EU Approves €90 Billion Loan for Ukraine, Sidesteps Direct Use of Frozen Russian Assets

EU Leaders Greenlight Substantial Aid Package

BRUSSELS – European Union leaders concluded a marathon summit in the early hours of Friday, December 19, 2025, by approving a crucial €90 billion interest-free loan to Ukraine. This significant financial package is intended to address Ukraine's urgent military and economic needs for the years 2026 and 2027. The decision marks a pivotal moment in the EU's ongoing support for Kyiv, which the International Monetary Fund estimated would require approximately €137 billion during this period.

Funding Mechanism: Capital Markets Over Frozen Assets

The approved loan will be financed through EU borrowing on capital markets, secured against the Union's budget. This approach was adopted after a contentious proposal to directly utilize frozen Russian central bank assets failed to garner unanimous support among member states. EU Council President António Costa confirmed the agreement, stating, 'We have a deal. decision to provide 90 billion euros ($106 billion) of support to Ukraine for 2026-27 approved. We committed, we delivered.'

Ukrainian President Volodymyr Zelenskyy expressed gratitude for the loan, emphasizing the importance of continued financial security. 'It is important that Russian assets remain immobilized and that Ukraine has received a financial security guarantee for the coming years,' Zelenskyy posted on social media.

Divisions Over Russian Assets Persist

The plan to directly use the estimated €210 billion (or $247 billion) in Russian central bank assets frozen within the EU, primarily held by the Belgium-based financial clearinghouse Euroclear, faced considerable opposition. Key concerns included:

• Legal complexities and risks: Many member states, including Belgium, raised fears of violating international law, setting dangerous precedents, and potential retaliatory lawsuits from Russia.
• Financial stability: The European Central Bank had warned that expropriating assets could undermine global investor confidence in the euro.
• Lack of consensus: Countries like Hungary, Slovakia, and the Czech Republic, while not blocking the final loan package, had expressed strong reservations about the frozen asset plan.

Belgian Prime Minister Bart De Wever, whose country hosts the largest share of frozen Russian assets, described the direct use of these funds as 'not a good idea' and lauded the adopted loan arrangement as 'a stable, legally sound, and financially credible European solution.' German Chancellor Friedrich Merz also welcomed the decision, noting that the funds are 'sufficient to cover the military and budgetary needs of Ukraine for the two years to come.'

Future of Frozen Assets and Russian Response

Despite the decision to fund the loan through alternative means, the €210 billion in Russian assets will remain frozen. EU leaders affirmed that these assets will stay immobilized until Russia pays reparations for the damage caused to Ukraine. The EU reserves the right to use these assets to repay the loan should Russia fulfill its reparation obligations.

Russian President Vladimir Putin has previously condemned any attempts to use frozen Russian assets, labeling such actions as akin to 'theft.' Meanwhile, EU governments and the European Parliament are expected to continue discussions on potential future mechanisms linking frozen Russian central bank assets to Ukraine's financing needs, though no final agreement was reached on this at the current summit.