Loan from budget or Russian assets, EU has two options to provide Ukraine with 90 billion over two years

Brussels – The European Commission unveiled the two possible solutions to ensure urgent economic support for Ukraine for the next two years. Member states will have to choose between a loan financed by the EU budget and one secured by frozen Russian assets on European territory. In any case, Brussels has revised its efforts downwards: the target is no longer to cover Kyiv’s total needs, but only two-thirds of them. Of the €140 billion needed, as estimated by the International Monetary Fund, the EU is putting up €90 billion. 

Of the three options proposed by Ursula von der Leyen in a letter to the capitals on 17 November, the one that envisaged raising the huge sum through bilateral grants from member states to Ukraine has disappeared. EU sources confirmed that, in a fortnight of intensive discussions between Brussels and the chancelleries of the 27, Member States “showed general support” for the loan option from the budget and a “strong support” for the use of Russian Central Bank cash accumulated over the past three and a half years in some financial services companies in the EU. 

Today, the Commission presented a package of five legislative proposals that will allow the Member States (much less the Parliament) to choose the final form of engagement for Ukraine for 2026–27. It is necessary to set up the “reparation loan”, to ban any transfer of frozen assets of the Russian Central Bank to Russia, to eliminate the risky six-monthly unanimous renewal of sanctions against Moscow (on which the freezing of Russian funds depends), and to amend the current multiannual financial framework to allow the EU budget to be used to support a loan to Ukraine. 

At the press conference, Ursula von der Leyen—who has never hidden her preference for the use of Russian funds—explained that proposals for the so-called “repair loan” could be approved by a qualified majority, whereas unanimity of the Member States is required to get to grips with the budget and its uses. A not insignificant difference, given the principled opposition to further support for Kyiv by Hungary and, as far as the use of Russian Central Bank assets is concerned, by Belgium. 

Ursula von der Leyen at a press conference with EU Commissioner Valdis Dombrovskis [Credits: European Commission]

“We have listened very carefully to Belgium’s concerns and have addressed almost all of them,” assured the President of the European Commission. Yet, Belgian Prime Minister Bart De Wever reiterated his opposition to the plan in a letter to the EU leader only a few days ago. Von der Leyen pointed out the three directions taken to reassure Belgium: the proposal no longer only concerns Euroclear—the Belgian-based company that holds most of Russia’s state assets, worth about €185 billion—and a strong solidarity mechanism between the Member States and a “liquidity mechanism” to ensure that Euroclear and the other companies involved are always able to reimburse Russia at all times have been devised. 

The other financial services companies holding frozen Russian assets in the EU—not just central securities depositories—are still located in Belgium, in France, and to a much lesser extent in Germany, Sweden, and Cyprus. The total value of frozen Russian assets, counting those deposited in Euroclear, is €210 billion. Of this 210, 45 must be kept aside as collateral for the G7 loan. 165 remain, but the EU has said it is ready to put up two annual tranches of €45 billion. 

As for guarantees, they would have to be issued bilaterally by the Member States, up to the full amount of the funds, or the EU budget could be used. But here, once again, the knot of unanimity would arise. And on the speed with which the member states could eventually find the necessary liquidity, an EU official explained that the guarantees would involve a kind of “integrated liquidity mechanism”. On the other hand, the European Central Bank—as reiterated today by Christine Lagarde—has called off the possibility of acting as lender of last resort. 

The issues remain, but von der Leyen made it clear that new discussions will start today and that—as the EU decision-making process dictates—the proposals will inevitably be “improved.” The aim is to arrive at the last summit of the year, on 18 December, with an agreement in principle among the heads of state and government. The Commission hopes that, with the leaders’ green light, the legislative process can be concluded in early 2026.