Web Desk (MNN); European Union leaders on Friday agreed to extend a large interest-free loan to Ukraine to help meet its military and economic needs over the next two years, as the war with Russia drags into its fourth year.
The 27-member bloc had initially planned to finance the support by using part of the 210 billion euros worth of Russian assets frozen across Europe, mainly in Belgium. However, despite overnight negotiations, EU leaders failed to convince Belgium that it would be shielded from possible Russian retaliation if it supported the plan.
As a result, the EU settled on an alternative approach: borrowing around $106 billion from international capital markets. According to the International Monetary Fund, Ukraine will require about 137 billion euros in 2026 and 2027, as Kyiv faces the risk of financial collapse and urgently needs funds by spring to cover expenses ranging from ammunition to infrastructure repairs.
European Commission President Ursula von der Leyen had presented two options at the summit to keep Ukraine financially afloat. While major leaders such as German Chancellor Friedrich Merz and French President Emmanuel Macron supported the use of frozen Russian assets, legal and financial concerns ultimately stalled the proposal.
Instead, the European Council agreed to invoke Article 20 of the EU Treaty, allowing the bloc to collectively shoulder debt to provide Ukraine with a zero-interest loan. The mechanism mirrors the approach used during the COVID-19 pandemic, when the EU raised 750 billion euros for economic recovery.
Hungary, Slovakia and the Czech Republic declined to take on additional debt for Ukraine but agreed not to block the package after securing assurances that they would be protected from any financial consequences. Hungarian Prime Minister Viktor Orbán claimed the outcome shielded his country from new debt obligations.
Although the plan to directly use frozen Russian assets was set aside, EU leaders stressed that the option remains open. They reiterated that the assets will stay frozen until Russia compensates Ukraine for war damages, with the EU reserving the right to use those funds to repay the loan if reparations are not paid.
Ukrainian President Volodymyr Zelenskyy welcomed the decision, saying the loan provides financial certainty and would be used either for defence if the war continues or for reconstruction if peace is achieved.
