EU unveils dual financing plan to keep Ukraine afloat through 2027

The European Commission has announced two major financing mechanisms aimed at sustaining Ukraine’s economic stability amid Russia’s ongoing war of aggression. The proposals—EU borrowing and a new Reparations Loan—are supported by five comprehensive legal initiatives and are designed to meet Ukraine’s budgetary and defence needs for 2026–2027.

The package follows commitments made by the European Council on October 23, 2025 and builds on the options presented by Commission President Ursula von der Leyen on November 17, 2025. With Russia escalating military strikes against Ukraine and intensifying hybrid attacks across EU member states, Brussels argues that continued and adaptable financial support is essential, Caliber.Az reports, citing the Commission.

The Commission said the measures are crafted to meet Ukraine’s evolving needs “irrespective of the situation on the ground,” whether during war or in peacetime. The proposals also include protections against potential Russian retaliation targeting EU member states or European financial institutions, particularly those operating in Russia-friendly jurisdictions. Any remaining risk would be covered through a mechanism backed by bilateral national guarantees or the EU budget.

Under the plan, the EU could either borrow collectively—relying on “headroom” within the EU budget—or issue a Reparations Loan, financed by borrowing against cash balances held by EU institutions that contain immobilised Russian Central Bank assets. The Commission stressed that both solutions fully comply with EU and international law and maintain the integrity of the Union’s financial system and the euro’s global standing.

President von der Leyen said the initiative ensures Ukraine can continue defending its sovereignty while strengthening its negotiating position in any future peace talks:

“With today's proposals, we will ensure Ukraine has the means to defend themselves and take forward peace negotiations from a position of strength. We are putting forward solutions to help cover Ukraine's financial needs for the next two years, support the State budget and strengthen its defence industry as well as its integration into the European defence industrial base. We are proposing to create a Reparations Loan, using the cash balances from immobilised Russian assets in the EU, with strong safeguards for our member states. We are increasing the cost of Russia's war of aggression. And this should act as a further incentive for Russia to engage at the negotiating table.”

The package includes a proposed regulation establishing the Reparations Loan, a proposal prohibiting the return of immobilised Russian Central Bank assets to Russia, two safeguard proposals amending Council Regulation 833/2014—these will be published once the Council adopts a position—alongside a complementary Council decision from High Representative Kaja Kallas.

An amendment to the EU’s multiannual financial framework enabling the EU budget to guarantee loans to Ukraine under either model.

The Commission said it stands ready to assist the European Parliament and the Council in securing rapid adoption of the measures.

The next European Council on December 18-19 should aim at reaching a clear commitment on the way forward.

By Vafa Guliyeva