"Burden on European Taxpayers: EU's €90 Billion Loan to Ukraine, Use of Frozen Russian Assets Shelved"

"Burden on European Taxpayers: EU's €90 Billion Loan to Ukraine, Use of Frozen Russian Assets Shelved"

Brussels: The European Union has decided to provide Ukraine with an interest-free loan of €90 billion (approximately $105 billion) over the next two years, but the plan to link this loan to Russia's frozen assets has failed. Instead, the funds will be raised through joint borrowing guaranteed by the EU budget, meaning European taxpayers will bear an additional annual interest burden of around €3 billion.

 European leaders reached this agreement after lengthy negotiations, where countries like Belgium opposed using Russia's €210 billion in frozen assets (primarily held at Euroclear in Belgium). Belgium argued that this could pose legal risks and invite retaliatory actions from Russia. As a result, the Russian assets will remain frozen indefinitely, but not directly utilized for Ukraine's aid.

 This loan will cover a significant portion of Ukraine's financial needs for 2026-2027, as Kyiv requires substantial funding for budget deficits and war-related expenses. Ukraine will only repay the loan if Russia pays war reparations—a scenario that currently seems unlikely. This could force the EU to repeatedly roll over the debt or draw additional funds from taxpayers. 

Countries like Germany and Poland favored using Russian assets to avoid burdening taxpayers. The lack of consensus has raised questions about European unity. Russia welcomed the decision, calling it a "victory for the rule of law." On the other hand, Ukrainian President Volodymyr Zelenskyy described the loan as "strengthening" support, though he expressed disappointment over the non-use of Russian assets.

 This decision represents a compromise in Europe's Ukraine support policy, placing extra pressure on taxpayers while the war's end remains distant. 

Sajjadali Nayani ✍🏼