EU leaders agree on $105 billion loan to secure Ukraine’s financing through 2027
European leaders approved an interest-free loan for Ukraine, providing a financial lifeline and securing the cash-strapped country's financing needs for at least the next two years, EU Council President Antonio Costa said on Dec. 19.
"We have a deal. Decision to provide 90 billion euros ($105.5 billion) of support to Ukraine for 2026-27 approved. We committed, we delivered," Costa said in a post on social media.
EU officials had initially sought to underpin a large loan to Ukraine with frozen Russian assets, but after failing to secure a consensus, they opted for an alternative financing approach.
The frozen-assets proposal fell apart at the eleventh hour amid divisions among EU leaders in Brussels. The bloc ultimately opted for a loan backed by the EU budget, a solution that avoids Russian assets but may be more expensive and less flexible than originally planned.
The agreement will lend the funds to Ukraine in 2026 and 2027, securing two-thirds of the country's financing needs. Kyiv was set to run out of cash by mid-2026.
"This (agreement) sends a clear signal from Europe to Putin: This war will not be worth it," German Chancellor Friedrich Merz said on X.
EU governments and the European Parliament will continue discussions on a separate financing mechanism for Ukraine that would be linked to frozen Russian central bank assets. That proposal remains under consideration but was not finalized at the summit.
The decision came down to the wire on Dec. 18 after a last sprint of preparatory meetings between EU envoys this week failed to reach consensus in the lead-up to the summit.
Advisers met on the sidelines of the summit throughout the entire day to try to get Belgium on board, Politico reported.
Belgium, which hosts the vast majority of the frozen assets, had been the most vocal opponent to the plan. The country feared that it could be on the hook for one-third of its gross domestic product should Russia claw back the assets through legal action.
EU leaders then spent hours discussing the technical and legal feasibility of structuring a loan backed by frozen Russian assets. Diplomats said the plan proved too complex and politically sensitive to resolve at this stage, prompting leaders to move forward with an alternative interest-free loan instead.
German Chancellor Friedrich Merz and the EU's top diplomat Kaja Kallas had both said ahead of the meeting that the odds were "50/50" that the reparations loan succeeded.
European Commission President Ursula von der Leyen first floated the reparations loan idea during her State of the Union Address to the European Parliament in September 2025. That was followed by an official legal proposal on Dec. 3.
European countries voted to indefinitely immobilize the assets on Dec. 12, using a provision in the EU treaties known as Article 122, usually reserved to help its members to deal with economic emergencies
By framing Russia's war in Ukraine as a source of significant economic difficulties, the EU leveraged the emergency clause as the legal basis of the indefinite freeze. Article 122 only requires a "qualified majority," to vote in favor, meaning a minimum of 15 countries representing 55% of the bloc's population.
Usually, matters of foreign policy must be decided by unanimity.
The indefinite immobilization of the assets removed the risk that Hungary or Slovakia would veto the continued immobilization of the assets — which was previously subject to a bi-annual unanimous vote.
