium, Hungary, Slovakia, Italy, Bulgaria, Malta, and the Czech Republic. Their opposition reflected a mix of legal caution, economic self-interest, and domestic political pressures.
Hungarian Prime Minister Viktor Orbán openly criticised the plan, calling the EU loan for Ukraine “lost money.” To secure agreement, the EU granted opt-outs from loan guarantees to Hungary, Slovakia, and the Czech Republic, allowing them to avoid direct budgetary exposure while permitting the rest of the bloc to proceed under an enhanced cooperation framework.
Russia’s Response and Legal Threats
Moscow reacted sharply to the decision, even though frozen assets were not directly touched. Russian officials described the €90 billion loan as a “major blow” to the EU’s economy and unity, arguing it prolongs the conflict. President Vladimir Putin reiterated earlier claims that any use of Russian assets would amount to “piracy.”
Russia has already filed lawsuits against Euroclear, seeking compensation for lost interest and damages. Kremlin officials warned of symmetrical seizures of Western assets held in Russia if the EU moves closer to asset confiscation in the future.
Ukraine War Context and Strategic Stakes
Russia’s full-scale invasion has devastated Ukraine’s infrastructure, displaced millions, and caused economic damage running into hundreds of billions of euros. Although Ukrainian forces continue to hold defensive lines, Russia has made incremental advances in parts of Donbas and near the Kursk region.
The EU loan for Ukraine is designed to fund defence production, soldiers’ salaries, public sector wages, and essential services. EU officials privately acknowledge that without sustained financial support, Kyiv would struggle to maintain resistance through 2026.
Loan Remittance and Conditions
Under the agreed framework, the EU will issue joint bonds, with disbursements beginning in April 2026 and continuing over two years. The loan carries zero interest for Ukraine and includes conditionality linked to anti-corruption reforms and governance standards.
While frozen Russian assets will not be used directly, EU leaders confirmed that the assets will remain immobilised. Options to securitise or leverage them for future repayment remain on the table if legal and political conditions change.
