Brussels: The European Union has agreed to provide a massive financial lifeline to Ukraine through a 105 billion dollar loan, choosing to rely on its own budget and borrowing power instead of frozen Russian assets.
EU leaders approved the plan after weeks of intense negotiations, aiming to help Ukraine cover much of its funding needs for 2026 and 2027 as the war continues to strain the country’s economy and defence spending.
Under the arrangement, the European Union will raise money from international financial markets and pass it on to Ukraine as long term, low cost loans. The borrowing will be backed by the EU budget, allowing the bloc to secure favourable rates without placing the burden directly on individual member states.
The decision marks a clear shift from earlier proposals that sought to base Ukraine’s funding on around 210 billion euros of Russian central bank assets frozen in Europe. Those plans stalled due to legal concerns and resistance from some EU countries, particularly Belgium, where a large share of the assets are held.
EU officials said the frozen Russian funds will remain immobilised, but will not be used directly unless there is a future international agreement on war reparations. If such an agreement is reached, Ukraine could potentially use those funds to help repay the EU loan.
European Commission President Ursula von der Leyen said the agreement sends a strong message of unity and long term commitment to Ukraine’s stability. Ukrainian President Volodymyr Zelenskiy welcomed the decision, calling it vital for keeping essential services running and sustaining the country’s defence.
The move was not without controversy. Some member states raised concerns about financial risk and long term EU debt, while others argued that using frozen Russian assets could undermine trust in Europe as a safe place for foreign reserves.
Russia reacted sharply to the decision. President Vladimir Putin warned that debates over seized assets could make countries reconsider holding reserves in Europe, describing any move toward confiscation as dangerous.
Despite the disagreements, EU leaders said the loan plan ensures predictable funding for Ukraine while avoiding legal battles that could delay urgent support. The agreement also reflects growing willingness within the EU to act collectively in times of crisis, using shared borrowing to address major geopolitical challenges.
For Ukraine, the loan offers breathing space at a critical moment, even as the broader debate over Russian assets and war reparations remains unresolved.