EU agrees €90bn loan for Ukraine – but won’t use frozen Russian assets

EU leaders have struck a deal to provide Ukraine a loan of €90bn (£79bn) to plug its looming budget black hole – but failed to agree on using frozen Russian assets to come up with the funds.

The agreement reached in the middle of the night at summit talks in Brussels offers Kyiv a desperately needed lifeline as Donald Trump, the US president, pushes for a quick deal to end Russia’s nearly four-year war.

“Today’s decision will provide Ukraine with the necessary means to defend itself and to support the Ukrainian people,” European Council head Antonio Costa, who chaired the summit, said.

Volodymyr Zelensky, the Ukrainian president, wrote on X that the deal offers “significant support that truly strengthens our resilience,” adding: “It is important that Russian assets remain immobilised and that Ukraine has received a financial security guarantee for the coming years.”

After scrambling around for a solution, EU leaders settled on providing a loan for the next two years backed by the bloc’s common budget.

The number one option on the table had been to tap around €200bn (£175bn) of Russian central bank assets frozen in the EU to generate a loan for Kyiv.

But that scheme fell by the wayside after Belgium, where the vast bulk of the assets are held, demanded guarantees on sharing liability – something that proved too much for other countries.

Briefing reporters as the summit wrapped up, Belgium’s prime minister Bart De Wever said he believed “rationality has prevailed”.

“This whole business was so risky, so dangerous, and raised so many questions – it was like a sinking ship, like the Titanic. The die are cast now – and everyone is relieved.”

German chancellor Friedrich Merz had pushed hard for the asset plan – but still said the final decision on the loan “sends a clear signal” to Russian president Vladimir Putin.

European Commission president Ursula von der Leyen said Ukraine would only need to pay back the loan once Moscow pays for the damage it has wrought.

Kirill Dmitriev, Putin’s ⁠special envoy for investment and economic cooperation, who has led Russia’s negotiations with Mr Trump’s team, said on Friday that “law and sanity” had won.

“Major BLOW to EU ‍warmongers led by failed Ursula – voices of reason ⁠in the ‌EU ‍BLOCKED the ILLEGAL use of ‍Russian reserves to fund Ukraine,” ⁠Dmitriev said on X.

Using joint debt requires a unanimous decision by the EU’s 27 countries, and sceptics Hungary, Slovakia and the Czech Republic were given an exemption from the commitment to avoid a blockage.

The EU estimates Ukraine needs an extra €135bn (£118bn) to stay afloat over the next two years, with the cash crunch set to start in April.

Ukrainian officials had made the case to their EU and US counterparts that the money could be used to help outlast Russia in a war of attrition, should Putin refuse to end the conflict.

“Russian assets must be used to defend against Russian aggression and rebuild what was destroyed by Russian attacks. It’s moral. It’s fair. It’s legal,” Mr Zelensky had said on Thursday.

He told the leaders that putting his country on firmer footing could give it more leverage in talks to end the war.

A 28-point US-led plan, which Kyiv and Europe argued was tilted in Moscow’s favour, called for $100bn (£74.8bn) of Russia’s frozen assets to be poured into reconstruction projects that would generate profits for American companies.

The remaining majority of the assets would be earmarked for a separate pot to fund joint Russian and American projects.

Mr Merz is understood to have lobbied Mr Trump to remove those plans to use the assets from a potential peace deal.

The latest draft of the peace proposal contained no reference to the future of the frozen assets, sources familiar with the document previously told The Telegraph.

The Kremlin has said it would reject any revisions by Ukraine or Europe to the original peace plans drawn up between Russian and US officials.

[Source: Daily Telegraph]