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EU Approves €90‑€106 B Zero‑Interest Loan to Ukraine, Shelving Frozen Russian Asset Plan

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Deal Finalized After Two‑Day Summit On 18‑19 December 2025 EU leaders reached a consensus to raise a zero‑interest loan for Ukraine, with amounts reported as €90 billion, $105 billion, and €106 billion across outlets [1][2][3][4]. The loan will be financed on capital markets and repaid only after Russia pays war reparations, a condition echoed by all sources [1][2][3]. The European Council invoked Article 20 of the EU Treaty to allow the bloc to shoulder the debt, mirroring the borrowing mechanism used for the COVID‑19 recovery fund [1].

Frozen‑Asset Proposal Abandoned Due to Opposition The earlier plan to tap roughly €210 billion of frozen Russian central‑bank assets was dropped after Belgium’s Bart De Wever and Hungary’s Viktor Orbán warned of legal risks and potential retaliation against Euroclear [2][3][5][7][8]. Belgium demanded binding guarantees before supporting the reparations loan, while Hungary, Slovakia, and the Czech Republic conditioned their backing on exemptions [1][3][5][8]. Consequently, the EU shifted to market borrowing, preserving the option to use the immobilized assets for loan repayment later [1][2][4].

Legal Framework and Guarantees The loan is guaranteed by the EU budget, requiring either a qualified‑majority (65 % of the EU population) for the asset‑backed option or unanimity for the market‑borrowing alternative [3][7]. Belgium’s insistence on explicit guarantees and Hungary’s veto threat shaped the final compromise [1][5][7]. The EU also affirmed its right to draw on the frozen assets to settle the loan if Russia fails to pay reparations, a clause supported by the European Commission [1][4][9].

Ukraine’s Immediate Needs and Reactions President Volodymyr Zelenskyy stressed that without the loan Ukraine could not fund its army or meet budget obligations, citing a projected €45‑50 billion deficit for 2026‑27 [3][4][6]. The IMF estimates a total need of €137 billion for Ukraine through 2027, with the new loan covering roughly two‑thirds of that gap [3][8]. Zelenskyy praised the agreement as a “significant” step toward financial certainty and thanked EU partners for their unity [2][4].

Potential Future Use of Frozen Assets While the assets remain frozen, the EU reserves the right to use them to repay the loan once Russia fulfills reparations obligations [1][2][4]. Russia’s central bank has filed a lawsuit against Euroclear in Moscow, alleging illegal seizure of sovereign assets [5][9][10]. EU officials maintain that the freeze is legally robust and necessary to prevent Hungary and Slovakia from blocking future Ukraine aid [9][10].

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Timeline

2022 – The war in Ukraine begins, prompting the EU to commit more than €170 billion in assistance to Kyiv over the conflict’s first years, setting the fiscal backdrop for later financing debates [12].

June 2025 – Roughly €194 billion of the €210 billion frozen Russian central‑bank assets sit in Belgium’s Euroclear, with the remaining €16 billion spread across other EU states, defining the pool at the centre of the loan proposal [12].

Oct 2025 – EU leaders pledge to keep the frozen Russian assets immobilised until Russia ends its aggression and pays reparations, a political commitment that later underpins the emergency freeze [10].

Dec 3 2025 – The European Commission unveils a plan to use about €90 billion of the frozen assets as collateral for a “reparations loan” covering two‑thirds of Ukraine’s 2026‑27 budget, while Belgian Foreign Minister Maxime Prévot warns the scheme is “the riskiest option” and urges market borrowing instead [12].

Dec 9 2025 – EU leaders agree to fund Ukraine for two years, evaluating a €90 billion loan backed by frozen assets versus a market‑borrowed alternative; Belgium demands binding guarantees, noting “mere oral promises are not enough,” and the €3.9 billion interest earned on the assets already supports a G7 loan [11].

Dec 12 2025 – The EU invokes an emergency procedure to freeze the €210 billion of Russian assets indefinitely, preventing Hungary and Slovakia from vetoing future aid; Russia’s Central Bank sues Euroclear, and Belgium warns of “significant economic, financial and legal risks” [5][10].

Dec 17 2025 – The European Council summit opens (Dec 18‑19) to decide on a loan using the frozen assets; the proposal requires a qualified‑majority representing 65 % of the EU population, while the ECB cautions that seizing the assets could damage euro‑zone confidence and Hungary’s Viktor Orbán opposes the plan, favouring a market‑borrowed option [9][4].

Dec 17‑18 2025 – EU leaders meet late‑night to craft guarantees shielding Belgium from possible Russian retaliation; Belgian Prime Minister Bart De Wever insists on “binding guarantees,” and President Volodymyr Zelenskyy urges a swift decision, calling the use of frozen assets “absolutely just” [8].

Dec 18 2025 – EU heads approve a €90 billion zero‑interest loan for Ukraine’s 2026‑27 needs, shifting to capital‑market borrowing after the frozen‑asset plan collapses; Zelenskyy posts on X that the deal “strengthens Ukraine’s resilience” and thanks partners for their unity [1][6].

Dec 19 2025 – The EU formally adopts a $105 billion (≈€90 billion) loan, shelving the reparations‑asset scheme; Belgian leader Bart De Wever reiterates the need for “binding guarantees,” while European Council President António Costa declares the message to Russia “crystal‑clear: Europe stands with Ukraine” [3][1].

2026 spring (expected) – Ukraine must secure the financing by spring 2026 to avoid a €45 billion shortfall for 2026‑27, with the EU hoping non‑EU allies such as the UK, Japan and Canada will help fill the gap [1].

Future (post‑conflict) – The EU reserves the right to draw on the immobilised Russian assets to repay the loan if Russia fails to meet reparations after a peace settlement, linking the loan’s ultimate repayment to the outcome of the war [1][7].

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