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In the early hours of Friday, European Union leaders concluded a marathon summit by approving a €90 billion ($105 billion) loan package to keep Ukraine financially afloat through 2027.
While the deal ensures Kyiv can continue its war effort and signals EU unity internationally, it also reveals cracks in the bloc: when faced with the chance to use frozen Russian assets, the EU chose caution over confrontation. By relying on its own budget rather than Moscow’s funds, the bloc avoided legal and political complications but may have passed up an opportunity to pressure Russia more directly.
The €90 billion package, structured as a conventional EU-backed loan, allowed leaders to avoid the complex challenges of using frozen Russian assets. Yet the decision shows the compromises and divisions within the EU, from Hungary’s initial opposition to opt-outs secured by smaller states.
As Europe steps up support for Kyiv, questions remain over whether this approach delivers stability or misses a chance to exert maximum leverage on Moscow.
Borrowing vs. reparations: a cautious approach
The EU’s loan to Ukraine was designed for speed and certainty, raising funds on financial markets and secured against the EU budget. This method avoids the legal and political challenges a “reparations loan” funded by frozen Russian assets would have faced.
Leaders like European Commission President Ursula von der Leyen and German Chancellor Friedrich Merz had supported a bolder plan to use Moscow’s billions for reparations. However, opposition from member states, particularly Belgium, which holds most of the €210 billion frozen assets, forced the EU to choose a safer, conventional route.
Michael Carpenter, former U.S. National Security Council senior director for Europe, criticized the deal on X, saying, “A lot better than no package but at the end of the day the EU stared down Russia and blinked. Fear triumphed over reason.” Analysts see this as Europe prioritising internal agreement over fully using frozen Russian funds, limiting its strategic impact.
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The agreement also reflected the divisions within the EU. Hungary, Slovakia, and the Czech Republic secured exemptions from financial obligations, while Moscow-friendly Prime Minister Viktor Orban initially opposed both EU-backed loans and using Russian assets. These negotiations show the difficulty of balancing national interests with shared geopolitical goals.
The package came under strong pressure: Ukrainian President Volodymyr Zelenskyy warned that without immediate funding, Ukraine’s war effort could falter, while U.S.-funded military support was reduced under the Trump administration. Diplomats note that by seeking unanimity, the EU prioritised compromise over bold action, raising doubts about the bloc’s ability to challenge Moscow decisively.
Immediate support vs. long-term leverage
The loan provides urgent funding for Kyiv but carries risks. By borrowing itself instead of using frozen Russian assets, the EU assumes financial responsibility and potential strain on its budget. Leaders defended the plan for speed and reliability, emphasizing that immediate support was essential.
Yet some analysts argue this choice may have been a missed opportunity to pressure Moscow directly. Using frozen Russian funds could have sent a clear message: aggression has financial consequences. By prioritizing speed and certainty, Europe meets Ukraine’s short-term needs but delays a stronger challenge to Putin.
Freezing Russian assets indefinitely, however, preserves Europe’s bargaining power for future reconstruction or peace negotiations. U.S. proposals, including investing $100 billion of frozen funds in rebuilding Ukraine, remain debated and could revive legal and political disputes if pursued.
The EU’s €90 billion loan shows the bloc can act quickly, but also the limits of its collective will. Choosing conventional borrowing over frozen Russian assets secures Ukraine’s immediate needs but may have postponed a more direct confrontation with Moscow.
As the war continues, Europe faces a delicate balancing act between practical support and strategic leverage, weighing short-term gains against long-term influence.
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