The EU reached an agreement on Ukraine support of 90 billion: War compensation loan collapsed, joint debt replaced

Despite several negotiation attempts, the EU leaders did not find an agreement at the summit on a war compensation loan based on Russia’s frozen assets.

A little before four o’clock Finnish time, the agreement was reached that Ukraine’s 90 billion euro financing needs for the years 2026-2027 will be covered by the EU’s common debt, which is guaranteed by the EU budget.

At the press conference held after the summit, the president of the EU Commission Ursula von der Leyen emphasized that Ukraine does not have to repay the loan based on joint debt before it receives war reparations from Russia.

The EU decided last week that the funds frozen from Russia will remain frozen until Russia pays war reparations to Ukraine.

Three were left out

In the new financing model based on a joint loan, the member states agreed to finance Ukraine through the EU budget. The financing is implemented by taking a loan from the capital market, and the loan is guaranteed by the EU budget.

“We will do this through enhanced cooperation, supported by the flexibility of the EU budget, based on a unanimous agreement to amend the Multiannual Financial Framework (MFF),” von der Leyen said at a press conference after the summit.

All other EU countries except the Czech Republic, Slovakia and Hungary participate in Ukraine’s financial responsibilities. With this arrangement, the EU countries were able to make the required unanimous decision on support for Ukraine.

The biggest opponent of the war reparations loan based on Russia’s frozen funds was Belgium, where most of the frozen Russian central bank cash is located.

Most of the EU countries would have liked to use the funds frozen from Russia to finance Ukraine, but that did not happen to Belgium. Prime minister of the country Bart De Wever said after the summit that the joint debt model is a win for Ukraine, Europe and economic stability.

“I drove to find a solution for Ukraine, which was essential,” said de Wever.

The Belgian prime minister said he was ready to discuss the loan arrangement based on Russia’s frozen assets again in the future, but not yet in January.

Disappointed Orphan

Prime minister Petteri Orpo (kok) said as recently as Thursday morning that he is against Ukraine support based on joint debt.

After the summit, Orpo, who swallowed his disappointment, thought the most important thing was that Ukraine’s funding was secured for the next two years.

“It must be said frankly that this was a different solution than what was sought in the morning, but the end result is that Ukraine will receive strong financial support – 90 billion euros for the years 2026-2027.”

“This is also the most essential for Finland,” Orpo said.

In practice, the new model means that EU taxpayers are the guarantors of the loan, instead of funds from Russia, which is waging a war of aggression, being used to support Ukraine.

Orpo said that he would have preferred to use Russian funds rather than European funds, but no agreement was reached on this.

According to the Prime Minister, Finland’s guarantee responsibilities will not increase with the joint loan model, because the loan is guaranteed against the EU budget.

According to Orpo, in addition to Belgium, several other countries had technical and political problems, as a result of which no agreement on the use of Russian funds was reached. The biggest problems concerned the limitations of guarantee responsibilities.

However, Orpo was positive that Russia’s frozen funds will remain frozen. These funds serve as the last plank for repaying the loan.

The Prime Minister also emphasized that after the decision of the summit, Ukraine will be in a stronger position.

“This will give Ukraine a strong ability to defend itself and develop its own arms industry,” Orpo said in Brussels.