European Council President Costa announced on the 19th that EU leaders have approved a resolution to provide Ukraine with €90 billion in aid for 2026-2027.
The two-year aid agreement was reached after a marathon summit in Brussels. With the U.S. significantly cutting financial support and pressuring Kyiv to make concessions in peace talks, European officials widely feared that without fresh funding, Ukraine’s reserves would dry up by April next year—jeopardizing not only Kyiv but also continental security.
France and Italy spearheaded calls to use the EU budget as an alternative, ultimately securing the deal. Under the new plan, the EU will leverage its budget to issue joint debt and raise capital from markets. While summit conclusions pledged further study on utilizing frozen Russian assets, the decision to rely on taxpayer funds instead marks a political setback for German Chancellor Merz and European Commission President von der Leyen, who had pushed for compensating Ukraine with seized Russian funds.
Despite potential criticism, the move reflects EU leaders’ urgency to secure funding for Ukraine. Costa declared on social media, “We promised, we delivered.” Polish Prime Minister Donald Tusk summarized the stakes:
“The choice is simple: pay today or bleed tomorrow—and I mean all of Europe, not just Ukraine.”
**Failed Asset Seizure Plan and Belgian Resistance** Before the summit, months of intense negotiations centered on tapping €210 billion in frozen Russian central bank assets—mostly held in Belgium—as the optimal funding source. Chancellor Merz called this the “only option” to strengthen Kyiv’s negotiating position and punish Moscow.
However, Belgium, the primary custodian of these assets, fiercely opposed the plan. Prime Minister Bart De Wever demanded unlimited risk-sharing from other EU states against potential Russian lawsuits and retaliation. When leaders refused such extreme guarantees, the “reparations loan” proposal collapsed.
Meanwhile, Russia’s central bank sued Belgian depository Euroclear for $229 billion last week over frozen assets and threatened further claims against European lenders if seizures proceed. Facing massive legal exposure, the EU opted for compromise.
**Joint Debt and Opt-Out Clauses** The €90 billion loan will be raised via EU bond issuance, backed by unused budget funds. Crucially, Czechia, Hungary, and Slovakia—long skeptical of funding Ukraine—won’t share fiscal obligations. A senior EU official noted:
“They won’t pay financially, but they’ll pay politically.”
Repayment terms stipulate Ukraine must only settle the loan if Russia pays reparations. Chancellor Merz sought to salvage his stance, stating:
“If Russia won’t pay, we’ll… use frozen assets to cover the debt.”
One negotiator admitted:
“The priority was getting money to Kyiv, not its source.”
**Funding Crunch and Leverage** The deal throws Ukraine a vital lifeline. Kyiv warned of collapse by early 2026 without support, and analysts note the funds are critical to maintaining Ukraine’s state functions and negotiation leverage amid dwindling U.S. aid.
President Zelensky, attending the summit, stressed that while Russian assets were the “most appropriate” funding source, securing funds was urgent:
“We need this so no one—especially Russia—can use money as leverage. With this tool, we’ll stand stronger.”
The agreement also bolsters Europe’s role in U.S.-led peace talks. By ensuring Ukraine’s fiscal stability for two years, the EU aims to prevent irreversible battlefield deterioration before negotiations.
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