EU agrees $136 billion loan for Ukraine, without Russian assets

BRUSSELS – European Union leaders struck a deal on Dec 19 to provide Ukraine with a €90 billion (S$136 billion) loan to plug its looming budget shortfalls – but failed to agree on using frozen Russian assets to come up with the funds.

The middle-of-the-night agreement reached at summit talks in Brussels offers Kyiv a desperately needed lifeline as US President Donald Trump 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,” said European Council head Antonio Costa, who chaired the summit.

Ukrainian President Volodymyr Zelensky wrote on social media platform X that the deal “is 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.”

In a post on Telegram, the Kremlin’s top economic negotiator Kirill Dmitriev welcomed the failure to “illegitimately use Russian assets to finance Ukraine”, adding that “for the time being, the law and common sense have won a victory”.

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

The No.1 option on the table had been to tap about €200 billion 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, Belgian 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 (is) 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 coughs up for the damages it has wrought.

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

‘It’s moral’

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

Mr Zelensky had told EU leaders at the start of the summit on Dec 18 that using Russian assets was the right way to go.

“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 said.

While Kyiv may be left disappointed that the EU did not take the leap to use the Russian assets, securing financing another way will still be a relief.

Mr Zelensky had told the leaders that Kyiv needed a decision by the end of 2025, and that putting his country on firmer footing could give it more leverage in talks to end the war.

Ukraine, US talks

Alongside the EU’s discussions, Washington has pushed its own effort to forge a deal to end the war.

The US has so far largely sidelined Europe from the negotiations – but French President Emmanuel Macron said it was time for the continent to start talking to Moscow itself.

“I believe that it’s in our interest as Europeans and Ukrainians to find the right framework to re-engage this discussion,” he said, adding that Europeans should find the means to do so “in coming weeks”.

Mr Zelensky announced Ukrainian and US delegations would hold new talks on Dec 19 and 20 in the US.

He said he wanted Washington to give more details on the guarantees it could offer to protect Ukraine from another invasion.

“What will the United States of America do if Russia comes again with aggression?” he asked. “What will these security guarantees do? How will they work?”

Mr Trump nonetheless kept the pressure on Kyiv, saying again he hopes Ukraine “moves quickly” to agree a deal. AFP