The €90 billion EU loan to Ukraine was agreed by EU leaders in Brussels early on Friday, 19 December 2025, after long overnight negotiations aimed at securing Kyiv’s financing needs for 2026–2027. The package is designed to keep Ukraine’s state finances and defence spending afloat as the war with Russia continues, while postponing a divisive decision on how to use immobilised Russian sovereign assets.
How the €90 billion EU loan to Ukraine will be financed
The new support will be raised through EU borrowing on the capital markets, backed by the EU budget headroom — the margin that allows the Union to provide guarantees without immediately increasing member states’ national contributions.
EU leaders framed the agreement as an urgent response to a looming funding gap: the European Council text explicitly links the loan to the need to ensure support for Ukraine “as from the second quarter of 2026,” including military needs.
In practice, the deal mirrors the EU’s crisis-financing playbook used during the pandemic: common borrowing at EU level, combined with budget-based guarantees, to deliver large-scale assistance quickly and at comparatively low cost.
Why frozen Russian assets were not used as collateral
Before the summit, several leaders and the European Commission had pushed for a so‑called reparations loan model: using immobilised Russian Central Bank assets held in the EU as the anchor for a large loan intended for Ukraine.
That approach ran into resistance led by Belgium, where the bulk of the frozen assets are held through the Brussels-based financial institution Euroclear. Belgian officials warned of legal uncertainty and possible Russian retaliation, including litigation targeting Euroclear or other European entities.
Instead of using the frozen assets as an upfront guarantee, leaders opted for a compromise. The assets will remain immobilised, and the Commission was asked to continue work on a reparations-based instrument. But the immediate €90 billion will be backed by the EU budget, not by the frozen funds.
Repayment is tied to future reparations — and the EU keeps an option
A central political element of the compromise is the repayment logic. Under the leaders’ agreement, Ukraine would repay the loan only once reparations are received. Until then, immobilised Russian assets remain frozen, and the EU “reserves its right” to make use of them to repay the loan, in line with EU and international law.
This is meant to balance two objectives: offering investors a clean, budget-backed guarantee today, while keeping open a route to shift the ultimate financial burden away from European taxpayers if Russia refuses to pay compensation for war damage.
Three member states opted out, but did not block the decision
The agreement was reached through a legal mechanism that allows for enhanced cooperation among willing member states.
As a result, 24 of the EU’s 27 member states will participate in the instrument. Czechia, Hungary and Slovakia will not take on financial obligations related to any mobilisation of EU budget resources as a guarantee for the loan.
Politically, this avoided a veto that could have derailed the package altogether. It also underlines the limits of EU unity on Ukraine: the same governments that have regularly questioned sanctions or military assistance were again unwilling to be tied to a major new financing commitment.
What the deal means for Europe’s Ukraine strategy
The package fits into a broader EU effort to provide predictable, multi-year financing for Kyiv.
Beyond emergency assistance, the EU’s Ukraine Facility (2024–2027) already provides grants and loans linked to reforms and reconstruction, and the Commission has built additional tools to channel extraordinary revenues stemming from immobilised Russian assets into Ukraine support.
The new €90 billion loan is different in scale and purpose. It is explicitly aimed at covering Ukraine’s budgetary and defence-related needs in 2026–2027 and reassuring Kyiv’s partners that a major funding cliff-edge will be avoided.
From a European perspective, the agreement also has an institutional dimension. Common borrowing — even when limited to specific crises — keeps reopening questions about how far the EU should go towards a permanent joint-debt capacity, and what precedent this creates for future security-related spending.
Denmark’s presidency, and a Nordic view of EU cohesion
The deal was reached at the last European Council meeting under Denmark’s EU Council presidency, with Danish Prime Minister Mette Frederiksen among the leaders who had publicly favoured a stronger role for frozen Russian assets.
After the compromise, Frederiksen welcomed the outcome as a guarantee of continued support to Ukraine, while warning that forces “outside — and unfortunately also inside — the EU” will keep trying to split member states.
For Nordic and Baltic governments that have argued for sustained pressure on Russia and long-term support for Ukraine, the agreement is a sign that EU financing can be scaled up even amid legal and political constraints. At the same time, the opt-outs and the unresolved debate over Russian assets show that unity will remain fragile as the war drags on.
What happens next
Leaders expect the loan instrument to be operational quickly, with financing intended to be available from early 2026.
In parallel, the Commission will continue technical work on options involving immobilised Russian assets — a politically popular idea in several capitals, but one that still faces legal hurdles and divergent risk assessments across the EU.
For Ukraine, the immediate impact is clear: the EU has locked in a large, two-year funding package at a moment when Kyiv is trying to plan both defence procurement and basic state operations. For the EU, the next test will be whether the compromise can hold if financial needs rise further — or if Russia escalates legal and economic pressure on European institutions holding its frozen funds.
