The EU Council has proposed a new €90 billion loan for Ukraine to cover its urgent financing and defence needs for 2026 and 2027, according to an information note published on 2 November 2026. The loan, to be raised on capital markets and backed by the EU budget, would be repaid by Ukraine only once it receives reparations from Russia, with the EU reserving the right to use immobilised Russian Central Bank assets for repayment. The proposal builds on the Ukraine Facility (Regulation (EU) 2024/792) and is subject to enhanced cooperation among member states.
Loan Structure and Repayment Mechanism The proposed regulation establishes an enhanced cooperation procedure to provide macro-financial assistance and defence support. The €90 billion loan is to be disbursed in 2026 and 2027, with the EU borrowing on capital markets using its budget headroom as a guarantee. Crucially, Ukraine's repayment obligation is contingent on receiving reparations from Russia; if those are insufficient, the EU may use income from immobilised Russian Central Bank assets held in the EU. This mechanism aims to shield EU taxpayers from direct losses while leveraging frozen Russian assets.
Policy Orientations and Trade-offs The proposal reflects a trade-off between providing substantial, timely support to Ukraine and managing fiscal risks for the EU. By linking repayment to Russian reparations and frozen assets, the Council seeks to minimise the burden on member state budgets. However, this approach may face legal and political challenges, as using sovereign assets for repayment could set precedents and require unanimous member state approval. The enhanced cooperation procedure allows a group of member states to proceed, but risks creating fragmentation within the EU.
Impact on Stakeholders - Ukraine: Receives critical financing for defence and budget support, but faces uncertainty over long-term repayment terms tied to reparations. - EU member states: Those participating in enhanced cooperation bear contingent liability through the EU budget, but may see reduced direct contributions compared to grants. Non-participating states may face pressure to join or risk being sidelined. - EU institutions: The European Commission and Council gain a new financial instrument, but must navigate legal complexities around asset seizure and repayment. - Financial markets: The loan issuance could absorb significant liquidity, but the EU's AAA rating may keep borrowing costs low.
Institutional Follow-up The proposal now moves to the European Parliament for consultation, followed by a formal Council decision. The European Central Bank and the European Court of Justice may also be involved in assessing the legality of using frozen assets. Implementation is expected by early 2026.
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