EU agrees to loan Ukraine $105B after bid to use Russian assets fails

BRUSSELS — European leaders agreed Friday to finance Ukraine’s state and army with a $105 billion loan backed by the EU budget after the failure of a last-ditch effort to tap Russia’s frozen assets.

The surprise decision followed more than 16 hours of negotiations at a European Union summit that stretched into the early hours, where officials cast this as a do-or-die moment for Ukraine’s fate and Europe’s voice. The debate over money and the unraveling of a much-touted plan threw a harsh light on European divides.

When leaders of the bloc’s 27 nations first convened here, Ukraine’s chief backers vowed not to leave until they found a solution to keep funding its ability to fight.

EU officials sought to unlock Russia’s assets before Kyiv runs out of money in the new year — or before Washington and Moscow decide to use the funds as part of negotiations on the war. It was also a way around spending more European public funds.

Instead, Europe’s leaders agreed overnight to jointly borrow the money and give Ukraine a loan over two years propped up by EU taxpayer funds. It will throw Kyiv a lifeline at a critical moment in the war and in its talks with the United States, officials said.

“The bottom line, after today, is that our support for Ukraine is guaranteed,” Danish Prime Minister Mette Frederiksen said at a news conference.

European Council President António Costa, who chairs the EU summits, said Ukraine would not have to repay the interest-free loan unless Moscow pays war reparations. He said the bloc “reserves the right” to one day use Russia’s assets, after EU nations decided last week to indefinitely freeze the funds.

Ukrainian President Volodymyr Zelenskyy thanked the EU and noted that at least this way, Russia could not access its assets, frozen in Europe since it invaded Ukraine in 2022.

“This is significant support that truly strengthens our resilience. It is important that Russian assets remain immobilized and that Ukraine has received a financial security guarantee for the coming years,” he said.

Joining the summit earlier, Zelenskyy told journalists in Brussels that without funding, Ukraine would have to cut back on drone production, a key component of its battle against Russia, now approaching its four-year mark.

European officials expect cash to run dry in Ukraine in early spring — a disastrous prospect for Kyiv as Russian forces grind forward across the front line — adding to the urgency of endorsing a solution before the new year.

Ukrainian officials lobbied intensively for the EU to unlock Russia’s frozen assets. Still, “there are moments when one should keep in mind that ‘Perfect is the enemy of good,’” Ukrainian Deputy Foreign Minster Sergiy Kyslytsya wrote. “It was a long night for European leaders but they were able to come up with a workable result.”

Since the beginning of the war, Ukraine has depended on outside financial aid to pay both for weapons and public expenditures, like pensions and health care. Now, with the Trump administration halting direct funding, the support has fallen entirely to Europe and institutions like the International Monetary Fund.

European leaders could not break the impasse over giving Kyiv a loan backed by up to $246 billion in Russia’s assets frozen — an idea billed as a way to show the EU is ready to take risks to assert its influence.

The plan collapsed after objections from Belgium, where most of the assets are held, and hesitation from some other countries.

The continent’s top leaders had issued increasingly dire calls to action. Ursula von der Leyen, president of the EU executive arm, called this Europe’s “independence moment.” Polish Prime Minister Donald Tusk told his counterparts Thursday they had a choice: “Either money today, or blood tomorrow.”

Those championing the assets plan, however, met opposition from Belgium, where the funds are held in a financial services institution called Euroclear, despite weeks of tensions and a diplomatic flurry by the E.U.’s power brokers.

Belgium maintained it did not get enough guarantees that EU neighbors would share the full cost of any Russian response. Russian President Vladimir Putin on Friday said any attempt to use the assets amounted to “robbery.”

Kirill Dmitriev, a key Russian envoy to talks and the head of its sovereign fund, on Friday celebrated the failure to tap the assets on social media. “Major BLOW to EU warmongers led by failed Ursula — voices of reason in the EU BLOCKED the ILLEGAL use of Russian reserves to fund Ukraine,” he said.

“They spent all their political capital, promised results — and delivered a spectacular failure,” he wrote.

Belgian Prime Minister Bart De Wever — warning of huge liabilities and financial instability — has also voiced concern that a U.S.-brokered deal on Ukraine would want to tap into the funds.

European officials cast the decision to keep funding Ukraine as a harbinger of how the EU meets this moment in the face of Russian threats, American antagonism and the expensive bill for the war.

Friday’s decision averts a budget crisis that would hit Kyiv’s leverage amid Washington-led talks with Moscow over the country’s future.

Ukrainian negotiators headed to the U.S. to continue talks with President Donald Trump’s administration, Zelenskyy said Thursday. The Kremlin, meanwhile, is also “preparing certain contacts with our American counterparts,” spokesman Dmitry Peskov said.

As talks intensify, European officials say Moscow and Washington piled pressure on EU capitals that are squeamish about tapping into Russia’s central bank assets.

“I understand Belgium is under a lot of pressure from Russia, from European countries, but also from the United States,” EU foreign policy chief Kaja Kallas told reporters earlier Thursday.

Though Europe holds most of the roughly $300 billion frozen in the West, versions of the U.S. proposal for a peace deal have envisaged using it for U.S. reconstruction efforts in Ukraine and joint U.S.-Russian investments.

European leaders saw the Russian assets as a way “to send a signal to the Americans in the hope of maybe being taken more seriously,” after Washington released a national security strategy berating the European Union, said Agathe Demarais, a fellow at the European Council on Foreign Relations and a former French treasury adviser in Russia.

After years of fretting about the dangers of setting a precedent by seizing sovereign assets, the EU plan for the Russian funds emerged out of a need. The U.S. has stopped paying for weapons to Kyiv, and European voters are growing more restless about public spending.

EU officials had said a decision on the assets proposal — crafted with some financial and legal gymnastics — could be made with a weighted majority, but they did not want to move ahead without Belgium.

Other EU countries, such as Germany, urged Belgium to play ball, assuring they would share the risks, while warning they could not offer unlimited guarantees.

The reluctance of other countries grew in recent days too, including EU heavyweight Italy whose Prime Minister Giorgia Meloni is a Trump ally.

After the summit, De Wever said that he believed “rationality has prevailed” and that he knew “the enthusiasm was not so big as people thought.”

The decision proves that the voice of smaller nations “also counts,” De Wever said, that the bloc “stands behind Ukraine” and that “Europe still matters.”

He had made Belgium’s dislike of the idea clear but earlier Thursday suggested it might be possible if Europeans share the risk: “You give us a parachute, and we jump all together.”

The assurances Belgium wanted ultimately seemed too big an ask for some of its EU peers. On Friday, they decided not to jump.

The alternative, joint debt, secured unanimous approval. But in a show of division, three of the E.U.’s populist leaders — in Hungary, Slovakia and the Czech Republic — only agreed to the plan in return for promises that their countries would be exempt.

The three countries had opposed using EU money to back Ukraine and Hungary’s Kremlin-friendly prime minister had called the Russian assets proposal “stupid.”

European leaders argued that although one plan stumbled, the consensus on another will get the funds to Kyiv and shows they can take decisions despite the differences.

The Danish premier echoed that sentiment, but Frederiksen also added a note of caution. “There are a lot of people outside the EU and unfortunately also inside who try to divide us,” she said. “It is getting more and more difficult, and I think this will continue.”

— — -

Kostiantyn Khudov and David L. Stern in Kyiv and Natalia Abbakumova in Riga, Latvia, contributed to this report.