EU's Strategic Move: Lending $105 Billion to Ukraine

The European Union plans to lend 90 billion euros to Ukraine, avoiding the use of frozen Russian assets. The funding will be interest-free and backed by the EU budget headroom. A proposal to utilize Russian assets faced opposition from Belgium, Italy, Malta, and Bulgaria, citing financial risks.

In a pivotal move, European Union leaders signed off on a 90-billion-euro loan to bolster Ukraine's defense against Russia over the next two years. This financial maneuver strategically avoids the unprecedented action of tapping into frozen Russian assets.

The EU plans to issue interest-free loans for 2026-2027 by leveraging its financial headroom, the gap between maximum potential contributions from member states and its actual budgetary needs. Despite initial skepticism, primarily due to Hungary's close ties with Russia, opposition from Hungary, Slovakia, and the Czech Republic was overcome when the plan assured their financial safety.

A parallel proposal to invest frozen Russian sovereign assets in bonds was blocked by Belgium and several other EU nations due to concerns over financial and legal repercussions. Nevertheless, EU leaders authorized continued exploration of this option to reimburse the EU's financial outlay.

(With inputs from agencies.)