EU Plans €35 Billion Loan for Ukraine Funded by Frozen Russian Assets

The European Union will raise a €35 billion loan to bolster Ukraine’s economy and military as the country faces renewed Russian offensives that have severely damaged its power infrastructure. This announcement came from European Commission President Ursula von der Leyen during her recent visit to Kyiv.
Von der Leyen promised “maximum flexibility” in how the funds will be utilized, emphasizing the urgency of the situation. “Russia keeps targeting your civilian energy infrastructure in a blatant and vicious way,” she stated alongside Ukrainian President Volodymyr Zelenskyy. With fears of a humanitarian crisis looming as winter approaches, the EU is stepping up its support to address both economic and military needs.
The €35 billion loan forms part of a larger commitment from the G7, aiming for a total of €45 billion ($50 billion) pledged in June. While the G7 allies are expected to contribute €10 billion, EU officials anticipate that contributions may exceed expectations, potentially reducing the EU’s share.
Von der Leyen reiterated the need for accountability, stating, “We should make Russia pay for the destruction it caused.” She expressed confidence that the international community would rise to the occasion, noting the urgency of the situation.
To facilitate the loan, the EU plans to establish a special mechanism to manage profits from frozen Russian assets, estimated at €2.5 billion to €3 billion annually. This new fund will allow G7 partners to service repayments based on their contributions to Ukraine.
Importantly, the lending proposal requires a qualified majority from member states, mitigating the risk of a veto from Hungary. The European Parliament will also play a role in the approval process, which must be finalized before the end of the year for disbursements to commence in 2025.
Ahead of her visit, von der Leyen announced an additional €160 million assistance package for Ukraine, including €100 million sourced from frozen Russian assets for repairing power plants and enhancing renewable energy capacity.
This initiative represents a significant portion of the G7’s commitment, originally structured to balance contributions among the US, EU, and other allies. However, technical negotiations have delayed progress, raising concerns about the long-term predictability of sanctions on frozen assets, especially given Hungary’s stance.
As the situation evolves, the EU remains committed to supporting Ukraine through these challenging times, aiming to keep essential services operational and aid the nation’s resilience against ongoing aggression.