EU leaders agree on €90bn loan for Ukraine without using frozen Russian assets

The European Union is to provide a €90-billion to Ukraine to cover its “pressing financial needs” for the next two years, European Council President António Costa announced on Thursday, though the funds are to come from the EU’s own budget after the bloc’s leaders failed to agree on using frozen Russian assets.

Speaking to reporters after an EU summit on Thursday, in which many pushed for the bloc to use some €210 billion of Russian Central Bank assets held in Europe to allow Ukraine to continue its war effort, Costa said the interest-free loan would be provided “as a matter of urgency” and that Kyiv would only repay it once it receives war reparations from Russia.

The funds will be raised through joint borrowing by 24 of the bloc’s 27 countries — not including the Czech Republic, Hungary and Slovakia, all of whom agreed to approve the so-called “reparations loan” on the condition that it would not impact them financially.

No deal was reached on using the frozen Russian assets to fund the loan primarily due to opposition from Belgium, which holds some €185 billion of the funds and feared retaliation from Moscow were they to be allocated to Ukraine.

Last week, Russia’s Central Bank announced it would file a lawsuit against securities depository Euroclear, which holds the bulk of the frozen Russian assets, while on Wednesday The Guardian reported that Russian intelligence was targeting key Euroclear figures and Belgian political leaders in an intimidation campaign aimed at undermining EU support for reallocating the funds to Ukraine.

Instead, the Russian assets will remain frozen indefinitely, though the bloc “reserves its right” to use them to repay the loan at any time, Costa added.

“The only way to bring Russia to the negotiation table is to strengthen Ukraine”, Costa said. “Today’s decisions will provide Ukraine with the necessary means to defend itself and to support the Ukrainian people”.

Ukrainian President Volodymyr Zelensky thanked European leaders for the loan, calling it “significant support that truly strengthens our resilience” and noting it was “important” that the Russian assets would remain immobilised.

Belgian Prime Minister Bart De Wever told reporters after Thursday’s summit that the EU had “avoided chaos and division” by not using the frozen Russian assets and “remained united” following its disagreements over the deal.

The decision not to use Russia’s frozen assets was also welcomed in Moscow, with Kremlin envoy and CEO of Russia’s sovereign wealth fund Kirill Dmitriev calling it a “major win for law and common sense” and a “blow to EU warmongers”.