EU proposes $105B support package for Ukraine using Russian funds, joint borrowing

BRUSSELS

The European Commission on Wednesday proposed a €90 billion ($105 billion) support package for Ukraine covering 2026-2027, combining joint EU borrowing with proceeds from immobilized Russian assets in Europe.

Announcing the proposal in Brussels, European Commission President Ursula von der Leyen said Ukraine faces a "critical juncture," with peace negotiations ongoing while Russia "intensifies its attacks."

She noted that the IMF estimates Ukraine will need €135 billion over the next two years to sustain essential state functions and continue its defense efforts.

Von der Leyen said the EU is ready to cover two-thirds of that amount, €90 billion, while calling on international partners to provide the rest.

Under the proposal, the commission presents two financing mechanisms for member states. The EU would raise funds on capital markets backed by the EU budget and lend them to Ukraine. This option requires unanimity from all EU member states.

The Commission would borrow against the cash balances generated from immobilized Russian Central Bank assets held across EU financial institutions, transferring these funds to Ukraine as a so-called reparations loan.

Kyiv would be required to repay the loan only once Russia pays war reparations. This option could be adopted by qualified majority voting.

She emphasized that the package includes extensive safeguards to protect EU countries and financial institutions from possible Russian retaliation or unlawful enforcement actions in third countries.

A "solidarity mechanism" would allow the EU to collectively absorb any residual risks, an assurance aimed especially at Belgium, home to Euroclear, the main holder of Russian assets frozen in the EU, von der Leyen added.

The Belgian government fears it may face legal problems and bear the financial liability alone. It has insisted that all EU member states must share the financial and legal risks of this proposal.

"The message to Russia is that the Reparations Loan is increasing the cost of its war of aggression. So it's an invitation to come to the negotiation table to finally find peace," she said.

The commission urged quick progress, saying the Dec. 18-19 European Council summit should deliver a clear political commitment from EU leaders.