"Plan to freeze Russian assets falls through; Europe agrees to provide Ukraine with a 90 billion euro loan."

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According to CCTV News reports, on the 19th local time, European Council President Costa announced that EU leaders have approved a resolution to provide 90 billion euros in aid to Ukraine for 2026-2027.

According to media reports on the 19th, the two-year aid agreement was reached after a marathon summit held in Brussels. Since the United States has drastically cut financial support and Washington is pressuring Ukraine to make concessions in peace talks, European officials are generally concerned that without new capital injections, Kyiv will run out of funds by April next year. At that point, not only will Ukraine face a risk of collapse, but the security of the entire European continent will also be threatened.

Additionally, media outlets reported on the 19th that countries such as France and Italy previously led calls to use the EU budget as an alternative plan, which ultimately facilitated this agreement. Under the new plan, the EU will use its budget to support the issuance of joint debt to raise capital from financial markets. Although all parties pledged in the meeting conclusions to continue researching how to use frozen Russian assets, the decision to rely on taxpayer funding instead of Russian funds this time is seen as a political blow to German Chancellor Merz and European Commission President von der Leyen, who had previously vigorously pushed for a plan to pay compensation using Russian assets.

Although the outcome may face criticism, it reflects the EU leaders’ intense sense of urgency to secure fresh funding for Ukraine right now. Costa posted on social media, “We promised, and we delivered.” Just as Polish Prime Minister Donald Tusk said to reporters before the summit:

“The choice is simple: pay money today or bleed tomorrow. I’m not just referring to Ukraine, but to all of Europe.”

Failure of the Asset Disposal Proposal and Belgium’s Resistance

According to Xinhua Finance, European Council President Costa said on the 19th that EU leaders have approved a resolution to provide 90 billion euros in support to Ukraine from 2026 to 2027.

Prior to reaching an agreement at this summit, intense wrangling over funding plans took place among EU countries for months. According to media reports, most EU leaders previously believed that using about 210 billion euros of frozen Russian central bank assets stranded in the EU (mainly in Belgium) was the best option to fund Ukraine. German Chancellor Merz told reporters this was “the only choice,” thinking the move would not only strengthen Ukraine’s position at the negotiation table but also punish Moscow.

However, this plan encountered strong resistance from Belgium, the country holding most of the assets. Media quoted informed officials saying Belgian Prime Minister Bart De Wever demanded other EU countries provide “unlimited” risk sharing to cope with possible legal suits and retaliation from Russia. As other leaders refused to accept such extreme guarantees, the “compensation loan” proposal eventually fell apart.

Meanwhile, the Russian central bank filed a lawsuit in Moscow last week, seeking compensation of 18.2 trillion rubles (about 229 billion US dollars) from Euroclear, the Belgian custodian institution holding most of the frozen assets. Russia also stated on Thursday that if the use of these assets continues, they would seek compensation from European lending institutions. Facing such massive legal risk exposure, the EU finally opted for compromise.

Joint Debt Issuance and Waiver Provisions

According to details disclosed by the media, the final 90 billion euro loan plan will be raised by EU borrowing in capital markets and backed by unused funds in the shared EU budget. Besides the adjustment in funding sources, the final agreement also included an important political compromise: the Czech Republic, Hungary, and Slovakia will not bear any financial obligation related to the loan. These three countries had long been skeptical about providing funding to Ukraine. A senior European official commented:

“They don’t have to pay, but we’ll make them pay a political price.”

Regarding repayment terms, summit conclusions indicate that Ukraine will only have to repay the loan after Russia pays reparations. German Chancellor Merz tried to salvage the original position in a statement, stressing:

“If we make it clear: If Russia does not pay compensation, we will... use the frozen Russian assets to repay the loan.”

An EU official involved in the negotiations told media bluntly:

“We’ve always said, the key is to get the money to Kyiv, not where the money comes from.”

Urgency of Funding Exhaustion and Negotiation Leverage

The agreement is seen as a critical “lifeline” for Ukraine. Reports say that Ukraine had warned that without additional support, the country would face collapse in early 2026. Bloomberg’s analysis also pointed out that as the US cuts off most financial support, this money is essential for strengthening Kyiv’s leverage in future negotiations and for keeping the country running.

Ukrainian President Zelensky, attending the Brussels summit, emphasized that although he considers using Moscow’s funds the “most appropriate” financing method, securing funding itself is more urgent. “We need the funding so that Russia or anyone else cannot use it as leverage against us,” Zelensky told the media, “We hope to use this instrument to support ourselves. With it, we are more confident than without it.”

This financial agreement comes as Europe attempts to establish its influence in US-led peace negotiations. With the Russia-Ukraine conflict approaching its fourth year, by ensuring Ukraine’s financial stability for the next two years, the EU aims to prevent the war situation from irreversibly deteriorating before talks even begin, due to lack of funding.

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