EU’s 90 billion euro Ukraine package focuses mainly on military support

Brussels – The EU’s economic and financial aid to Ukraine is mainly military. Of the 90 billion euros made available to Kyiv for the 2026-2027 two-year period, two-thirds, or 60 billion euros, is earmarked for military support. The rest of the package that the European Union and its Member States are making available to their partner at war with Russia is earmarked for the functioning of the state, reforms, and the fight against corruption. The main innovation in the legislative proposal presented with great fanfare by European Commission President Ursula von der Leyen is, in fact, here: in the way the aid is allocated. 

“Ukraine is at war,” recalls the President of the European Commission. That’s why two‑thirds of the financial support is structured around that reality. The conditions for using the funds: to invest in the European defence industry. “In this way, we are creating investment and jobs in Europe and strengthening our industrial base,” she emphasises. Priority must therefore be given to purchases and contracts in Ukraine, the European single market, and partner countries in the European Economic Area (EEA), namely Iceland, Liechtenstein, and Norway, and only in cases of urgent necessity should purchases “abroad” be made. 

The European strategy, then, is to create a cycle that finances the European economy through military support for Ukraine. On the one hand, von der Leyen stresses that by requiring Kyiv to spend European money in Europe, Ukraine “could integrate more closely into Europe’s defence industrial base,” responding to the desire for Kyiv’s economic integration nurtured in Brussels. On the other hand, there is less exposure to loans that the EU will not immediately recoup: the 90 billion will be raised on the markets and guaranteed by the common budget, as expected, but the actual repayment is linked to Russia’s compensation to Ukraine for war damages. Only then will the loan be repaid.

https://www.eunews.it/en/2025/03/14/white-paper-on-defense-joint-eu-procurement-and-industrial-integration-with-ukraine/

Until then, according to the amended proposal for the Multiannual Financial Framework (MFF 2021-2027), the common budget will also cover debt servicing costs (financing costs and costs of issuing and managing liquidity) related to borrowing, as well as related administrative costs. The debt servicing costs will be financed by a new special instrument, the Ukraine Loan Instrument, which will go beyond the EU budget’s spending ceilings and can only be mobilised for this purpose. 

“Today’s proposals will safeguard Ukraine’s financial stability and strengthen its ability to defend itself,” said Economy Commissioner Valdis Dombrovskis, confident that “this represents an essential step towards ensuring just and lasting peace that guarantees real, long-term security for both Ukraine and Europe.” 

Support for Ukraine is made possible through enhanced cooperation among 24 Member States (the Czech Republic, Slovakia, and Hungary are not participating), which will contribute at the level of individual governments, but the aid does not end there. “Our reparation loan proposal remains on the table,” von der Leyen stresses, sending a message to Russian President Vladimir Putin: “This should serve as a stark reminder to Russia that we reserve the right to use its frozen assets.” Documents produced in Brussels state that, “the assets will remain frozen until the end of the war and the payment of war reparations.”