European Union Agrees €90 Billion Loan for Ukraine but Rejects Use of Frozen Russian Assets
Brussels, December 2025 – After intense negotiations lasting into the early hours of Friday, European Union leaders have agreed to provide Ukraine with a €90 billion financial support package to sustain the country’s government and defence effort over the next two years. The decision comes amid growing concerns that Kyiv’s finances could collapse in 2026 without urgent assistance, with some estimates placing Ukraine’s funding needs at approximately €135 billion over the coming period.
The agreement, brokered at a summit in Brussels, represents a significant reaffirmation of the European Union’s commitment to Ukraine’s sovereignty and continued resistance against Russia’s full-scale invasion. However, the package notably does not include the use of frozen Russian central bank assets as originally proposed, a strategy that had been favoured by several member states but ultimately blocked after legal and political objections.
This article provides a comprehensive analysis of the deal, the political dynamics that shaped it, the legal issues surrounding frozen Russian assets, and the role played by Belgium’s government in the negotiations.
The €90 Billion Loan: Structure and Purpose
The agreement reached by EU leaders establishes an interest-free loan of €90 billion to Ukraine, designed to bridge an expected funding gap in the country’s state budget in 2026 and 2027. The loan will be backed by the EU’s common budget and obtained through capital markets rather than relying on frozen Russian sovereign funds. Ukraine will only be required to repay this loan if and when Russia pays reparations for the vast damage caused by its invasion.
European Council President António Costa emphasised that the decision “provides the necessary means for Ukraine to support its people and defend itself”, underlining that the bloc “committed and delivered” on a crucial financing package. Ukrainian President Volodymyr Zelensky welcomed the agreement, stating on social media that it “truly strengthens our resilience”, while stressing that immobilised Russian assets should remain inaccessible until the end of the war or until Moscow settles its obligations.
The loan will be disbursed across the next two years and will support both military needs and civilian expenditures in Ukraine, which has faced severe financial strain as its economy has contracted and revenues have collapsed. International Monetary Fund estimates indicate that Kyiv may require up to €137 billion to maintain basic functions and public services over that period.
The Frozen Russian Assets Controversy
Background
Shortly after the full-scale Russian invasion in February 2022, EU member states froze approximately €210 billion of Russian central bank assets held within the Union. These funds are largely immobilised in institutions such as Euroclear, a Brussels-based central securities depository that holds government bonds and reserves for international clients.
From late 2025 onwards, European Commission proposals aimed to leverage part of these frozen assets to provide Ukraine with a so-called “reparations loan”. Under this plan, the EU would borrow against the immobilised Russian funds to finance a generous package for Kyiv. The loan would be repaid to the EU only if Russia agreed to pay war reparations after a future settlement, essentially using Russia’s own assets to cover the cost of its aggression.
Proponents of the asset-backed loan argued that the measure would be moral, fair, and legally sound, since the funds remained frozen and would not be confiscated outright from Russia. Supporters further asserted that such a mechanism would send a strong political signal to President Vladimir Putin and might encourage other Western allies to adopt similar measures.
Belgium’s Crucial Objection
Despite broad support for the idea in many capitals, the plan foundered on a key political and legal objection from Belgium — the EU member state where the vast bulk of the frozen Russian assets are held. Belgian Prime Minister Bart De Wever and his government argued that using these assets to back a €140 billion reparations loan posed unacceptable risks to Belgium’s financial and legal position.
Belgium’s concerns were three-fold:
- Legal Liability: Brussels argued that deploying foreign sovereign assets as collateral for an EU loan could be perceived as de facto confiscation, exposing Belgium to legal action by Russia or other parties. Belgian officials reasoned that if a court in a non-EU jurisdiction allowed enforcement of a Russian claim, Belgium — as host to the underlying financial institution — could be held liable for substantial damages.
- Financial Risk: Belgium demanded legally binding, cast-iron guarantees from all other EU member states that any financial liability arising from legal claims would be shared collectively, rather than being borne by Belgium alone. Without such guarantees, Belgium maintained that its sovereign finances could be imperilled.
- Participation of All Jurisdictions Holding Assets: The Belgian government also insisted that any mechanism to unlock frozen Russian funds should include all jurisdictions that hold such assets — including, for example, the United Kingdom, United States, Canada, Japan, Switzerland, and Norway — so that Belgium did not shoulder disproportionate risk relative to other holders.
Prime Minister De Wever characterised the proposal as “fundamentally wrong” under existing legal and financial conditions, effectively vetoing the use of the asset-based loan at the summit without the risk-sharing guarantees he demanded.
Legal and Political Dimensions
Legal Risks and International Law
The crux of Belgium’s argument was not that using frozen Russian assets would automatically breach international law, but that such use could create significant legal uncertainty and potential liability for the host state due to the complexity of sovereign immunity, treaty obligations, and enforcement mechanisms across different jurisdictions. Belgian officials highlighted that even though EU courts might not recognise a Russian legal victory, a disruptive ruling in a friendly non-EU jurisdiction could lead to enforcement actions against Belgian assets overseas.
