Following a protracted overnight session in Brussels, European Union leaders have reached a compromise agreement to provide Ukraine with a substantial €90 billion credit package spanning 2026 and 2027. The accord, announced by EU Council President António Costa, represents a crucial step in sustaining Ukraine’s resilience amidst ongoing Russian aggression, but also exposes underlying tensions within the bloc regarding resource allocation and the utilization of frozen assets.
The financing will be facilitated through EU bonds issued on capital markets, underpinned by the EU’s existing budgetary capacity. A previously-advocated plan to directly leverage frozen Russian assets to fund the credit has been shelved, a decision that has drawn immediate scrutiny and accusations of timidity from some quarters. While Costa indicated that the possibility of utilizing these frozen assets for eventual debt repayment remains, contingent on Russia failing to provide reparations to Ukraine, the delay underscores the political complexities involved. Ukraine’s repayment obligation will be linked to the provision of such reparations, a condition designed to incentivize Russian accountability.
German Chancellor Friedrich Merz, a vocal proponent of directly accessing frozen assets prior to the summit, expressed satisfaction with the outcome, emphasizing the commitment to a €90 billion, zero-interest loan. He characterized the package as sufficient to cover Ukraine’s military and budgetary needs for the next two years, suggesting it signals a critical deterrent to Russian President Vladimir Putin. “This signal is decisive in ending the war, because Putin will only change course when he recognizes that his war is not worth it” Merz stated.
However, the agreement’s reliance on EU bonds, rather than direct asset seizure, has fueled skepticism regarding its long-term sustainability and effectiveness. Critics argue that it shifts the financial burden onto European taxpayers while potentially missing a significant opportunity to hold Russia directly accountable for its actions. The deferral on asset utilization also raises questions about the EU’s resolve in confronting Russian aggression and risks incentivizing further escalations. Furthermore, the linking of Ukraine’s debt repayment to Russian reparations introduces a layer of uncertainty, dependent on a politically charged scenario that may or may not materialize. The agreement, while offering much-needed immediate support for Ukraine, ultimately reveals a fractured consensus within the EU regarding the appropriate tools and strategies for addressing the conflict.
