If Peace Is Near, Why Commit $90 Billion for Two More Years of War?
EU Pledges 90 Billion Euro Interest-Free Loan to Ukraine Amid Russian Asset Freeze Standoff, Czech Republic Hungary and Slovakia Opt Out
In a marathon negotiation stretching over 16 grueling hours, European Union leaders have finalized a landmark 90 billion euro financial lifeline for Ukraine, yet notably refrained from touching the frozen Russian assets that many had hoped would foot the bill. The compromise, announced by European Council President António Costa, marks both a diplomatic triumph and a strategic retreat, revealing stark fractures within the bloc over how far to go in penalizing Moscow—and who ultimately pays the price.
The funds, to be disbursed in 2026 and 2027, will come not from confiscated Russian reserves but from the EU’s general budget, a significant pivot from earlier proposals championed by nations like France and Italy, which had pushed aggressively to monetize the roughly 200 billion euros in immobilized Russian Central Bank assets held primarily in Belgium and Luxembourg. Those assets, frozen since Russia’s full-scale invasion of Ukraine in 2022, remain legally and politically untouchable for now, due to legal uncertainties and fierce opposition from a trio of member states.
The Czech Republic, Hungary, and Slovakia have outright refused to contribute to Ukraine aid drawn from the EU budget, citing national sovereignty, fiscal constraints, and skepticism over the war’s trajectory. Their resistance forced negotiators into a delicate workaround: the final agreement explicitly states that these three countries “will not lead to any financial obligations” for them. Yet behind closed doors, frustration simmers. “They are not obliged to pay, but we will make them ‘pay’ for it,” quipped a senior European official, hinting at future political or procedural consequences for bucking collective solidarity.
German Chancellor Friedrich Merz emerged as a central architect of the compromise, framing the loan as both a moral imperative and a legally sound bridge to eventual Russian accountability. Speaking to reporters after the summit’s first day, Merz confirmed the loan would carry zero interest—a critical concession for a war-torn economy burning through billions monthly. “These funds are enough to cover Ukraine’s military and budgetary needs for the next two years,” he declared.
But the most striking element of Merz’s statement was his conditional repayment clause: Ukraine will only be required to repay the 90 billion euros after Russia pays war reparations. And if Moscow refuses? “We, in full compliance with international law, will use Russia’s immobilized assets to repay the loan,” Merz vowed.
This formulation—delayed repayment tied to Russian liability—serves multiple purposes. It reassures skeptical EU taxpayers that European money isn’t vanishing into a bottomless pit. It maintains pressure on Moscow by keeping asset confiscation as a looming threat. And it upholds the EU’s self-image as a rules-based union, avoiding outright expropriation that could set dangerous precedents for global finance.
Nonetheless, the decision not to seize Russian assets now reflects deeper anxieties. Legal scholars warn that confiscating sovereign reserves, distinct from private oligarch wealth, could violate international norms protecting state property, potentially inviting retaliation against EU holdings abroad. Belgium, home to Euroclear where much of the Russian gold and securities are held, has privately cautioned that forced liquidation might trigger systemic market instability.
We build your website for you
By opting for a budget-funded loan with a contingent repayment trigger, the EU has chosen prudence over provocation. Yet the path forward remains fraught. Costa confirmed the summit has instructed the European Commission to continue developing a “parative loan” mechanism, likely a typo or shorthand for a “repayment-assured” or “asset-backed” facility, tied directly to Russian assets in the future. This keeps the door ajar for eventual confiscation, without crossing the line today.
Meanwhile, Kyiv watches closely. While grateful for the financial certainty, Ukrainian officials know that promises of Russian reparations remain theoretical without an enforceable legal framework or a post-war settlement. The 90 billion euros offer breathing room, but not a permanent solution.
Ultimately, this summit exposed the EU’s balancing act: projecting unity while accommodating dissent, upholding legality while demanding justice, and funding a war it didn’t start but cannot afford to lose. The Czech Republic, Hungary, and Slovakia may escape the bill this time, but in a union built on reciprocity, political debts, like financial ones, tend to come due.
