EU clears $105 billion Ukraine loan, sidesteps use of Russian assets

After hours of intense negotiations stretching deep into the night, European Union leaders have struck a hard-fought agreement to extend a 90-billion-euro ($105.5 billion) interest-free loan to Ukraine, securing critical military and economic support for Kyiv through 2026–27, the Al Jazeera reported.

Announced by EU Council President Antonio Costa, the deal shifts away from using frozen Russian assets..

“We have a deal. We committed, we delivered,” Costa declared, as the bloc opted to raise funds on capital markets, with the borrowing secured against the EU budget rather than tapping into immobilised Russian central bank reserves. The decision came after EU leaders laboured through Thursday night to overcome deep legal, financial and political divisions within the bloc.

A draft of the summit’s conclusions, seen by Reuters, confirms that while the contentious proposal to base the loan on frozen Russian assets has been set aside for now, discussions on that option will continue between EU governments and the European Parliament. Under the current arrangement, Ukraine will begin repaying the loan only after it receives war reparations from Moscow, while the Russian assets remain frozen and could still be used as a backstop for repayment if required.

The agreement carefully sidesteps the financial obligations of Hungary, Slovakia and the Czech Republic, which declined to contribute to Ukraine’s financing, underscoring the delicate compromises underpinning the deal.

Moscow welcomed the EU’s retreat from using Russian assets. Kirill Dmitriev, Russian President Vladimir Putin’s special envoy for investment and economic cooperation, said “law and sanity” had prevailed, claiming that voices of reason within the EU had blocked what he described as the “illegal” use of Russian reserves — a pointed swipe at European Commission President Ursula von der Leyen.

Diplomats acknowledged that the complexity of seizing Russian funds — particularly the legal and financial risks for Belgium, which holds roughly 185 billion euros of the frozen assets — proved insurmountable at this stage. Brussels had sought ironclad guarantees against potential retaliation or compensation claims should courts later rule the move unlawful, amid Kremlin warnings of lawsuits and counter-seizures of Western assets in Russia.

“It’s good in the sense that Ukraine will now have secured funding for the next two years,” one EU diplomat told Reuters, while another remarked wryly that the bloc had shifted “from saving Ukraine to saving face.”

In the end, the decision to borrow was framed as a stabilising choice. Belgian Prime Minister Bart De Wever hailed the outcome, saying EU leaders had avoided “chaos and division” by steering clear of an unprecedented and legally risky step.

As the war grinds on and Europe balances solidarity with caution, the agreement underscores both the EU’s commitment to Ukraine and the intricate fault lines shaping its response to Russia’s invasion.