Ukraine’s EU loan linked to Russian reparations, says Commission chief

European Commission President Ursula von der Leyen has clarified the terms of the EU’s €90 billion loan to Ukraine, confirming that Kyiv will only be required to repay the funds if Russia pays reparations for the damage caused by its invasion.

European Union leaders have abandoned plans for an unprecedented reparations loan for Ukraine, instead opting to raise €90 billion in joint debt to fund Kyiv over the next two years. Hungary, the Czech Republic, and Slovakia will not participate in the scheme, Euronews reports.

The move comes after negotiations hit a stalemate over Belgian demands for “uncapped guarantees” before accessing the immobilised Russian assets hosted in Belgium. Facing resistance, EU leaders agreed to issue joint debt against the bloc’s common budget to ensure Ukraine’s financial stability in 2026 and 2027.

Hungary, Czechia, and Slovakia will benefit from an opt-out, while the remaining member states proceed under an enhanced cooperation mechanism.

In the run-up to Thursday’s summit in Brussels, EU leaders had insisted there was no alternative to the reparations loan, which would have been backed by frozen Russian Central Bank assets. German Chancellor Friedrich Merz spearheaded the plan, but Belgian demands ultimately made it unworkable.

The failure to implement the reparations loan represents a setback for both Merz and European Commission President Ursula von der Leyen, who had presented the plan as the most effective option for the bloc.

After the summit, which concluded in the early hours following tough negotiations, von der Leyen, accompanied by Danish Prime Minister Mette Frederiksen, emphasised that the primary objective—funding Ukraine—had been achieved.

“The bottom line, after today, is that our support for Ukraine is guaranteed,” Frederiksen told reporters.

Despite securing financing, the principle of compelling Russia to pay for the damage inflicted on Ukraine has not been realised. European member states will borrow on financial markets and bear the associated interest costs. According to the European Commission, the loan provided to Ukraine will be interest-free, with repayment contingent on any reparations payments from Moscow. Given the uncertainty of Russian compensation, the loan is likely to effectively become a grant.

By Vafa Guliyeva