EU to loan $160 billion to cover Ukraine’s military needs for two years
Lili Bayer, Andrew Gray And Andreas Rinke
Brussels: EU leaders unanimously decided to provide Ukraine with an interest-free loan of 90 billion euros ($60 billion) to meet its military and budget needs over the next two years, German Chancellor Friedrich Merz said on Friday.
After a long meeting of EU leaders in Brussels, Merz said that Ukraine would have to repay the loan only if Russia paid war reparations, and that if Russia did not pay compensation, the EU reserved the right to use Russian assets immobilized in the EU for repayment.
“We have an agreement,” EU summit president Antonio Costa said on social media early Friday morning after hours of talks.
Costa did not specify the source of the financing, but the draft outcome of the summit seen by Reuters stated that it would be provided by borrowing from capital markets in return for the EU budget.
The text stated that the agreement would not affect the financial obligations of Hungary, Slovakia and the Czech Republic, which do not want to contribute to Ukraine’s financing.
At the same time, it was stated that EU governments and the European Parliament will continue to work on creating a loan to Ukraine based on frozen Russian central bank assets.
The loan based on joint borrowing given to Ukraine can only be repaid by Ukraine after receiving war compensation from Moscow.
According to the text, until then Russian assets will remain dormant and the EU will reserve the right to use them to repay the loan.
“It’s a good thing for Ukraine to get two years of funding,” an EU diplomat said.
The move came after hours of discussions between leaders over the technical details of a loan based on frozen Russian assets that proved too complex or politically challenging to resolve at this stage, diplomats said.
“We have moved from saving Ukraine to at least saving the reputation of those pushing for the use of frozen assets,” a second EU diplomat said.
The main difficulty in the use of Russian money was to provide Belgium, where 185 billion of the total 210 billion euros of Russian assets in Europe were held, with adequate guarantees against the financial and legal risks that could arise from possible retaliation by Russia for leaving the money to Ukraine.
