European Union leaders declared victory after agreeing on a €90 billion loan to keep Ukraine afloat financially for the next two years and continue its fight against the Russian invasion - but at the EU's own expense, not by using frozen Russian assets.
The deal has the advantage of simplicity, Reuters reports. The EU will borrow on financial markets, with guarantees from the EU budget, and the money should arrive in Kiev quickly. It sends a message to Russian President Vladimir Putin that the bloc can emerge as a geopolitical player.
However, the deal damaged the reputation of powerful figures in the EU, such as German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen, who advocated a bolder and more complex “reparation loan,” financed from Russian assets frozen in the EU.
"It's much better than no package at all, but at the end of the day the EU looked Russia in the eye and blinked. Fear overcame reason," Michael Carpenter, former senior director for Europe at the US National Security Council, said on X Network.
The leaders, who met at a summit in Brussels that began on Thursday and lasted until the early hours of Friday morning, were under intense pressure to reach a deal on financing for Kiev.
President Donald Trump has cut off U.S.-funded military aid to Ukraine and recently described European leaders as weak. President Volodymyr Zelensky personally warned leaders that if they did not deliver, Ukraine would run out of funds within months, seriously jeopardizing its war effort.
However, the reparations loan proposal has met with strong resistance from Belgium, which holds the bulk of the 210 billion euros of Russian assets frozen in the EU. By failing to win over Belgium and other member states, proponents of the project have given a key role to Hungarian Prime Minister Viktor Orban, who is close to Moscow and a Trump supporter.
Orban said a few weeks ago that he would not support an EU-financed loan for Ukraine, as it would require unanimous consent from all 27 members of the bloc. At the same time, he has strongly opposed the use of frozen Russian assets.
At the summit, however, he paved the way for an agreement by stating that he would ultimately support an EU-backed loan, provided that it did not financially hurt his country.
The agreement was reached at the end of what some diplomats saw as a crucial week for the EU's geopolitical ambitions, as attempts were also being made to finalize a trade deal with the South American bloc Mercosur.
Here too, the EU's results were mixed. Von der Leyen had to scrap plans to travel to Brazil for the signing ceremony on Saturday after Italian Prime Minister Giorgia Meloni said she needed more time before signing. Still, EU leaders expressed confidence that the deal would be concluded in the coming weeks.
Although some leaders insisted they would continue to work on a reparations loan, Orban told reporters after the summit that the idea was “dead.” He also noted that Hungary, Slovakia and the Czech Republic had secured exemptions from the financial costs of the new plan.
Other EU leaders have suggested that frozen Russian assets could later be used to repay the loan. However, any attempt to do so would likely reopen the same contentious legal and political issues that surrounded the idea of a reparations loan, Reuters points out.
However, the EU's decision ahead of the summit to freeze those assets indefinitely means they will not be returned to Russia without the bloc's consent, giving Europe a significant advantage in the ongoing US-led peace talks.
The 28-point draft US peace plan, unveiled last month, proposes investing $100 billion in frozen assets in a US-led reconstruction of Ukraine, with the United States receiving 50 percent of the profits.
In the early hours of Friday morning, Merz, Von der Leyen and other leaders rushed to praise the EU's borrowing plan - an outcome they had previously made clear was not their preferred option.
"I am delighted that today, after intensive negotiations, we were able to unanimously reach this decision. This way, we can rely on tried and tested European instruments and support Ukraine immediately, without further delay," said Merck.
Not everyone was impressed, however. "We've gone from saving Ukraine to saving face - at least for those who were pushing the idea of using frozen assets," one EU diplomat told the British agency.
Zelensky said that the EU loan is "a signal to Russia that there is no point in continuing the fight because Ukraine is financially supported" and that he will continue the fight.
Putin: EU attempted robbery
Vladimir Putin offered no compromise on his terms for ending the war in Ukraine yesterday and accused the European Union of attempting "blanket looting" of Russian property.
Putin said it was up to Ukraine and Europe to take the next step towards peace. “President Trump is making serious efforts to end this conflict. He is doing so with complete sincerity,” Putin said. “The ball is completely in the court of our Western opponents, first of all the leaders of the Kiev regime, and in this case, above all, their European patrons. We are ready for both negotiations and a peaceful resolution of the conflict.”
Putin addressed the annual press conference and the “Direct Line” show, which lasted nearly four and a half hours. Although Ukraine was the dominant topic, the event was also marked by bizarre moments, as well as occasional sarcastic remarks from ordinary Russians, whose messages were displayed on a large screen in the hall.
“Not a direct line, but a circus,” read one message. Others referred to internet outages, dirty tap water and the rising cost of living. Putin said Russia’s conditions for ending the war in Ukraine were those he had outlined in a speech in June 2024, when he demanded that Ukraine abandon its ambition to join NATO and withdraw completely from four regions that Russia considers its territory. Putin spoke hours after EU leaders abandoned a plan to use frozen Russian assets as collateral for a loan to Ukraine.
He said the block withdrew from the original scheme because it would have faced serious consequences and thereby undermined its status as a safe place to store assets.
"Theft is not the right term... It's a robbery in broad daylight. Why can't this robbery be carried out? Because the consequences could be severe for the robbers," he said.
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