European Union leaders have officially approved a substantial €90 billion financial package aimed at bolstering Ukraine's economic and military resilience through 2026 and 2027. This significant agreement, reached during a summit in Brussels, demonstrates a strong commitment from the bloc. However, the plan deliberately avoids addressing the contentious issue of utilising frozen Russian state assets as a funding source for now.
This substantial loan represents a critical injection of capital intended to alleviate Ukraine's pressing financial needs amidst the ongoing conflict with Russia. Ukrainian President Volodymyr Zelensky has repeatedly warned of dwindling resources, underscoring the urgency of such external assistance. The EU's decision to proceed with the loan highlights a collective resolve among a significant majority of member states to prevent Ukraine's collapse, a sentiment echoed by EU foreign policy chief Kaja Kallas.
The €90 billion will be procured through joint borrowing by 24 of the 27 EU member states, with the European Union's central long-term budget providing a guarantee for these loans. This mechanism implies that Ukraine will eventually be expected to repay these funds through future reparations levied against Russia for war damages. While this approach offers a stable financial avenue, it sidesteps a potentially larger funding source that has proven divisive.
Discussions concerning the deployment of approximately €300 billion in frozen Russian central bank assets have been fraught with legal and financial complexities. Several member states have expressed considerable reservations regarding the potential legal ramifications and financial instability that could arise from such a move. These concerns have effectively stalled immediate consensus on leveraging these frozen funds, pushing the debate into the future.
The agreement's approval signifies a pragmatic approach by EU leaders, prioritising immediate support for Ukraine over prolonged debates. President of the European Council Charles Michel hailed the outcome, stating, "We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-27 approved." This financial lifeline is projected to cover a substantial portion of Ukraine's estimated fiscal deficit, providing a crucial buffer for its defence and reconstruction efforts.
This decision, while a significant victory for Ukraine, also highlights persistent internal divisions within the EU regarding financial support for Kyiv. The exclusion of frozen Russian assets from this immediate funding plan leaves a contentious financial instrument for future consideration. The loan is expected to be disbursed in stages, with initial tranches anticipated in the coming months.