Russian Assets Off the Table, EU Shows Weakness but Approves €90bn Support for Ukraine

EU leaders have approved a decision to raise joint debt in order to provide Ukraine with €90 billion in financial support for the period 2026–2027, equivalent to roughly BGN 176 billion. The agreement was reached at a European Council summit after the bloc abandoned the long-debated idea of a so-called “reparations loan” backed directly by frozen Russian assets.

European Council President António Costa announced the outcome after hours of negotiations, stressing that the leaders had committed to reaching a decision and had ultimately delivered one. While Costa did not publicly detail the technical structure, European Pravda reports that the package is based on common EU borrowing and required unanimous backing from all member states.

Shift from frozen-assets plan to joint borrowing

The original plan to underpin a major loan with frozen Russian central bank assets collapsed late in the talks due to political and legal sensitivities. Belgium, which holds the bulk of the frozen funds, expressed concerns about potential legal risks that could expose it to liabilities amounting to a significant share of its GDP. As a result, EU leaders switched to an alternative solution: an interest-free loan guaranteed by the EU budget, which avoids direct reliance on Russian assets but is seen as less flexible and potentially more costly.

Despite dropping the reparations loan idea for now, EU institutions will continue discussions on a separate mechanism linked to frozen Russian assets. European leaders had already agreed earlier this month to indefinitely immobilize those assets using Article 122 of the EU treaties, an emergency clause that allows decisions by qualified majority rather than unanimity.

Military and budgetary support for the next two years

German Chancellor Friedrich Merz said the approved funds would cover both Ukraine’s military requirements and its broader budgetary needs through 2027. According to him, the package is sufficient to secure Kyiv’s financing for at least the next two years and sends a clear political message to Moscow. Merz argued that Russia’s leadership would only reconsider its course once it becomes evident that continuing the war brings no advantage.

EU officials noted that without this agreement Ukraine was facing the risk of running out of funds by mid-2026. The new financing is expected to cover around two-thirds of the country’s projected needs for the period.

Zelensky welcomes decision as boost to resilience

Ukrainian President Volodymyr Zelensky welcomed the EU decision, describing it as substantial support that strengthens Ukraine’s resilience. He also highlighted the importance of the continued immobilization of Russian assets and the fact that Ukraine now has a clear financial security framework for the coming years.

Zelensky’s reaction followed earlier assurances from António Costa that EU leaders would not leave the summit without resolving the issue of Ukraine’s funding.

U.S. approves additional long-term military aid

Separately, U.S. President Donald Trump signed a major defense spending bill into law on December 18, authorizing a $900 billion package that includes military assistance for Ukraine. Under the legislation, Kyiv will receive $400 million annually in fiscal years 2026 and 2027 through the Ukraine Security Assistance Initiative, totaling $800 million over two years.

The bill passed with broad bipartisan support in Congress and also includes provisions affecting U.S. troop levels in Europe, funding for missile defense, support for the Baltic states, and higher pay for U.S. service members. According to Ukraine’s ambassador in Washington, the law also requires prompt notification to Congress if intelligence sharing with Ukraine is restricted.