BRUSSELS, Dec. 19 (Xinhua) -- After late-night bargaining, European Union (EU) leaders on Friday approved a 90-billion-euro (105.4 billion U.S. dollars) loan package to support Ukraine's military and economic needs over the next two years, abandoning a plan to leverage Russia's immobilized assets.
Analysts said the deal offers Ukraine a near-term lifeline, but also underscores a reality in which EU support is increasingly held together by opt-outs. With Ukraine's financing needs far exceeding this package, the EU is walking a tightrope, seeking sustainable funding without crossing legal red lines.
UNITY IN DISGUISE?
According to a European Council statement, the loan will be financed through EU borrowing on capital markets and backed by EU budget "headroom," the unused margin in the budget that can be mobilized as a guarantee to support borrowing.
A senior EU official told reporters that the chosen approach differs from the proposed "reparations loan" in one key respect: under the reparations-loan option, the EU would have tapped cash already sitting in the system to fund Ukraine, whereas under the agreed solution it will borrow from capital markets. That entails interest costs, but the official said the EU budget will subsidize them, so Ukraine does not have to pay.
Because EU-level joint borrowing often hinges on unanimity, the statement added that any EU budget guarantee for the loan "will not have an impact on the financial obligations" of the Czech Republic, Hungary and Slovakia, an opt-out designed to secure their approval and keep the deal intact. In practical terms, the 27-country bloc is acting more like a "coalition of 24" on this issue.
"Joint borrowing for Ukraine? Grants disguised as loans fueling conflict. Hungary, the Czech Republic, and Slovakia have successfully stayed out of it," Hungarian Prime Minister Viktor Orban wrote on X.
Meanwhile, German Chancellor Friedrich Merz, European Commission President Ursula von der Leyen and other leaders moved quickly on Friday to praise the borrowing plan, even though it had not been their preferred option.
As analysts at the European Policy Centre (EPC) noted, the outcome lays bare persistent fractures over ambition, unity and Europe's willingness to fully leverage its economic power at a decisive moment for European security.
IS 90-BLN EUROS SUFFICIENT FOR UKRAINE?
Ukrainian President Volodymyr Zelensky has warned EU leaders that without a firm funding decision, Ukraine could run out of money within months, a scenario that would quickly erode its ability to sustain the war effort.
The International Monetary Fund estimates Ukraine will need roughly 135 billion euros in 2026 and 2027, implying a remaining gap of about 45 billion euros that still has no clear solution.
This concern is compounded by mounting strains in 2025. In a report earlier this month, analysts at the Kiel Institute in Germany warned that new aid allocations in 2025 could fall to their lowest level since 2022 and are on track to come in far below what would be needed to offset the loss of U.S. support.
Kiel's tracking also highlights widening imbalances within Europe itself: while France, Germany and the United Kingdom have stepped up, Nordic countries remain the top contributors, whereas Italy and Spain have "contributed very little."
Zhao Yongsheng, director of the French Economy Research Center at China's University of International Business and Economics, noted that against the backdrop of a U.S. pullback, Europe would need 2.5 to 3 times the current 90-billion-euro level in 2026 to maintain the balance on Ukraine's frontlines, a sobering benchmark that looms over what is likely to be a long and difficult financing road ahead.
IS "REPARATION LOAN" OPTION DEAD?
Belgian Prime Minister Bart De Wever told reporters after the summit that "politics is not an emotional job" and that "rationality has prevailed."
Hungarian Prime Minister Viktor Orban declared the idea "dead, done and dusted" on X. However, some leaders insist that using Russia's frozen assets should remain on the table.
Last week, the Council of the EU decided to prohibit any transfers of immobilized assets belonging to Russia's central bank within the bloc back to Russia "indefinitely," paving the way for their potential use as a backstop for Ukraine-related financing.
A senior EU official stressed that the joint-borrowing package remains tied to the immobilization of Russian assets: under the deal, Ukraine would repay the joint loan only once reparations are received.
Yet analysts caution that any attempt to actually use those immobilized assets to repay the loan could reopen the same legal and political battles that derailed the reparations-loan route in the first place.
Zhao said the "reparation loan" concept tests the boundaries of the existing legal and institutional order, and that mobilizing sovereign assets risks crossing legal and political red lines shaped in the post-World War II system.
However, the European Council on Foreign Relations (ECFR) believes the idea could still make a comeback. The think tank noted that a 90-billion-euro package will be nowhere near enough to close Ukraine's funding gap over the next two years. "In other words," ECFR wrote, "this is probably not the last chapter of the story of Russia's central bank reserves." ■
