EU Leaders Approve €90 Billion Loan to Ukraine but Split on Frozen Russian Assets
On 19 December 2025, EU leaders made a big decision in Brussels. They agreed to give Ukraine a €90 billion interest-free loan to help it through the next two years. This move aims to keep Ukraine’s economy and defence strong as the war with Russia grinds on.
But the deal did not go as some had hoped. At first, many EU states wanted to use billions of euros in frozen Russian central bank assets to fund the loan. Those funds were seized after Russia’s 2022 invasion of Ukraine.
In the end, leaders could not agree on using those Russian assets. They worried about legal risks, financial retaliation, and what it would mean for the EU’s economy. So the EU chose to borrow money together instead. This split reveals deep disagreements among member states. It also highlights how hard it is to support Ukraine while keeping unity in the bloc.
Why This Loan Matters Now: Timing, War Fatigue, and 2025 Budget Pressure
On 19 December 2025, EU leaders in Brussels agreed to provide Ukraine with a €90 billion interest-free loan for 2026 and 2027. This decision came after long talks and deep divisions over how to fund Ukraine’s long-term needs.
Ukraine has been struggling to pay for both its defence and basic government services. Without fresh money, Kyiv was set to run short by spring 2026. The International Monetary Fund (IMF) says Ukraine needs roughly €135 billion over the next two years just to stay afloat.
The EU has already sent large sums of aid since Russia’s full-scale invasion began in 2022. Earlier EU initiatives and G7 loans totalled many billions, but they are not enough to cover future gaps.
This new €90 billion deal is significant. It gives Ukraine financial breathing room and maintains the EU’s role as a key backer in a war that shows no sign of ending soon.
The Frozen Russian Assets Debate: Where the EU Is Deeply Divided?
One of the most heated parts of the Brussels summit was the question of using frozen Russian central bank assets to fund Ukraine’s support. These assets are roughly €210 billion worth of Russian state money frozen in the EU after economic sanctions began in 2022.
Many EU leaders wanted to use these assets as collateral for the loan or eventually to repay Ukraine for war losses. German Chancellor Friedrich Merz and others argued this was fair and that it could pressure Russia.
However, Belgium strongly opposed using the assets directly. Most of the funds are held in Euroclear, a big financial institution in Brussels, and Belgian leaders feared legal fallout if Moscow sued or retaliated.
As a result, the EU chose joint borrowing on capital markets instead. The frozen assets will remain immobilized indefinitely, but the Union says it may use them later if Russia refuses to pay war reparations.
Interest vs. Principal: The Compromise Nobody Loves
The EU’s decision to borrow money instead of using frozen Russian assets was a compromise. Some EU diplomats had pushed a plan that would allow Ukraine to repay the loan only once Russia compensates for war damage.
This would mean that Ukraine would not have to pay back the €90 billion until it receives reparations from Russia. In effect, the frozen funds would act as a future repayment guarantee, but only if Moscow pays willingly.
The compromise was far from universally popular. Critics say it slows down the process of making Russia financially responsible for the war. Supporters argue it avoids costly legal fights and protects the EU budget.
Legal Minefield: What Happens If Assets Are Seized?
Using frozen Russian assets carries big legal risks. Russia has already sued financial institutions like Euroclear, claiming the freeze is illegal.
If the EU seized those funds outright, Russia could pursue compensation cases in international courts. Some countries fear this could undermine confidence in the EU as a safe place for global reserves.
Russian President Vladimir Putin warned that if sovereign reserves of other nations become unsafe in Europe, big foreign holders might move funds elsewhere. This could hurt the euro’s reputation. So the legal risks were a major reason Belgium and others rejected the plan to use the frozen assets directly.
Market and Currency Implications Investors are Watching Closely
Financial markets pay attention when governments borrow large sums. The EU’s move to issue joint debt affects long-term borrowing costs and future budget commitments of member states.
Some investors worry that new European bonds could drive yields up if demand shrinks. Others see the decision as a sign of strong unity, which can boost confidence. The frozen assets debate also puts soft pressure on the euro’s standing as a stable reserve currency.
Global reserve holders watch closely because any change in how sovereign assets are treated sets a longer-term precedent. If major currencies lose trust in asset protection, money may shift to other financial hubs.
Ukraine’s Perspective: Relief Today, Uncertainty Tomorrow
Ukraine welcomed the EU’s decision. President Volodymyr Zelenskyy said the €90 billion loan “truly strengthens our resilience” and gives financial certainty for the coming two years.
Kyiv had pushed hard for frozen Russian assets to be used, arguing this was fair and legal. Zelenskyy said it would help Ukraine defend itself and rebuild. Even though the deal did not use those assets immediately, Ukraine is relieved that the money will arrive and that Russian assets will stay blocked.
However, questions remain about what happens if Russia never pays reparations. Kyiv still faces long-term economic pressure.
Political Fractures Inside the EU: Unity on Aid, Division on Enforcement
The final agreement showed a mix of unity and disagreement among member states. Hungary, Slovakia, and the Czech Republic opposed the loan package but did not block it.
Hungarian Prime Minister Viktor Orbán said he did not want Europe tied to war financing, arguing that sending money equates to involvement in conflict.
France and Germany supported the deal. French President Emmanuel Macron said borrowing on markets was the most practical route.
Belgium’s refusal to risk frozen assets also showed how different states prioritize legal safety and economic stability differently.
What Comes Next: Key Decisions to Watch in 2026?
EU leaders say they want to keep frozen Russian assets immobilized indefinitely. They also reserve the right to use those assets for reparations if Russia refuses to pay after the war.
Several legal battles over frozen assets are already underway. The outcome will shape future EU sanctions policy and asset handling. Future EU and G7 negotiations may also focus on blending more aid sources to cover Ukraine’s needs beyond 2027.
Bottom Line: A Strong Signal with an Unresolved Core Risk
The EU’s €90 billion loan sends a clear message: Europe will keep supporting Ukraine. It stabilizes Kyiv’s budget and military funding for the next two years. But the deeper issue of frozen Russian assets remains unresolved. Using them now could have sped up support and shifted pressure to Moscow. At the same time, the risk of legal and financial fallout slowed down direct action.
In the end, the compromise reflects political caution and a desire to avoid systemic risks. Yet it also highlights how divided the bloc remains on strategic and legal challenges posed by the war.
Frequently Asked Questions (FAQs)
On 19 December 2025, the EU approved the loan to help Ukraine pay defence costs, salaries, and basic services as the war with Russia continues.
As of 19 December 2025, EU leaders avoided using frozen Russian assets due to legal risks, possible lawsuits, and concerns about financial stability in Europe.
Around €210 billion in Russian central bank assets remain frozen in the EU as of December 2025, mostly held by Belgium-based financial firm Euroclear.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
