EU Approves Zero‑Interest Loan for Ukraine After Frozen‑Asset Plan Collapses, Funding Size Disputed
Updated (2 articles)
EU Leaders Endorse Capital‑Market Borrowing for Ukraine On 19 December 2025 EU heads signed a zero‑interest loan package to finance Ukraine’s 2026‑27 military and budget needs, opting to raise the funds on capital markets after the frozen‑Russian‑assets scheme fell apart [1][2]. The loan is intended to provide financial certainty whether the war continues or reconstruction begins. Ukraine’s President Volodymyr Zelenskyy travelled to Brussels to press for swift approval.
Loan Amount Reported Differently Across Reports One AP dispatch cites a $106 billion (≈€106 billion) borrowing, while another lists a €90 billion loan [1][2]. Both describe the same zero‑interest, two‑year facility, but the discrepancy highlights divergent reporting on the exact figure. The EU Council invoked Article 20 of the Treaty of Europe to permit the union to shoulder the debt, mirroring the COVID‑19 recovery fund approach.
Repayment Tied to Russian War Reparations and Immobilized Assets The agreement stipulates that repayment will occur only after Russia fulfills war‑reparation obligations [1][2]. The EU retains the right to draw on immobilized Russian assets to settle the loan if reparations are delayed, while the assets remain frozen under EU and international law. This structure aims to shield EU taxpayers while pressuring Moscow.
Hungary, Slovakia, and Czech Republic Oppose but Do Not Veto Hungary’s Viktor Orbán, Slovakia, and the Czech Republic voiced objections, arguing the loan deepens EU involvement in the conflict [1][2]. Despite their dissent, they did not exercise veto power, allowing the package to pass. Poland’s Donald Tusk warned of severe consequences for Ukraine if the funds were withheld.
Sources
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1.
AP: EU approves 106 billion loan to Ukraine after frozen-asset plan stalls – Details the EU’s decision to borrow roughly $106 billion via capital markets, the legal basis under Article 20, and Zelenskyy’s framing of the loan as defense or reconstruction funding .
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AP: EU leaders approve a 90 billion euro zero-interest loan to Ukraine after plan to use frozen Russian assets unravels – Highlights the collapse of the frozen‑asset proposal, opposition from Hungary and others, and the context of farmer protests and Zelenskyy’s Brussels visit .
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Timeline
2022 – EU freezes about €210 billion of Russian sovereign assets, mainly held at Belgium’s Euroclear, after Russia’s invasion of Ukraine, creating a pool of immobilised funds for potential future use [1][2].
Dec 2025 – Belgian Prime Minister Bart De Wever rejects the EU proposal to tap the frozen Russian assets, calling it “legally risky” and warning it could jeopardise Euroclear’s operations [1].
Dec 2025 – Russia’s Central Bank files a lawsuit against Euroclear, challenging the immobilisation of the assets and contesting the EU’s legal basis for using them [1].
Dec 2025 – EU leaders abandon the frozen‑asset plan and decide to raise money on capital markets, opting for a zero‑interest loan to Ukraine financed through EU borrowing [1][2].
Dec 19, 2025 – EU heads approve a zero‑interest loan of roughly €100 billion for Ukraine’s 2026‑27 budget and defence needs; the package is described as €90 billion in one statement and €106 billion in another, to be repaid only after Russia pays reparations [1][2].
Dec 19, 2025 – Hungary, Slovakia and the Czech Republic refuse to back the loan but do not veto it; Viktor Orbán declares a “double victory” for his country and for “protecting Hungarians,” while Poland’s Donald Tusk warns of “severe consequences” if the funds are not delivered [1][2].
Dec 19, 2025 – President Volodymyr Zelenskyy flies to Brussels, urging a swift decision so Ukraine can secure financing before the new year and keep its armed forces and state budget afloat [1].
Dec 19, 2025 – Farmers stage fiery protests outside the EU summit, objecting to a pending trade deal with South American countries, adding pressure on leaders as they negotiate the Ukraine loan [1].
Dec 2025 – The EU Council invokes Article 20 of the Treaty of Europe to shoulder the debt, likening the move to the large‑scale borrowing that funded the COVID‑19 recovery programme [2].
Dec 2025 – The loan terms stipulate repayment only after Russia fulfills war‑reparations; the EU reserves the right to draw on the immobilised Russian assets if reparations remain unpaid [1][2].
Spring 2026 – Ukraine expects the approved loan to be disbursed, aiming to cover its projected shortfalls for the 2026‑27 fiscal year as highlighted by IMF forecasts [1][2].