EU leaders agree €90bn Ukraine loan after Russian assets plan collapses

EU leaders agreed in the early hours in Brussels to raise €90 billion on the markets and lend it to Ukraine over 2026–2027, using unused EU budget margins as guarantees. The deal came only after the 27 failed to reach consensus on how to deploy roughly €250 billion in frozen Russian sovereign assets, held largely in Belgium, since Russia’s invasion of Ukraine.

The compromise exposed both the limits of EU unity and the political sensitivity surrounding the Russian assets. Belgium led resistance to their use, citing legal exposure and financial stability risks, while Hungary, Slovakia and the Czech Republic made clear they would block any solution likely to provoke retaliation from Moscow.

Reactions among leaders were cautiously positive, but media commentary was more critical. Le Monde warned that the support risks amounting to an interest-free loan rather than outright aid. Politico framed the outcome more bluntly, arguing that Europe “still doesn’t want to pay to save Ukraine,” reflecting growing public unease over continued financial transfers.

The European Council also agreed to postpone the EU–Mercosur free trade agreement until January, bowing to pressure from France and Italy. Opposition was highly visible in Brussels, where farmers staged protests against the deal, while industry groups continued to lobby strongly in its favour.

Belgium’s red line

Belgium’s position proved decisive in closing off the option of using frozen Russian sovereign assets. Brussels has already faced legal challenges linked to the immobilisation of the funds and warned that any move to seize or pledge them would expose the country to further litigation and potential financial instability, including retaliation from Moscow, which has already initiated legal action.

Several other Member States shared those concerns. Italy, Bulgaria and Malta flagged legal and financial risks, while Hungary, the Czech Republic and Slovakia made clear they would block any approach they viewed as legally precarious or geopolitically escalatory.

In the end, Budapest, Prague and Bratislava accepted the market-backed loan compromise, while securing the right to opt out of contributing financially, a concession that proved essential to achieving unanimity.

From frozen assets to Plan B

As EU leaders struggled through the night in Brussels, US diplomacy on Ukraine was moving in parallel. Washington’s negotiation team, led by envoy Steve Witkoff and Jared Kushner, met interlocutors from Qatar, Egypt and Turkey to advance talks on the second phase of the early October understandings related to the Russia–Ukraine war. 

The timing was not lost on European capitals. With US-led contacts accelerating, pressure was mounting on the EU to demonstrate financial resolve of its own.

US media closely tracked the EU’s overnight compromise. The Washington Post wrote that “the bloc – that is, the 27 – is racing against time to help Ukraine,” a race it ultimately won, though later than necessary. The paper traced the delay to the European Commission and Germany’s push to use frozen Russian assets, a legally fraught route, rather than the market-backed loan eventually adopted, a solution seen as ideologically uncomfortable in Berlin.

Several European leaders sought to frame the outcome as a victory for pragmatism. Italian prime minister Giorgia Meloni welcomed the deal as an example of “common sense,” highlighting financial stability and a renewed commitment to supporting Ukraine, according to ANSA.

Politically, however, the night produced clear losers. Commission president Ursula von der Leyen and German chancellor Friedrich Merz, both outspoken advocates of using frozen Russian funds, were ultimately forced to abandon that approach to preserve unanimity in the face of opposition from Hungary, the Czech Republic and Slovakia.

As leaders debated other agenda items, parallel negotiations continued between the Commission and Belgium over possible guarantees linked to the frozen assets. 

By dinner time, that route had effectively collapsed. Belgian prime minister Bart De Wever showed no willingness to shift, while concerns voiced by Italy, Bulgaria and Malta remained unresolved. Meanwhile, Budapest, Prague and Bratislava were poised to block any solution that risked legal escalation or retaliation from Moscow.

Once it became clear the asset option was untenable, von der Leyen and Merz pivoted to Plan B: a €90 billion loan raised on the markets and guaranteed by the EU’s multiannual budget. 

To widespread surprise, Hungary, the Czech Republic and Slovakia agreed, while securing the right to opt out of contributing financially, a concession that unlocked unanimity.

For now, the frozen Russian assets remain untouched. 

EU leaders reiterated that they could still be used to recover the loan should Russia ultimately fail to pay reparations to Ukraine, a step Brussels insists would be fully consistent with international law.