The "Frozen Russian Assets Plan" has failed, and Europe agrees to provide Ukraine with a loan of 90 billion euros

According to CCTV News, on the 19th local time, European Council President Costa stated that EU leaders have approved a resolution to provide €90 billion in aid to Ukraine for the 2026-2027 fiscal year.

Media reports on the 19th indicated that this two-year aid agreement was reached after a marathon summit held in Brussels. With the United States significantly reducing its financial support and Washington pressuring Ukraine to make concessions in peace negotiations, European officials are generally concerned that without new funding, Kyiv's finances will run out by April next year, at which point not only will Ukraine face the risk of collapse, but the security of the entire European continent will also be threatened.

Additionally, media reports on the 19th stated that countries like France and Italy had previously led calls to use the EU budget as an alternative, ultimately facilitating this agreement. Under the new plan, the EU will use its budget to support the issuance of joint debt to raise funds from the capital markets. Although all parties committed to continue exploring how to utilize frozen Russian assets in the meeting conclusions, the decision to rely on taxpayer funds rather than Russian funds is seen as a political blow to German Chancellor Merz and European Commission President von der Leyen, who had previously strongly advocated for using Russian assets to pay reparations.

Despite the potential for criticism, this reflects the extreme urgency felt by EU leaders at this moment to secure new funding for Ukraine. Costa stated on social media, "We promised, we delivered." As Polish Prime Minister Donald Tusk told reporters before the summit:

“ The choice now is simple: either pay today, or bleed tomorrow. I am not just referring to Ukraine, but to all of Europe.”

The Failure of Asset Disposal Plans and Resistance from Belgium

According to Xinhua Finance, European Council President Costa stated on the 19th that EU leaders have approved a resolution to provide €90 billion in support to Ukraine for the 2026-2027 fiscal year.

Before this summit agreement was reached, EU countries had engaged in intense negotiations over funding plans for several months. Media reports indicated that most EU leaders previously believed that utilizing approximately €210 billion of frozen Russian central bank assets, which are mainly located in Belgium, was the best option for funding Ukraine. German Chancellor Merz had told reporters that this was "the only choice," believing that this move would not only strengthen Ukraine's position at the negotiating table but also punish Moscow.

However, this plan faced strong resistance from Belgium, the main holder of the assets. Media cited informed officials stating that Belgian Prime Minister Bart De Wever demanded that other EU countries provide "unlimited" risk-sharing to address potential legal actions and retaliatory measures from Russia. As other leaders refused to accept such extreme guarantee terms, the "compensation loan" proposal ultimately fell apart At the same time, the Central Bank of Russia filed a lawsuit in Moscow last week, claiming 18.2 trillion rubles (approximately 229 billion USD) from the Belgian custodian institution Euroclear, which holds most of the frozen assets. The Russian side also stated on Thursday that if the use of these assets continues to be promoted, it will seek compensation from European lending institutions. Faced with such a huge legal risk exposure, the EU ultimately chose to compromise.

Joint Bond Issuance and Exemption Clauses

According to details disclosed by the media, the final 90 billion euro loan plan will be financed by the EU borrowing in the capital markets, backed by unused funds from the EU shared budget. In addition to the adjustment of funding sources, the final agreement also includes an important political compromise: the Czech Republic, Hungary, and Slovakia will not bear any financial obligations related to this loan. These three countries have previously been skeptical about providing funding to Ukraine. A senior European official stated:

“They don’t need to pay, but we will make them pay politically.”

Regarding the repayment terms, from the summit conclusions, Ukraine will only need to repay this loan after Russia pays compensation. German Chancellor Merz attempted to regain the original position in a statement, emphasizing:

“If we make one thing clear: if Russia does not pay compensation, we will... use the frozen Russian assets to repay the loan.”

An EU official involved in the negotiations candidly told the media:

“We have always said that the key is to get the money to Kyiv, not where the money comes from.”

Urgency of Funding Exhaustion and Negotiation Leverage

The agreement is seen as a crucial "lifeline" for Ukraine. Reports indicate that Ukraine had warned that without additional support, the country would face collapse in early 2026. Bloomberg's analysis also pointed out that with the U.S. cutting off most financial support, this funding is vital for strengthening Kyiv's leverage at the negotiation table in the future and maintaining the operation of the state.

Ukrainian President Zelensky, attending the Brussels summit, emphasized that while he believes using Moscow's funds is the "most appropriate" financing method, obtaining funding support itself is more urgent. “We need funds so that Russia or anyone else cannot use it as leverage against us,” Zelensky told the media, “We want to use this tool to support us. With this tool, we will be more confident than without it.”

This financial agreement also comes at a time when Europe is trying to establish its influence in the U.S.-led peace negotiations. As the Russia-Ukraine conflict continues for nearly four years, by ensuring Ukraine's financial stability for the next two years, the EU aims to prevent an irreversible deterioration of the situation due to funding cuts before negotiations