EU approves €90bn loan to support Ukraine’s economy

European Union leaders have reached a hard-fought agreement to provide Ukraine with a €90 billion loan designed to keep the country’s government and military operational over the next two years. The breakthrough came after more than 24 hours of negotiations in Brussels, where talks were initially stalled over whether to use frozen Russian assets to fund the plan.

European Council President Antonio Costa announced the deal on X, stressing that the bloc had honoured its commitment to support Kyiv. The financing will be backed by the EU’s common budget and is intended to stabilise Ukraine’s strained economy, maintain essential public services, and support its ongoing defence efforts.

Disagreement Over Russian Assets Delays Talks

The summit was overshadowed by disagreements about frozen Russian assets worth an estimated €200 billion, most of which are held in Belgium. Ukrainian President Volodymyr Zelensky had urged EU governments to seize and redirect those funds to support his country, arguing that Russia should bear the cost of its own invasion.

However, Belgium demanded stronger guarantees regarding any legal liabilities that might arise from seizing the funds, creating a divide among member states. With no consensus on the issue, leaders ultimately chose borrowing as a faster and legally safer alternative to secure the urgently needed aid.

Belgian Prime Minister Bart De Wever defended the decision, saying the compromise prevented “chaos and division” within the EU and demonstrated unity at a crucial moment.

Economic Pressure Mounts on Kyiv

Ukraine is under increasing financial strain as the war approaches its third year. Zelensky has warned that without fresh external support, Ukraine could face severe shortfalls by spring. This would force cuts in defence production, including the manufacturing of drones—one of the country’s most critical wartime industries.

EU estimates suggest Ukraine requires €135 billion over the next two years to remain solvent, with the most pressing funding gap expected to emerge in April. The newly approved loan forms a significant portion of this requirement but does not fully cover it, meaning further international assistance will likely be necessary.

European Leaders Signal Political Intent

Despite internal disagreements, several EU leaders framed the deal as a strategic message to Moscow.

German Chancellor Friedrich Merz, who had initially pressed for the frozen asset plan, said the agreement still sends a “clear signal” to Russian President Vladimir Putin that Europe remains committed to Ukraine’s defence and sovereignty.

Polish Prime Minister Donald Tusk added that European governments needed to meet this moment with resolve, arguing that failure to do so would embolden Russia.

In a separate development, French President Emmanuel Macron suggested that Europe should begin considering ways to re-engage diplomatically with the Kremlin. He argued that even as Europe supports Ukraine, dialogue must remain an option in the search for a long-term settlement.

US and Russia Prepare for Peace Talks

The EU decision comes as international diplomatic efforts intensify. According to US officials, representatives from Washington and Moscow are expected to meet in Miami this weekend to explore potential peace proposals. Kremlin envoy Kirill Dmitriev is expected to participate, alongside Trump advisers Steve Witkoff and Jared Kushner.

Meanwhile, Zelensky confirmed that Ukrainian and American delegations will hold further talks in the United States on Friday and Saturday. Kyiv aims to seek clearer assurances from Washington about long-term security guarantees to prevent any future Russian invasion.

A Temporary Solution to a Long Conflict

While the loan marks a significant step, it is ultimately a stopgap. Ukraine will require continued financial and military backing as the conflict shows no clear signs of ending. The EU’s internal debate over Russian assets is likely to resurface, especially as pressure grows for Moscow to shoulder responsibility for the war’s economic devastation.