Legal experts noted that prohibitions on freezing and seizing sovereign assets are generally upheld in international law, and that EU proposals were framed to avoid outright confiscation. Nevertheless, Belgium demanded guarantees precisely because legal risk in this area remains inherently unpredictable — particularly where sovereign sovereign relations and economic retaliation overlap.
Political Balancing Among Member States
The debate also exposed political divisions within the EU. While Germany and others argued that using frozen Russian assets was the only viable way to meet Ukraine’s funding needs without overburdening European taxpayers, sceptical governments — including Hungary, Slovakia, and the Czech Republic — expressed broader reservations about sharing liability for large-scale joint debt.
Hungarian Prime Minister Viktor Orbán, a long-standing critic of further EU involvement in the Ukraine conflict, characterised participation in a war-funding mechanism as problematic, remarking that he “would not like a European Union in war”.
The impasse over frozen assets eventually led leaders to conclude that the practical benefits of securing Ukraine’s immediate financing outweighed the political capital required to secure a legally and financially acceptable asset-backed mechanism. Hence, the summit agreed to adopt the loan mechanism based on the EU budget rather than the more contentious asset-backed plan.
Reactions and Implications
Ukraine and European Allies
President Zelensky welcomed the agreement as a critical step in shoring up Ukraine’s economy and defence. He reiterated that keeping Russian assets immobilised — rather than released or returned — was crucial to guaranteeing Ukraine’s financial stability.
Many Western observers characterised the outcome as a diplomatic compromise: it provides urgent funds to Ukraine while averting the legal and financial risks some member states insisted were too high. However, some analysts warned that by sidestepping the use of frozen Russian funds, the EU might have missed an opportunity to press a broader message about accountability for war damages.
Russia
The Russian government was quick to seize on the abandonment of the asset-based plan as a diplomatic victory, with President Putin and his officials decrying efforts to use frozen assets as “illegal” and warning of “severe consequences” should such measures proceed. Despite this rhetoric, Moscow’s actual legal options to overturn the immobilisation of its assets in the EU remain limited.
Looking Ahead
The EU’s decision to provide a €90 billion loan marks a significant milestone in its ongoing support for Ukraine. By choosing a budget-backed financing mechanism over the contested frozen asset plan, European leaders have opted for political consensus and immediate practical aid, while deferring one of the most legally fraught questions of the war’s financial aftermath.
Whether the bloc will return to the idea of using frozen Russian reserves in a future, more legally secure context remains an open question. However, the summit’s compromise underscores the complex intersection of international law, sovereign risk, collective liability, and political will that defines major EU decisions in an era of sustained geopolitical tension.
Frequently Asked Questions
1. Why did the European Union agree to a €90 billion loan for Ukraine?
The European Union agreed to the €90 billion loan to address Ukraine’s imminent budget shortfall over the next two years. Ongoing military expenditure, infrastructure damage, and reduced tax revenues have placed severe strain on Ukraine’s public finances. Without additional external funding, the Ukrainian state would struggle to maintain basic government functions, support its population, and continue its defence effort. The loan provides financial stability while allowing the EU to demonstrate continued political and economic support.
2. Why were frozen Russian assets not used to fund the loan?
Although many EU leaders initially supported using frozen Russian central bank assets, the proposal was ultimately rejected due to legal and financial risks. Belgium, where most of the assets are held, refused to proceed without binding guarantees that any legal or financial liability would be shared across all EU member states and other international partners. Without unanimous agreement on risk-sharing and legal safeguards, the EU opted for a safer alternative using its common budget.
3. What role did Belgium play in blocking the use of Russian assets?
Belgium played a decisive role because the majority of frozen Russian sovereign assets are held in Belgian financial institutions. The Belgian government argued that deploying these assets as collateral for a loan could expose the country to legal challenges or financial retaliation, potentially leaving Belgian taxpayers liable. Belgium insisted that responsibility must be shared by all nations holding Russian assets, a condition that could not be secured at the summit.
4. Will Ukraine have to repay the €90 billion loan?
Under the agreed framework, Ukraine is only expected to repay the loan if Russia ultimately compensates Ukraine for war-related damages. If reparations are paid by Moscow following a future settlement or peace agreement, those funds would be used to service the debt. If no such compensation materialises, the repayment burden would not fall directly on Ukraine, reducing long-term financial pressure on the country.
5. How could a future peace deal affect frozen Russian assets?
If a peace deal were brokered — potentially involving the release of frozen Russian assets — complex legal and financial questions would arise. Returning the funds to Russia after they had been used to underpin loans could leave EU member states exposed to significant liabilities. This uncertainty was a major reason the EU avoided using the assets directly. Any future settlement would require clear agreements on who bears responsibility for repayments and how financial guarantees are honoured.
Comment
Keir Starmer is determined to plunder the assets of Roman Abramovich, but this would not only be a dangerous move for him personally, it would also be further provocation of Russia, which has been intentionally made the default enemy since the Clintons were in the Whitehouse.