Ukraine welcomes 90 bil. euro EU loan, despite lack of deal on Russian assets
European Commission President Ursula von der Leyen attends a press conference after the European Council meeting in Brussels, Belgium, Friday. European Union leaders struck a deal to provide Ukraine a 90-billion-euro loan to plug its looming budget shortfalls, but failed to agree on using frozen Russian assets to come up with the funds. AFP-Yonhap
BRUSSELS (Reuters) — Ukraine thanked the European Union on Friday for deciding to provide it with 90 billion euros ($105.46 billion) of support over the next two years — even if the bloc failed to agree on an ambitious plan to finance it using frozen Russian assets.
Russian President Vladimir Putin said the EU had backed away from the plan to use its frozen assets because it would have faced serious repercussions. The stakes for finding money for Kyiv were high because without the EU's financial help, Ukraine would run out of money in the second quarter of next year and most likely lose the war to Russia, which the EU fears would bring the threat of Russian aggression against the bloc closer.
"This is significant support that truly strengthens our resilience," Ukraine's President Volodymyr Zelenskiy wrote on the Telegram app after the agreement was reached at a summit of EU leaders. The decision followed hours of discussions on the proposal for an unprecedented loan based on Russia's assets, which turned out to be too politically demanding to resolve at this stage. Instead, the EU will borrow cash.
Putin said the initial plan to use Russia's frozen assets to back the loan would have amounted to "daylight robbery."
"Why can't this robbery be carried out? Because the consequences could be grave for the robbers," he said during his annual end-of-year press conference.
"This isn't just a blow to their image; it's an undermining of trust in the euro zone, and the fact that many countries, not just Russia, but primarily oil-producing countries, store their gold and foreign exchange reserves in the euro zone."
The main difficulty for the reparation-loan plan was providing Belgium, where 185 billion euros of the total Russian assets in Europe are held, with sufficient guarantees against financial and legal risks from potential Russian retaliation for the release of the money to Ukraine.
German Chancellor Friedrich Merz, who had pushed hard for a reparations loan backed by the frozen Russian assets, argued this was still a good deal.
"This is good news for Ukraine and bad news for Russia and this was our intention," he said.
Ukraine said this was still hugely welcome. "Indeed, there are moments when one should keep in mind that 'perfect is the enemy of good'. It was a long night for European leaders but they were able to come up with a workable result," said Ukrainian Deputy Foreign Minister Sergiy Kyslytsya.
Carsten Brzeski, global head of macro research at ING in Frankfurt, also welcomed the deal. "If Europe hadn’t found a solution, I must say, it would have been a symbolic disaster," he said, adding: “I think there should be enough investor appetite for the new loan."
Meanwhile, on the summit's other major topic, Merz and European Commission President Ursula von der Leyen expressed confidence that the EU would be able to sign a contentious free trade agreement with South American bloc Mercosur in January, despite insufficient backing at the summit.