brussels, belgium
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European Union leaders reached an agreement early Friday on a $105 billion loan to protect Ukraine’s economy and military from a financial black hole until 2027. Although it didn’t happen in the way some in the European Union had hoped, the fact that it at least happened is being hailed by leaders as a victory for the bloc.
“If we had left Brussels divided today, Europe would have moved away from geopolitical relevance,” Belgian Prime Minister Bart de Wever told reporters shortly before 4 a.m. “It would have been a complete disaster.”
Some leaders had hoped to agree on a controversial proposal to use billions of dollars in frozen Russian funds to finance Ukraine, but the plan was shelved due to opposition from Belgium and elsewhere. Instead, EU leaders chose to borrow money from investors to lend to Ukraine, while reserving the right to use Russian assets in the future. According to the agreement, Kiev does not have to repay the funds until Russia pays reparations at the end of the conflict.
The money freed up by the loan will be welcomed in Kiev, which is fighting to thwart Russian battlefield gains while negotiating with Washington over plans to end the war.
Ukrainian President Volodymyr Zelenskiy warned that failure to provide Ukraine with the findings would mean the country would not have enough funds “for lives and weapons.”
He praised Friday’s 11th hour breakthrough.
“This is important support that will truly strengthen our resilience,” President Zelenskiy wrote to X. “It is important that Russian assets remain fixed and that Ukraine receives guarantees of financial security for the coming years. Thank you for the result and solidarity.”
European leaders also targeted Moscow.
“The message we are sending today to Russia is very clear,” European Council President Antonio Costa said. “Firstly, you are not achieving your objectives in Ukraine. Secondly, Europe is with Ukraine today, tomorrow and as long as necessary.”
The International Monetary Fund predicts that Ukraine will face a funding shortfall of $160 billion (137 billion euros) over the next two years, due in part to U.S. funding cuts. The EU had aimed to meet two-thirds of that amount, or about $105 billion (90 billion euros).
The idea of using Russia’s central bank’s frozen assets was not new. This has been emerging since the early days of Russia’s 2022 invasion of Ukraine.
And this has long been met with fierce opposition from some European powers. French President Emmanuel Macron said in the Oval Office in February that accessing Russian funds would be a violation of international law.
But earlier this week, he expressed support for using the money.
As with many things regarding Western aid to Ukraine, another red line has been broken.
Not everything was smooth sailing. Hungary, Slovakia and the Czech Republic all agreed to loans based on EU borrowings, but on the condition that there would be no financial consequences.
As for reparation loans, Belgium, which holds most of the stuck funds, is concerned about future retaliation by Russia and its liability if Moscow demands its funds returned under a peace agreement.
Ahead of the summit, Belgian Prime Minister de Wever called for “binding guarantees” from all EU member states in exchange for approving compensation financing.
“Mere verbal promises are not enough,” he told Belgium’s parliament on Thursday.
The EU has so far used interest from Russian assets, mostly bonds, to finance part of its support for Kiev. But the bonds themselves turn into cash when they mature, and this is the cash that EU officials wanted to lend and borrow from Ukraine until Russia pays reparations.
Russia’s central bank on Monday filed a lawsuit against Belgium’s Euroclear depository seeking billions of dollars in damages. The bank claimed the move was a pre-emptive move against EU plans to transfer frozen assets held by Euroclear to a “third party”, Russia’s state-run TASS news agency reported.
And on Thursday, Russia’s central bank announced that it would freeze assets held by European banks and demand compensation in the amount of lost profits.
The longest night of the year looms over Brussels and the outlook for Europe is bleak.
US President Donald Trump slammed European leaders as “weak” in a recent interview, days after accusing the continent of a “political crisis” and a “lack of confidence” in his administration’s new national security strategy.
A 28-point U.S.-backed peace plan leaked last month called for $100 billion in globally frozen Russian central bank assets to be invested in a “U.S.-led Ukraine reconstruction and investment effort,” with the U.S. receiving profits from the investment. Assets frozen in Europe make up the bulk of Moscow’s assets stuck around the world.
This sparked a flurry of diplomatic efforts among European leaders outraged by the idea that the White House would seize assets.
The president of the EU executive body, Ursula von der Leyen, thinly veiled the United States, calling this week’s summit “a moment of European independence” and hammering home the idea 10 times in a short speech to the European Parliament on Wednesday.
The summit, she said, was about confronting “the reality of a world that has become dangerous and transactional. A world of war, a world of predators.”
“Europe must take responsibility for its own security. This is no longer an option, it is a necessity.”
The trust across the Atlantic, long taken for granted, has certainly evaporated this year.
Europe is currently wary of divisive forces on two fronts: the cultural attacks of the transactional White House and the subversion and hostility of Moscow. Russian President Vladimir Putin’s near-constant efforts to undermine Europe reached a new level Thursday when he referred to the continent’s leaders as “pigs” in a speech to Russian military officials before the start of an EU summit.
“The Russians are working day and night to divide Europe, and Russia is better at keeping Europe united than Europe is,” Tom Keatinge, director of the Center for Finance and Security at the Royal United Services Institute think tank, told CNN.
The White House has publicly used Ukraine’s past battlefield difficulties and structural weaknesses as leverage to reach a hasty peace deal.
Zelenskiy said before the end of European negotiations that a funding deal would reduce that threat.
“These assets give us more confidence at the negotiating table,” he said, as Kiev’s ability to resist Moscow’s aggression is publicly secured for at least a few more years.
He also said failure to agree on funding for Ukraine would deal a major blow to Kiev’s vital drone industry, which is the lifeblood of frontline troops.
Similarly, the country’s much-vaunted long-range attacks on Russia’s oil and gas infrastructure will be affected, he said.
“They will all disappear,” he told journalists.
Early Friday morning brought some relief to Kiev and Brussels.
In the face of Russia’s ruthless aggression in Ukraine and a White House that appears to be craving a quick peace rather than justice, Europe’s Ukraine lifeboat, which has crawled out of the jaws of division and delay, promises Kiev a courageous friend in the uncertain months ahead.
