(BRUSSELS, BELGIUM) – European Union leaders have reached an agreement to provide Ukraine with a large scale financial loan following extended overnight negotiations in Brussels, offering Kyiv crucial budget support as the war with Russia continues into its fourth year. The deal, reached after roughly seventeen hours of talks, will see the EU extend a loan of 90 billion euros, equivalent to about 105 billion US dollars, to help Ukraine cover a looming budget shortfall over the next two years.
The agreement was confirmed after intense discussions among EU leaders, reflecting both strong political support for Ukraine and deep internal divisions over how that support should be financed. While the loan represents a significant financial commitment, leaders did not reach consensus on using frozen Russian state assets held in Europe to fund the package, an issue that has remained politically and legally sensitive within the bloc.
Under the terms of the deal, the funds will be distributed to Ukraine over a two year period. The loan will carry no interest, and repayment will only be required if Russia pays reparations for its full scale invasion of Ukraine. This structure is designed to ease pressure on Ukraine’s public finances while recognising the extraordinary circumstances created by the war.
The loan will be backed by unused funds within the EU’s wider common budget. These guarantees will allow the EU to raise money on international markets through common borrowing, meaning that EU taxpayers ultimately underwrite the support. Although some member states had pushed for the use of frozen Russian assets instead, the compromise avoided immediate legal risks linked to asset seizure.
European officials stressed that the decision helps Ukraine avoid a severe budget crisis expected in the spring. Ukrainian authorities have warned that without predictable funding, spending on defence production, including drones and long range weapons, as well as salaries and pensions, could come under strain. The new financing is intended to ensure continuity in both military and civilian state functions.
Despite not being used for this loan, frozen Russian assets will remain immobilised. EU leaders agreed that these assets will stay frozen indefinitely or until Russia pays reparations to Ukraine. This preserves the option of using the assets in the future, should legal and political conditions change.
The talks exposed divisions among EU member states. Belgium, where a large share of Russian assets is held, opposed their use without firm legal guarantees that it would be protected if Russia launched lawsuits. Hungary and Slovakia, often sceptical voices on Ukraine related measures, secured opt outs from participating in the loan but did not block the overall agreement. The Czech Republic was also granted flexibility. Despite these differences, unanimous consent was ultimately achieved, allowing the deal to proceed.
Germany and the European Commission had been among the strongest advocates for directly linking the loan to frozen Russian assets. Their failure to secure agreement on this point was seen by some observers as a political setback, although both institutions welcomed the final outcome as an important step for Ukraine.
The Russian dictator Vladimir Putin claimed that the decision showed the EU had failed to seize Russian assets, presenting this as a victory for Moscow. However, European officials noted that the continued freezing of assets directly contradicts that narrative and denies Russia access to hundreds of billions of euros held abroad.
The decision is likely to be closely watched in Washington, where debates continue over future support for Ukraine. European diplomats argue that the agreement demonstrates Europe’s willingness to shoulder a greater share of the financial burden, particularly as uncertainty grows over the scale of future US assistance.
Ukrainian officials have welcomed the loan as a critical lifeline that could help the country withstand a prolonged war of attrition. Some Ukrainian representatives believe that guaranteed funding over two years strengthens Kyiv’s position in any future negotiations by reducing pressure to make territorial concessions.
The broader context of the agreement includes ongoing discussions about frozen Russian assets globally, estimated at around 300 billion US dollars. Previous proposals linked to US led peace initiatives reportedly included plans that would have returned a substantial portion of these assets to Russia. European officials see the continued immobilisation of the funds as an important source of leverage.
Beyond financial diplomacy, the war continues on multiple fronts. Ukrainian forces reported counterattacks near Lyman in Donetsk Oblast, claiming improvements in their tactical positions, while fighting remains intense around Pokrovsk. Humanitarian agencies have also reported widespread power, heating and water outages following Russian strikes, leaving tens of thousands of civilians without basic services.
In parallel developments, Ukraine’s security service reported an attack on a Russian oil tanker linked to the so called shadow fleet in the Mediterranean Sea. The vessel was reportedly empty at the time and no environmental damage was recorded. If confirmed, the strike would mark the first such operation in the Mediterranean, more than 2,000 kilometres from Ukraine.
Meanwhile, Russia sentenced a former British soldier captured while fighting for Ukraine to thirteen years in prison. The UK government rejected the ruling, stating that prisoners of war cannot be prosecuted for taking part in hostilities under international law.
Taken together, the Brussels agreement highlights both Europe’s continued support for Ukraine and the political limits of that support. While the loan provides substantial and immediate financial relief, the unresolved question of frozen Russian assets reveals the ongoing tension between legal caution and calls for a more forceful economic response to Russia’s war.
