Ukraine welcomes €90 billion EU loan despite lack of deal on frozen Russian assets

Ukraine welcomed the European Union’s decision to provide €90 billion ($105.5 billion) in financial support over the next two years, even as EU leaders failed to reach an agreement on using frozen Russian assets to help fund the aid.

The decision was reached early Friday following lengthy talks at an EU summit in Brussels. Instead of tapping frozen Russian sovereign assets, EU leaders agreed to borrow funds to support Ukraine’s defense against Russia, citing legal and financial concerns.

Ukrainian President Volodymyr Zelenskiy praised the move, calling it “significant support that truly strengthens our resilience.” EU officials have warned that without continued financial assistance, Ukraine could run out of money by the second quarter of next year, potentially shifting the course of the war in Russia’s favor and bringing security risks closer to EU borders.

Efforts to structure an unprecedented loan backed by frozen Russian assets proved politically difficult, particularly due to concerns in Belgium, where roughly €185 billion of Russian assets are held. Belgian authorities sought stronger guarantees against possible legal and financial retaliation from Moscow.

“Perfect is the enemy of good,” Ukrainian Deputy Foreign Minister Sergiy Kyslytsya said, adding that European leaders had reached a workable outcome after long negotiations. Italian Prime Minister Giorgia Meloni also welcomed the decision, saying it was based on a solid legal and financial foundation.

Russia welcomed the EU’s failure to reach a deal on using its frozen assets. Kirill Dmitriev, a senior envoy of President Vladimir Putin, said that “law and sanity” had prevailed, criticizing what he described as attempts to illegally seize Russian reserves.

German Chancellor Friedrich Merz, who had pushed for a reparations-style loan backed by frozen assets, acknowledged the setback but said the outcome still served Ukraine’s interests. “This is good news for Ukraine and bad news for Russia, which was our intention,” he said.

Following the summit, German government bond yields edged higher, with 10-year yields rising 1.5 basis points to 2.864%. Analysts noted that using frozen Russian assets could have increased risks for European sovereign debt markets, while borrowing may modestly add to the bloc’s fiscal burden.