BRUSSELS (AP) — European Union leaders agreed Friday to provide massive interest-free loans to Ukraine to meet its military and economic needs for the next two years, but failed to bridge differences with Belgium that would have allowed them to use frozen Russian assets to raise the funds.
After nearly four years of war, the International Monetary Fund estimates that Ukraine will need 137 billion euros ($161 billion) in 2026 and 2027. The government in Kiev is on the brink of bankruptcy, and desperately needs money by spring.
The plan was to use some of the 210 billion euros ($246 billion) of Russian assets that are frozen in Europe, mostly in Belgium.
The leaders worked hard on Thursday evening to reassure Belgium that they would protect it from any Russian retaliation if it supports the “shooting loan” plan but in the end the leaders did not use that option, but as the talks wound down the leaders eventually chose to borrow money in the capital markets.
“We have an agreement. A decision to provide 90 billion euros ($106 billion) of support to Ukraine for 2026-27 approved. We committed, we delivered,” EU Council President António Costa said in a post on social media.
Not all countries agreed to the loan package. Hungary, Slovakia and the Czech Republic refuse to support Ukraine and opposed it, but an agreement was reached in which they did not block the package and were promised protection from any financial consequences.
Hungarian Prime Minister Viktor Orbán, who is Russian President Vladimir Putin’s closest ally in Europe and describes himself as a pacifist, said “I don’t want a European Union at war.”
“Giving money means war.” said Orbán. He also described the rejected plan to use frozen Russian assets as a “dead end.”
French President Emmanuel Macron called the deal a major breakthrough, saying capital markets borrowing “was the most realistic and practical way” to finance Ukraine and its war effort.
German Chancellor Friedrich Merz also praised the decision.
“The financial package for Ukraine has been finalized,” Merz said in a statement, noting that “Ukraine will be given an interest-free loan.”
“These funds are sufficient to cover Ukraine’s military and budgetary needs for the next two years,” Merz added. He said the frozen assets will remain blocked until Russia has paid war reparations to Ukraine. Ukrainian President Volodymyr Zelenskyy said this would cost more than 600 billion euros ($700 billion).
“If Russia does not pay reparations we – in full compliance with international law – will make use of Russian immobilized assets to repay the loan,” Merz said.
Zelenskyy, who traveled to Brussels for a summit held amid fiery protests by angry farmers over a proposed trade deal with five South American countries, had called for a quick decision to keep Ukraine going in the new year.
Polish Prime Minister Donald Tusk warned early Thursday that it will be a case of sending “either money sooner or later blood” to help Ukraine.
The plan to use frozen Russian assets ended up being hampered as Belgian Prime Minister Bart De Wever dismissed the scheme as legally risky, and warned that it could damage the business of Euroclear, the Brussels-based financial clearing house where 193 billion euros ($226 billion) in frozen assets are held.
Belgium was shaken last Friday when Russia’s Central Bank launched a lawsuit against Euroclear to prevent any loans to Ukraine using its money, which is frozen under EU sanctions slapped on Moscow after it launched its full-scale war in 2022.
“For me, the loan for reparations was not a good idea,” De Wever told reporters after the meeting. “When we re-explained the text, there were so many questions that I said, I told you this, I told you that. There are many loose ends. And if you start pulling from the loose ends in the strings, the thing collapses.”
“We have avoided entering a precedent that risks weakening legal certainty around the world. We have safeguarded the principle that Europe respects the law, even when it is difficult, even when we are under pressure,” he said, adding that the EU “sent a strong political signal. Europe is behind Ukraine.”
However, Costa said that the EU “reserves its right to make use of the immobilized assets to repay this loan.”