As reparations loan talks stall, EU proposes 90 billion euro grant to cover Ukraine's financing needs
The European Commission on Nov. 17 proposed three ways of providing financial support to Ukraine to help cover its financing needs amid Russia's full-scale invasion, according to a letter seen by the Kyiv Independent.
These options include grants funded by member states, a limited recourse loan funded by the EU's borrowing on financial markets, and a limited recourse loan funded by cash balances linked to immobilized Russian assets, according to a letter to EU leaders by Commission President Ursula von der Leyen.
Based on International Monetary Fund (IMF) estimates, the EU expects that if the Russia-Ukraine war ends in 2026, Kyiv will face a financial gap of 135.7 billion euros ($157 billion) in the 2026-2027 period.
The letter comes as EU leaders struggle to reach a consensus on a reparations loan funded by cash balances linked to frozen Russian assets, with Belgium resisting the move.
Roughly two-thirds of the $300 billion in Russian sovereign assets immobilized by G7 partners are held by Euroclear, a Belgium-based financial company.
As an alternative, von der Leyen proposed a grant-based support of at least 90 billion euros (over $100 billion) for the period of 2026-2027, funded by national budgets of member states.
The burden would be distributed based on the gross national income (GNI) of individual EU countries.
As another alternative option, the EU could provide a loan to Ukraine by borrowing on financial markets, backed by "legally binding, unconditional, irrevocable and on-demand guarantees" from member states.
Finally, von der Leyen proposed pushing forward with the reparations loan funded through frozen Russian assets. The Commission sought to address some of Belgium's earlier voiced concerns, including the possibility of using cash balances at institutions in other member states.
In both of the latter two cases, Ukraine would be required to repay the loan only once Russia pays compensation for war damages.
Von der Leyen stressed that, regardless of the selected option, the EU must ensure that funding is readily available, with the first disbursement set for the second quarter of 2026.
The solution cannot place additional debts on Ukraine, must be flexible, and its costs must be fairly shared with international partners, she added.
"It will now be key to rapidly reach a clear commitment on how to ensure that the necessary financing for Ukraine will be agreed at the next European Council meeting in December," von der Leyen wrote.
"Taking this forward will allow us to maintain pressure on Russia, deny it the hope of victory, and lay the foundations for the suspension of hostilities and the groundwork for long-awaited peace negotiations."
