Brussels — European Union leaders have agreed to borrow and loan €90 billion (approximately $105 billion) to Ukraine to sustain its defence against Russia over the next two years, opting for a politically viable financing mechanism while shelving, for now, the controversial use of frozen Russian sovereign assets.

The decision, reached after prolonged overnight negotiations in Brussels, reflects a pragmatic compromise amid deep internal divisions within the bloc. While the European Commission was mandated to continue exploring a so-called “reparations loan” backed by immobilised Russian assets, EU leaders acknowledged that the proposal remains legally and politically unworkable at this stage.

“Today we approved a decision to provide €90 billion to Ukraine,” said European Council President António Costa at a press conference early Friday. “As a matter of urgency, we will provide a loan backed by the European Union budget.”

Frozen Assets: A Bridge Too Far—for Now

Since Russia’s full-scale invasion of Ukraine, the EU has frozen roughly €210 billion in Russian assets, the majority of which—around €185 billion—are held in Belgium. The idea of directly using these funds to finance Kyiv’s defence has long been promoted by several member states and strongly supported by Ukrainian President Volodymyr Zelenskiy, who attended the summit.

However, resistance from Belgium and other countries concerned about legal exposure, financial instability and potential Russian retaliation ultimately stalled the plan. Belgian Prime Minister Bart De Wever was blunt in his assessment: “There were so many questions on the Reparations Loan, we had to go to Plan B. Rationality has prevailed.”

EU leaders reiterated that the Russian assets will remain frozen until Moscow pays war reparations to Ukraine. Should that occur, the funds could eventually be used to repay the EU-backed loan.

Hungary Relents, Claims a Win

The borrowing option initially appeared unlikely, as it requires unanimity among EU members and had faced opposition from Hungary’s Russia-friendly Prime Minister Viktor Orbán. In the end, Hungary—along with Slovakia and the Czech Republic—allowed the plan to proceed on the condition that it would not have direct financial implications for them.

This outcome enabled Orbán to frame the agreement as a diplomatic success. “Orbán got what he wanted: no reparation loan,” one EU diplomat said, noting that the final structure limits the political symbolism of seizing Russian state funds.

High Stakes for Ukraine—and Europe

The urgency of the decision was underscored by stark warnings from EU officials. Without continued European financial support, Ukraine could run out of funds as early as the second quarter of next year, a scenario EU leaders fear could tip the balance of the war decisively in Russia’s favour.

“This is good news for Ukraine and bad news for Russia—and this was our intention,” said German Chancellor Friedrich Merz. EU foreign policy chief Kaja Kallas was even more direct: “We just can’t afford to fail.”

The summit also carried broader geopolitical overtones, as European leaders sought to project unity and resolve following recent criticism from U.S. President Donald Trump, who described Europe as “weak.”

For Kyiv, the agreement guarantees short-term financial stability but falls short of the moral and political victory Zelenskiy has repeatedly sought. “The decision to fully use Russian assets to defend against Russian aggression is one of the clearest and most morally justified decisions that could ever be made,” the Ukrainian president said.

For now, the EU has chosen unity over precedent—buying time for Ukraine on the battlefield, while leaving the question of Russian assets unresolved.