EU Approves $105 Billion Interest-Free Loan to Ukraine, Bypasses Frozen Russian Assets

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Brussels: The European Union has greenlit a $105.5 billion (90 billion euros) interest-free loan to support Ukraine’s military and economic needs for 2026–2027. EU Council President Antonio Costa announced the deal on Friday, sidestepping a contentious plan to use frozen Russian assets as collateral. The decision follows months of debate, with Belgium hosting €185 billion of Russia’s €210 billion frozen funds, citing fears of Russian retaliation, including lawsuits and asset seizures.

The EU’s compromise on Ukraine’s funding involves borrowing $105.5 billion (90 billion euros) from capital markets, backed by the bloc’s budget, instead of using frozen Russian assets.

Key terms include: Ukraine will repay only after securing war reparations from Russia; Hungary, Slovakia, and the Czech Republic are exempt from contributing; and the EU will continue exploring a Russian-asset-backed loan.

Reactions were mixed. Ukraine’s President Zelenskyy called it a ‘clear signal’ of support, while Russia’s envoy Kirill Dmitriev praised it as ‘law and sanity’ prevailing.

The EU estimates Ukraine needs $159 billion to bridge its funding gap. Critics label this a ‘face-saving’ compromise, delaying bolder action. The Kremlin warns of legal action if assets are used.