On Wednesday, European Union (EU) member countries reached an agreement to provide financial aid to Ukraine, as part of an effort to help the country manage its ongoing war with Russia.
According to a statement issued by the European Council on Wednesday, this new package includes an exceptional macro-financial assistance (MFA) loan worth up to €35 billion. The loan will use immobilized assets from Russia’s Central Bank as collateral, marking a unique way to support Ukraine financially amid the conflict.
“The financial assistance aims to provide immediate relief to Ukraine’s urgent financing needs that have increased due to Russia’s intensified aggression towards Ukraine,” read the statement.
The loan comes with a maximum term of 45 years and is planned to be repaid using profits from the frozen Russian assets within the EU. These assets, estimated at over €200 billion, have been blocked since the start of Russia's invasion of Ukraine in February 2022 under EU sanctions. The frozen assets are managed by the European depository Euroclear, and they generate about €2.5-3 billion annually in income.
Earlier this year, EU leaders had already discussed the idea of using the funds from these Russian assets to support Ukraine’s military efforts. In May, German Chancellor Olaf Scholz confirmed that the EU had agreed to this plan. However, Russia has strongly criticized the EU’s actions, calling the use of its frozen assets "theft" and threatening legal action that could drag on for years.
The deal is part of a broader initiative by the Group of Seven (G7) allies to provide $50 billion to Ukraine to ensure Kyiv can continue its fight against Russia's invasion and to signal Western resolve to Moscow. The countries, including Britain, Canada, France, Germany, Italy, Japan and the United States, reached this agreement in June 2024, along with top officials from the European Union, where most of the frozen Russian assets are held.
However, there have been some concerns from the United States regarding the EU’s approach. In light of upcoming elections in the US, Washington has requested assurances from EU countries that loan repayments will indeed come from blocked Russian assets. Currently, EU sanctions on Russia are renewed every six months, but Washington has expressed doubt that this frequency is enough to ensure long-term financial stability for the repayments. The US has proposed extending the sanction review period to three years to secure the funds.
Meanwhile, not all EU members are fully aligned with the plan. Hungary, under Prime Minister Viktor Orbán, has repeatedly opposed sanctions against Russia and has voiced concerns about using Russian funds for aid to Ukraine. Hungary argues that any decisions on this matter should only be made after the US elections. Hungary has threatened to block further aid to Ukraine if these concerns are not addressed.
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