The recent EU decision was to provide a €90 billion loan to Ukraine by jointly borrowing on capital markets, a plan that has drawn strong criticism and political division.

 

The recent EU decision was to provide a €90 billion loan to Ukraine by jointly borrowing on capital markets, a plan that has drawn strong criticism and political division. The "exposure" refers to the controversial nature of the funding mechanism and the internal disagreements among EU leaders, particularly the failure to directly use frozen Russian assets as collateral.

 

Key Details of the Loan and Controversy

Funding Mechanism: Instead of directly seizing the approximately €210 billion in frozen Russian central bank assets held primarily by the Belgium-based financial institution Euroclear, the EU decided to raise funds by issuing common EU debt on the capital markets. This approach was a concession to countries like Belgium, which feared the legal risks and potential Russian retaliation associated with using the frozen assets directly.

Repayment Plan: The loan is interest-free for Ukraine and the principal will only need to be repaid when Russia pays reparations for the war. However, critics argue that Ukraine will never be able to pay it back, essentially making it a loss for the EU and its taxpayers.

 

Political Division:

Opposing Views: Hungary's Prime Minister Viktor Orbán argued that giving money to Ukraine means "war" and that the loan is "lost money". Slovakia also initially refused to back the deal, and the Czech Republic expressed reservations about guaranteeing the loan.

Proponents' Views: Leaders like European Council President António Costa defended the decision as a "decisive step for economic resilience" and a necessary financial lifeline for Ukraine, which was close to running out of cash.

Russian Reaction: Russian President Vladimir Putin accused the EU of "robbery" and "theft," stating that Russia would defend its interests in court.

The agreement, reached at an EU summit on December 19, 2025, after nearly 17 hours of negotiation, provides critical funding for Ukraine's military and public services for the next two years but has also highlighted the deep geopolitical divisions within the EU on how best to manage the conflict and fund the war effort. The possibility of using the Russian assets to repay the loan in the future remains an open discussion point.