What's happened
On December 19, 2025, EU leaders agreed to provide Ukraine with a €90 billion zero-interest loan through joint borrowing to cover military and economic needs through 2027. The plan avoids using €210 billion in frozen Russian assets due to legal and political concerns, especially from Belgium and Hungary. Ukraine will repay only if Russia pays reparations.
What's behind the headline?
EU's Compromise Reflects Political Realities
The EU's decision to borrow €90 billion on capital markets rather than use frozen Russian assets reveals the bloc's cautious approach amid complex legal and geopolitical risks. Belgium's refusal to back the reparations loan, fearing Russian retaliation and legal challenges, was pivotal. Hungary's opposition to both plans further complicated unanimity requirements.
Implications for EU Unity and Geopolitics
The deal underscores divisions within the EU, with Hungary, Slovakia, and the Czech Republic opting out of financial guarantees but not blocking the package. This arrangement preserves EU unity but highlights fractures over Ukraine policy. The EU's willingness to shoulder debt signals a stronger geopolitical stance against Russia, despite internal compromises.
Future Risks and Leverage
While the frozen Russian assets remain immobilized, their use for loan repayment is reserved, potentially preserving leverage in peace negotiations. However, attempts to tap these assets later will likely reignite legal and political disputes. The EU's borrowing approach ensures immediate funding but may increase long-term financial obligations.
Forecast
The loan will sustain Ukraine's defense and reconstruction efforts through 2027, preventing near-term bankruptcy. However, the EU must navigate internal dissent and external pressures, including Russia's hostility and US diplomatic maneuvers. The outcome will influence Europe's credibility and the broader conflict trajectory.
What the papers say
Jeanna Smialek of The New York Times highlights the EU's 'messy compromise' after 16 hours of talks, noting the failure to use frozen Russian assets as a decisive signal. The Independent and AP News emphasize Belgium's legal concerns and Hungary's opposition, with The Independent quoting Hungarian Prime Minister Viktor Orbán's claim of protecting his country from financial fallout.
Reuters provides a critical perspective, quoting Michael Carpenter's view that 'fear triumphed over reason' as the EU 'blinked' in the face of Russia. It also details the political dynamics, including the role of Belgium and Hungary, and the EU's fallback borrowing plan.
The Guardian's Jennifer Rankin reports on the unanimous approval of the €90 billion loan backed by the EU budget, with EU Council President António Costa stating, 'We committed and we delivered.' She also notes Zelenskyy's praise and Belgium's Prime Minister Bart De Wever's legal concerns.
The New Arab presents Russian President Vladimir Putin's condemnation of the frozen assets plan as 'daylight robbery' and highlights EU leaders' confidence in the alternative loan plan. France 24 and The Moscow Times provide context on the urgency due to Ukraine's looming financial crisis and the EU's internal divisions.
Together, these sources illustrate a complex negotiation balancing legal risks, political dissent, and urgent financial needs, with the EU opting for a pragmatic but less bold solution to support Ukraine.
How we got here
Since Russia's 2022 invasion of Ukraine, the EU froze €210 billion of Russian assets. Ukraine faces a financial crisis by early 2026, needing over €135 billion for two years. The EU sought to fund Ukraine via a 'reparations loan' backed by frozen Russian assets but faced opposition, particularly from Belgium, due to legal risks and potential Russian retaliation.
Go deeper
- Why did Belgium oppose using frozen Russian assets?
- How will the EU loan affect Ukraine's war effort?
- What are the risks of borrowing on capital markets for the EU?
Common question
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Can Ukraine legally access frozen Russian assets to fund its budget crisis?
With ongoing conflict and a significant funding gap, Ukraine's potential to tap into frozen Russian assets has become a hot topic. While these assets are held abroad, especially in Belgium, legal and diplomatic hurdles complicate their use. Many wonder if Ukraine can legally access these funds, what options the EU has to support Kyiv, and what risks are involved. Below, we explore the key questions surrounding this complex issue and what it means for Ukraine's future.
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What are the broader implications of Zelensky’s push for EU action on Russian assets?
Ukrainian President Zelensky has called for the EU to take stronger action against Russian assets to support Ukraine. This move raises questions about how the EU might respond, potential legal and diplomatic consequences, and what it means for Ukraine-EU relations. Here are some key questions and answers to understand the situation better.
More on these topics
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The European Union is a political and economic union of 27 member states that are located primarily in Europe. Its members have a combined area of 4,233,255.3 km² and an estimated total population of about 447 million.
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Ukraine is a country in Eastern Europe. It is the second-largest European country after Russia, which borders it to the east and northeast.
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Vladimir Vladimirovich Putin is a Russian politician and former intelligence officer who has served as President of Russia since 2012, previously holding the position from 1999 until 2008.
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Friedrich Merz is a German lawyer and politician. A member of the Christian Democratic Union, he served as a Member of the European Parliament from 1989 to 1994 and was elected to the Bundestag from 1994 until 2009, where he chaired the CDU/CSU parliament
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Ursula Gertrud von der Leyen is a German politician and the president of the European Commission since 1 December 2019. She served in the federal government of Germany from 2005 to 2019 as the longest-serving member of Angela Merkel's cabinet.
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Bart Albert Liliane De Wever is a Belgian politician. Since 2004 De Wever has been the leader of the New Flemish Alliance, a Belgian political party advocating independence for the Flemish region of Belgium within the European Union; he is also a member o
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Volodymyr Oleksandrovych Zelenskyy is a Ukrainian politician, actor and comedian who is the 6th and current president of Ukraine, serving since May 2019.
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Viktor Mihály Orbán is a Hungarian politician who has been Prime Minister of Hungary since 2010; he was also Prime Minister from 1998 to 2002.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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Emmanuel Jean-Michel Frédéric Macron is a French politician who has been President of France and ex officio Co-Prince of Andorra since 14 May 2017.
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Belgium, officially the Kingdom of Belgium, is a country in Western Europe. It is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to the southwest, and the North Sea to the northwest.
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Kirill A. Dmitriev is the CEO of the Russian Direct Investment Fund, a $10 billion sovereign wealth fund created by the Russian government to co-invest in the Russian economy alongside the sovereign wealth funds of other countries.