What's happened
On December 19, 2025, after marathon talks in Brussels, EU leaders agreed on a €90 billion loan to support Ukraine’s defense and financial needs through 2026-27. The loan is backed by the EU budget, not frozen Russian assets, which remain immobilized amid legal and political disputes. Ukraine welcomes the deal as vital for resilience amid ongoing peace talks and war threats.
What's behind the headline?
EU’s Strategic Pivot and Its Implications
The EU’s decision to fund Ukraine with a €90 billion loan backed by its own budget rather than frozen Russian assets marks a pragmatic shift amid complex legal and political hurdles. Belgium’s refusal to provide unlimited guarantees against potential Russian retaliation was decisive, highlighting the limits of EU unity on contentious financial warfare measures.
Legal and Political Constraints
The frozen Russian assets, totaling around €210 billion in the EU, represent a tempting but legally fraught resource. The risk of costly lawsuits and retaliatory asset seizures by Russia, especially given Euroclear’s ongoing legal battles, made the reparations-backed loan politically untenable for now.
Impact on Ukraine and the War
For Ukraine, the source of funds is secondary to securing financial stability. The loan covers roughly two-thirds of Ukraine’s needs for the next two years, preventing an imminent budget crisis that could have crippled drone production and military resilience. This financial security strengthens Kyiv’s position in peace negotiations, countering Moscow’s narrative of Ukrainian exhaustion.
EU Cohesion and Future Prospects
The exemptions granted to Hungary, Slovakia, and the Czech Republic to avoid blocking the unanimous decision reveal underlying fractures within the EU. Yet, the deal demonstrates a collective commitment to Ukraine’s defense, with the EU reserving the right to use frozen assets for loan repayment once legal issues are resolved.
Geopolitical and Economic Forecast
This loan will sustain Ukraine’s war effort and bolster Western resolve, but it also signals the EU’s cautious approach to escalating economic conflict with Russia. The decision delays direct financial confrontation but keeps pressure on Moscow. The coming months will test whether this financial lifeline translates into a durable peace or prolonged conflict.
What the papers say
The New York Times’ Constant Méheut highlights Ukraine’s urgent need, noting Zelensky’s warning that without the loan, drone production would sharply decline, undermining defense capabilities. Méheut emphasizes that while Kyiv preferred frozen Russian assets as collateral, the EU’s budget-backed loan still resolves critical funding issues.
The Guardian’s Jennifer Rankin provides detailed insight into the EU’s internal divisions, quoting European Council President António Costa: “We committed and we delivered.” Rankin explains Belgium’s pivotal role in blocking the asset-backed loan due to legal risks, and German Chancellor Friedrich Merz’s view that the loan sends a “decisive message” to Putin.
The Moscow Times and The New Arab present contrasting perspectives, with Kremlin economic envoy Kirill Dmitriev praising the EU’s failure to use Russian assets as a “victory for law and common sense,” framing the EU’s decision as a setback for Ukraine and its Western supporters.
France 24 and Reuters underscore the high stakes, noting the EU’s fears that without financial aid, Ukraine would run out of money by spring 2026, risking defeat and increased Russian aggression near EU borders. They also report on the complex negotiations and the eventual compromise to borrow on capital markets.
Together, these sources reveal a story of high-stakes diplomacy, legal complexity, and geopolitical maneuvering, with the EU balancing support for Ukraine against internal divisions and legal caution.
How we got here
Ukraine faces a looming budget shortfall risking its war effort against Russia. The EU initially sought to back a loan with €200 billion in frozen Russian central bank assets but abandoned this due to legal and financial risks, especially concerns from Belgium, which holds most of these assets. The EU instead opted to borrow on capital markets, guaranteeing the loan with its budget.
Go deeper
- Why did Belgium block the use of frozen Russian assets?
- How will the EU loan impact Ukraine’s war effort?
- What are the legal risks involved in using frozen Russian assets?
Common question
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What Does the EU's €90 Billion Support for Ukraine Mean?
The European Union has announced a €90 billion support package for Ukraine, aimed at bolstering the country's economy and military efforts amid ongoing conflict. But what does this funding really entail, and why did the EU choose this route instead of using Russian assets? Here, we explore the implications of this support, its political significance, and what it means for Ukraine's future.
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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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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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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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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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.