‘This is good news for Ukraine and bad news for Russia and this was our intention,’ German Chancellor Friedrich Merz said.
The European Union will borrow money for a 90 billion euro ($105 billion) loan to Ukraine to fund the country’s defense over the next two years, rather than use frozen Russian assets, the 27-nation bloc said on Dec. 19.
Member states also gave consent for the European Commission, the bloc’s executive arm, to keep working on a so-called reparations loan based on Moscow’s immobilized assets, but were unable to get that scheme off the ground for now due to objections from several countries.
“Today, we approved a decision to provide €90 billion to Ukraine for the next two years,” European Council President António Costa said in the early hours of Dec. 19 after hours of talks in Brussels. “As a matter of urgency, we will provide a loan backed by the EU budget. This will address the urgent financial needs of Ukraine. And Ukraine will only repay this loan once Russia pays reparations.”
Both options, the use of frozen Russian assets and using the EU budget to back the loan, initially seemed unworkable, with decisions of that nature requiring unanimity among EU member states. Hungary, which maintains closer ties with Moscow than other EU nations, remains opposed to both options.
Costa said the EU reserves the right to “make use of the immobilized assets to repay this loan.”
“At the same time, we gave a mandate to the Commission to continue working on the Reparation Loan based on Russian immobilized assets,” he added.
Hungary, Slovakia, and the Czech Republic agreed to let the scheme go ahead as long as it was agreed that they would not be held financially liable for the loan.
Hungarian Prime Minister Viktor Orban said in a post on X that the decision not to use Russian frozen assets meant that the EU had “managed to avert the immediate risk of war.”
“This plan would have dragged Europe into war and imposed a financial burden of 1000 billion [Hungarian forints] ($3 billion) on Hungary. We succeeded in protecting Hungarian families from this,” he said.
By Guy Birchall
