EU leaders yesterday agreed to provide a massive interest-free loan to Ukraine to meet its military and economic needs for the next two years, but they failed to bridge differences with Belgium that would have allowed them to use frozen Russian assets to raise the funds.
The IMF estimated that Ukraine would need 137 billion euros (US$160 billion) next year and in 2027. The government in Kyiv is on the verge of bankruptcy and desperately needs the money by spring.
The plan had been to use some of the 210 billion euros of Russian assets that are frozen in Europe, mostly in Belgium.
Photo: Reuters
The leaders reassured Belgium they would protect it from any Russian retaliation if it backed the “reparations loan” plan, but as the talks bogged down, the leaders opted to borrow the money on capital markets.
“We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-[20]27 approved. We committed, we delivered,” EU Council President Antonio Costa wrote 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 a deal was reached in which they did not block the package and were promised protection from any financial fallout.
Hungarian Prime Minister Viktor Orban, who is Russian President Vladimir Putin’s closest ally in Europe and describes himself as a peacemaker, said: “I would not like a European Union in war.”
“To give money means war,” Orban said.
German Chancellor Friedrich Merz also hailed the decision.
“The financial package for Ukraine has been finalized,” Merz said, adding that “Ukraine is granted a zero-interest loan.”
The frozen assets would remain blocked until Russia has paid war reparations to Ukraine, he said.
Ukrainian President Volodymyr Zelenskiy has said that would cost more than 600 billion euros.
“If Russia does not pay reparations, we will — in full accordance with international law — make use of Russian immobilized assets for paying back the loan,” Merz said.
Zelenskiy had appealed for a quick decision to keep Ukraine afloat in the new year.
Polish Prime Minister Donald Tusk warned early on Thursday that it would be a case of sending “either money today or blood tomorrow” to help Ukraine.
The plan to use frozen Russian assets got bogged down as Belgian Prime Minister Bart de Wever rejected the scheme as legally risky, and warned that it could harm the business of Euroclear, the Brussels-based financial clearing house where 193 billion euros in frozen assets are held.
Belgium was rattled last week when Russia’s central bank launched a lawsuit against Euroclear to prevent any loan being provided to Ukraine using its money, which is frozen under EU sanctions slapped on Moscow after its launched its full-scale war in 2022.
“For me, the reparations loan was not a good idea,” De Wever said. “When we explained the text again, there were so many questions that I said, I told you so, I told you so. There are a lot of loose ends. And if you start pulling at the loose ends in the strings, the thing collapses.”
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