The leaders of the EU countries have failed to agree on the transfer of frozen Russian assets to Ukraine. However, Kiev will not be left without financial assistance. What solution was found at the EU summit?
The heads of state and government of the EU countries have reached a compromise on the future financing of Ukraine. As announced by German Chancellor Friedrich Merz after the EU summit in Brussels, Ukraine will receive an interest-free loan of 90 billion euros from the EU. These funds are enough to cover military and budget needs for the next two years.
“We will leave Russian assets frozen until Russia compensates Ukraine, but we expressly reserve the right: if Russia does not pay compensation, we will use Russian assets to repay the debt in full accordance with international law”, Merz said in a statement, quoted by ARD.
The goal has been achieved: Russia will pay for the war
Merz assessed the decision as a “great success”, although it did not correspond to his initial proposal, according to which funds from the Russian Central Bank should be used to lend to Ukraine. However, this proved too complicated - mainly because of Belgium's reserves, since a large part of Russian assets worth about 210 billion euros are stored in the Belgian-based financial institution Euroclear. Belgium's position against the payment of a "reparation loan" was supported by Italy, Malta and Bulgaria. Belgian Prime Minister Bart De Wever stated that it was Belgium that would bear all the legal, reputational and financial risks in case Russia decided to appeal the use of Russian assets in court.
But in the end, a compromise was found that achieved the goal, namely that Russia would pay for this war.
Hungary, the Czech Republic and Slovakia remain outside the agreement
The approved loan should enable Ukraine to continue defending itself against Russia. There was a real danger that the country would go bankrupt within a few months, ARD points out.
A total of 90 billion euros must be paid by the end of 2027. This amount was determined by the European Commission as Ukraine's financial needs. Hungary, the Czech Republic and Slovakia have agreed not to contribute to the costs.
According to information from the DPA agency, the EU wants to raise funds on the capital market at favorable terms and then transfer them to Ukraine. The guarantee will be provided by the general EU budget.