Brussels, December 20, 2025 – European Union leaders have agreed to provide Ukraine with a €90 billion (approximately $105 billion) interest-free loan to support its military and economic needs over the next two years. The deal, finalized early on December 19 after marathon talks, comes as an alternative to a more controversial proposal to back the loan with frozen Russian central bank assets.
The loan will be raised through joint borrowing on capital markets, secured against unallocated funds in the EU budget. It is expected to cover roughly two-thirds of Ukraine’s projected €136 billion in financing needs for 2026 and 2027, helping Kyiv avoid a potential budget crisis that could have forced cutbacks in defense spending by spring 2026.
Ukrainian President Volodymyr Zelenskyy welcomed the agreement, describing it on social media as “significant support that truly strengthens our resilience.” He emphasized the importance of the continued immobilization of Russian assets and the financial guarantee provided to Ukraine.
The summit had initially focused on a “reparations loan” plan championed by German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen. This ambitious scheme aimed to use up to €210 billion in Russian sovereign assets frozen in the EU as collateral. Under the proposal, Ukraine would repay the loan only after receiving war reparations from Russia.
However, the plan collapsed due to strong reservations from Belgium, which hosts about 88% of the frozen assets (around €185-193 billion). Belgian Prime Minister Bart De Wever insisted on unlimited guarantees from other EU members to shield his country and Euroclear from potential Russian legal retaliation or financial claims. Despite concessions, including an agreement to freeze the assets indefinitely until Russia pays reparations, Belgium’s demands proved too contentious, with support from countries such as Italy.
EU Council President António Costa announced the compromise deal, stating: “We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-27 approved. We committed, we delivered.” Leaders reserved the option to use the frozen assets for future loan repayments if Russia fails to compensate Ukraine for war damages.
The Kremlin reacted positively to the failure of the asset-backed plan. A top Russian economic negotiator called it a victory for “law and common sense.” President Vladimir Putin accused Western nations of attempting “robbery.”
Public reaction in Germany has been mixed. Some critics highlight ethical and legal concerns over repurposing seized foreign assets. A social media commentator, Jochen Ziehmann, posted that the current proposal is like using a neighbor’s property as collateral for a personal loan.
The €90 billion package underscores the EU’s commitment to Ukraine amid ongoing Russian aggression. Non-EU allies, including the United States, United Kingdom, and others, are now urged to bridge the remaining funding gap.
Impact on Germany if Ukraine is unable to repay the loans
If Ukraine is unable to repay and no Russian reparations are available, the EU would have to cover the principal from future budgets. This would affect Germany the most, as it is the largest contributor. This would not push Germany into a debt crisis (given its economic size), but it would tighten already strained fiscal space.
