EU leaders agree to allocate 90 billion euros to Ukraine. Frozen Russian assets will not be used
Ukraine is not yet threatened with bankruptcy.
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During a 16-hour discussion, European Union leaders were unable to agree on a scheme to finance Ukraine using Russian assets frozen in Europe. However, it seems that Ukraine is not yet threatened with bankruptcy: the EU has approved financial support for Kyiv totaling 90 billion euros through a loan backed by the European Union budget, writes the BBC.
"The decision to provide Ukraine with support totaling 90 billion euros for 2026-2027 has been approved," wrote EU summit chairman António Costa on social media on Friday night after hours of negotiations.
Costa did not specify where these funds would come from, but a draft text of the summit conclusions, seen by Reuters, states that the funds will be raised through borrowing on capital markets, backed by the EU budget.
This decision was made after hours of discussions on the technical details of a loan based on frozen Russian assets. However, European leaders ultimately decided not to use Russian assets. As unnamed diplomats explained to Reuters, this proved to be too politically complex.
"We've gone from saving Ukraine to saving face – at least the face of those who insisted on using frozen assets," Reuters quoted one European diplomat as saying.
According to the initial plan, Ukraine's financing was supposed to come from Russian reserves. Ukraine, it was assumed, would receive part of these funds as a loan and would be obliged to repay it only after Russia paid reparations for the invasion, the damage from which is already estimated at more than half a trillion dollars.
However, several EU countries opposed this plan from the very beginning. In addition to the leaders of the Czech Republic, Hungary, and Slovakia, who are considered pro-Russian, doubts about the advisability of using frozen Russian assets were expressed by Italy and, crucially, Belgium, home to the Euroclear depository, which holds 193 billion out of the 210 billion of the Kremlin's funds frozen in Europe.
According to the Financial Times, citing officials familiar with the negotiations, Belgium demanded extensive guarantees to cover any financial risks associated with the loan, which prompted other leaders to reject these terms.
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