EU Agrees $105 Billion Interest-Free Loan to Ukraine Without Using Russian Assets

Al Jazeera
Al Jazeera
1d ago
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The EU will loan $105 billion to Ukraine via capital markets, avoiding the use of frozen Russian assets amid legal and political hurdles.
EU Agrees $105 Billion Interest-Free Loan to Ukraine Without Using Russian Assets
A What happened
EU leaders reached an agreement to provide Ukraine with 90 billion euros ($105.5 billion) over 2026-27 through an interest-free loan funded by capital market borrowing secured against the EU budget. They avoided using Russia's frozen assets due to legal complexities and political opposition, especially from Belgium, which holds most of the frozen funds and feared financial retaliation. Ukraine will repay the loan only upon receiving war reparations from Russia, with frozen assets remaining immobilized in the meantime. The decision reflects a compromise to maintain EU unity and secure Ukrainian financial resilience amid ongoing conflict with Russia.
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Key insights

  • 1

    Legal and Political Constraints Shape EU Funding Choices: The EU’s decision to avoid using frozen Russian assets stems from legal risks, especially for Belgium, and potential financial retaliation threats from Russia, highlighting how national interests and legal frameworks limit collective action.

  • 2

    Borrowing on Capital Markets Reflects EU Unity Prioritization: By opting for capital market financing, the EU navigates internal divisions, enabling support for Ukraine without risking member states’ financial exposure, but increases the bloc’s collective borrowing burden.

  • 3

    Conditional Repayment Links Financial Support to War Reparations: Ukraine’s agreement to repay only after receiving reparations from Russia ties EU financial assistance to broader conflict resolution outcomes, keeping frozen assets as collateral while avoiding premature asset seizure.

Takeaways

The EU’s loan decision secures crucial funding for Ukraine while managing intra-bloc legal and political challenges, postponing a resolution on accessing frozen Russian assets amid the ongoing conflict.

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