BRUSSELS — European leaders struck a deal Friday to give Kyiv nearly $105 billion in a loan backed by the bloc’s budget, after the failure of a last-ditch effort to tap Russia’s frozen assets to finance Ukraine’s state and army.
The surprise decision followed more than 16 hours of negotiations at a European Union summit that stretched till dawn. When leaders of the bloc’s 27 nations first convened here, Kyiv’s chief backers vowed not to leave until they found a solution to keep funding its ability to fight.
E.U. officials sought to push through the plan to unlock Russia’s assets before Ukraine runs out of money in the new year — or before Washington and Moscow decide to use the funds as part of negotiations on the war. It was also a way around spending more European public funds.
But as the plan faltered, the bloc’s leaders instead agreed overnight to give Ukraine $105 billion over the next two years in a loan propped up by E.U. taxpayer funds. It will give Kyiv a lifeline to plug its budget gap and could strengthen its hand in the negotiations, officials said.
“This will address the urgent financial needs of Ukraine,” European Council President António Costa, who chairs the summit, said at a news conference. He said the bloc “reserves the right” to one day use Russia’s assets, after E.U. nations decided last week to indefinitely freeze the funds.
Still, E.U. officials could not break the impasse over the plan to give Kyiv a loan backed by some $246 billion in Russian assets, frozen in Europe since Moscow’s 2022 invasion of Ukraine. The proposal collapsed over objections from Belgium, where most of the assets are held, and hesitation from some other countries in the bloc.
As they cast this as a do-or-die moment for Ukraine’s fate and Europe’s voice, the debate over money threw a harsh light on European divides in recent days.
The continent’s top leaders have issued increasingly dire warnings. Ursula von der Leyen, president of the E.U. executive arm that drafted the assets plan, the European Commission, called this Europe’s “independence moment.” Polish Prime Minister Donald Tusk told his counterparts earlier on Thursday they had a choice: “either money today, or blood tomorrow.”
The assets plan faced stiff opposition from Belgium, where the funds are held in a financial services institution called Euroclear, despite weeks of tensions and a diplomatic flurry by the E.U.’s power brokers.
Belgium maintained it did not have enough guarantees that its E.U. neighbors would share the full risk of any Russian response, even as they called on Belgium to play ball. Moscow has denounced the plan as “theft.”
Belgian officials — worried about retaliation, huge liabilities and financial instability — also wanted other countries holding smaller pots of Russian funds to use them. And Belgian Prime Minister Bart De Wever voiced concern that a U.S.-brokered deal on Ukraine would want to tap into the funds too.
European officials have cast the decision on funding Ukraine as a harbinger of how the E.U. meets this moment in the face of Russian threats, American antagonism and the expensive bill of the war now resting with them.
European officials expect a funding crisis in Ukraine in early spring, adding to the urgency of endorsing a solution before the new year. It would be a blow to Ukrainian President Volodymyr Zelensky’s leverage and his European partners if Kyiv runs out of money to fight while Washington leads negotiations with Moscow over its future.
Ukrainian negotiators headed to the United States to continue talks with President Donald Trump’s administration, Zelensky said Thursday. The Kremlin, meanwhile, is also “preparing certain contacts with our American counterparts,” spokesman Dmitry Peskov said.
As talks intensify, European officials say Moscow and Washington both piled pressure on E.U. capitals that are squeamish about tapping into Russia’s central bank assets.
“I understand Belgium is under a lot of pressure from Russia, from European countries, but also from the United States,” E.U. foreign policy chief Kaja Kallas told reporters as leaders convened Thursday.
Though Europe holds most of the roughly $300 billion frozen in the West, versions of the U.S. proposal for a peace deal have envisaged using it for U.S. reconstruction efforts in Ukraine and joint U.S.-Russian investments.
European leaders also saw the Russian assets as a way “to send a signal to the Americans in the hope of maybe being taken more seriously,” after Washington released a national security strategy berating the European Union, said Agathe Demarais, a fellow at the European Council on Foreign Relations and a former French treasury adviser in Russia.
After years of fretting about the legal and financial risks of setting a precedent by seizing sovereign assets, the E.U. plan to tap into the Russian funds emerged out of a need. The United States has stopped paying for weapons to Kyiv, and European voters are growing more restless about public spending.
E.U. officials had said a decision on the assets proposal — crafted with some financial and legal gymnastics — could be made with a weighted majority rather than unanimity, but they did not want to move ahead without Belgium.
Other E.U. capitals gave assurances that they would share the risk of a Russian response, while saying they could not give Belgium unlimited guarantees. Belgium may be the main focus, but some other countries have in recent days also shared their reluctance, including E.U. heavyweight Italy.
“We are a reliable partner and are ready to make sacrifices but there is no free money,” De Wever told Belgian lawmakers ahead of the summit.
Kostiantyn Khudov in Kyiv and Natalia Abbakumova in Riga, Latvia, contributed to this report.
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