NYT: Budget-backed Ukraine loan likely to cost EU more than scrapped asset plan

A new European Union financing plan for Ukraine is likely to prove more expensive and harder to scale quickly than the bloc’s original proposal, after European leaders failed to agree on using frozen Russian state assets to back the aid, according to the New York Times.

European leaders agreed in the early hours of December 19 to provide Ukraine with a €90 billion loan to keep the country funded for the next two years. However, they were unable to secure consensus on their preferred option of using Russian sovereign assets frozen in Europe as collateral for the loan.

The plan to tap frozen Russian assets collapsed at the last moment during an EU summit in Brussels, exposing divisions among member states and raising concerns about the bloc’s ability to act decisively at a critical juncture. Instead, leaders opted for an alternative mechanism that will channel funding to Ukraine through loans backed by the EU budget.

Because the revised plan does not leverage the large pool of immobilised Russian assets, it is expected to be costlier and less flexible than the original proposal. Nonetheless, EU officials portrayed the agreement as a success, emphasising that it would still ensure vital financial support for Kyiv.

“This will address the urgent financial needs of Ukraine,” European Council President Antonio Costa said at an early morning press conference in Brussels.

The funding decision comes at a sensitive moment, as Ukraine is engaged in discussions with the United States over potential peace terms and faces mounting fiscal pressure. Officials have warned that Kyiv could begin running out of funds as early as 2026, making the timing of the agreement particularly significant.

By Sabina Mammadli