EU's Strategic Loan to Ukraine: Bypassing Frozen Assets

The EU has agreed to lend 90 billion euros to Ukraine, steering away from a plan to use frozen Russian assets. The loan, backed by EU borrowing, aims to support Ukraine's defense. Challenges in using Russian assets arose due to legal risks, leading to the focus on EU-backed loans.

The European Union has opted to lend 90 billion euros to Ukraine as support against Russian aggression, rejecting an unprecedented proposal to use frozen Russian assets. This decision, concluded by EU leaders, aims to meet two-thirds of Ukraine's needs over the next two years.

The loan will be interest-free for 2026-2027, relying on EU borrowing backed by the EU budget headroom. Initially, a plan to involve Britain's frozen Russian assets was considered, but EU borrowing faced initial resistance due to the requirement of unanimity.

The use of frozen Russian assets failed due to Belgium's financial and legal concerns, alongside reservations from other EU countries. While Russian assets remain frozen pending reparations, borrowing is seen as a practical option to satisfy Ukraine's immediate financial requirements.

(With inputs from agencies.)