BRUSSELS — European leaders agreed Friday to finance Ukraine’s state and army with a $105 billion loan backed by the E.U. budget, after the failure of a last-ditch effort to tap Russia’s frozen assets.
The surprise decision followed more than 16 hours of negotiations at a European Union summit that stretched until dawn, where officials cast this as a do-or-die moment for Ukraine’s fate and Europe’s voice. The debate over money and the unraveling of a much-touted plan threw a harsh light on European divides.
When leaders of the bloc’s 27 nations first convened here, Ukraine’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 Kyiv 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.
Instead, Europe’s leaders agreed overnight to jointly borrow the money and give Ukraine a loan over the next two years propped up by E.U. taxpayer funds. It will throw Kyiv a lifeline as it faces critical moment in the war and in its talks with the United States, officials said.
“The bottom line, after today, is that our support for Ukraine is guaranteed,” Danish Prime Minister Mette Frederiksen said at a news conference.
Afterward, Ukrainian President Volodymyr Zelensky, who attended the summit, thanked the E.U. for the loan and noted that at least this way, Russia still did not have access to the assets frozen by Europe after it invaded Ukraine in 2022.
“This is significant support that truly strengthens our resilience. It is important that Russian assets remain immobilized and that Ukraine has received a financial security guarantee for the coming years,” he said.
European Council President António Costa, who chairs the E.U. summits, said Ukraine would not have to repay the loan unless Moscow pays war reparations. 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 giving Kyiv a loan backed by up to $246 billion in Russia’s assets frozen in Europe. That plan collapsed after objections from Belgium, where most of the assets are held, and hesitation from some other countries.
The continent’s top leaders had issued increasingly dire calls to action. Ursula von der Leyen, president of the E.U. executive arm, 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.”
Those championing the assets plan, however, met 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 get enough guarantees that E.U. neighbors would share the full cost of any Russian response as they called on Belgium to play ball. Russian President Vladimir Putin on Friday said any attempt to use the assets amounted to “robbery.”
Kirill Dmitriev, a key Russian envoy to talks and the head of its sovereign fund, wrote tweets Friday celebrating the failure to tap the assets. “Major BLOW to EU warmongers led by failed Ursula — voices of reason in the EU BLOCKED the ILLEGAL use of Russian reserves to fund Ukraine,” he said.
“They spent all their political capital, promised results — and delivered a spectacular failure,” he wrote in another tweet.
Belgian officials — worried about 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 cast the decision on funding Ukraine as a harbinger of how the E.U. meets this moment as it seeks to assert influence in the face of Russian threats, American antagonism and the expensive bill for the war.
European officials expect cash to run dry in Ukraine in early spring, adding to the urgency of endorsing a solution before the new year. Friday’s decision will help Zelensky avoid a budget crisis while Washington leads talks with Moscow over the country’s future.
Ukrainian negotiators headed Thursday to the U.S. to continue talks with President Donald Trump’s administration, said Zelensky. 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 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 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 dangers of setting a precedent by seizing sovereign assets, the E.U. plan on 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, but they did not want to move ahead without Belgium.
Other E.U. capitals assured Belgium they would share the risks, while warning they could not offer unlimited guarantees. The reluctance of some countries, such as E.U. heavyweight Italy, also grew in recent days.
After the summit, De Wever said he believed “rationality has prevailed.”
He had made Belgium’s dislike of the idea clear, but earlier on Thursday suggested it might be possible if Europeans share the risk: “You give us a parachute, and we jump all together.”
The assurances Belgium wanted ultimately seemed too big an ask for some of its E.U. peers. On Friday, they all decided not to jump.
The alternative, joint debt, secured unanimous approval. But in a show of division, three of the E.U.’s populist leaders — in Hungary, Slovakia and the Czech Republic — only agreed to the plan in return for promises their countries would be exempt from liability.
The agreement said it would “not have an impact on the financial obligations” on those three countries, which had opposed using E.U. money for Ukraine.
European leaders argued that although one plan stumbled, the consensus on another will get the funds to Kyiv and shows they can take decisions despite the differences.
The Danish premier echoed that sentiment, but Frederiksen also added a note of caution. “There are a lot of people outside the E.U. and unfortunately also inside who try to divide us,” she said. “It is getting more and more difficult, and I think this will continue.”
Kostiantyn Khudov in Kyiv and Natalia Abbakumova in Riga, Latvia, contributed to this report.
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