EU leaders agree to provide €90bn to fund Ukraine, set aside plan to use frozen Russian assets

European Union leaders decided on Friday to borrow cash to fund Ukraine's defence against Russia for the next two years rather than use frozen Russian assets, sidestepping divisions over an unprecedented plan to finance Kyiv with Russian sovereign funds.

"Today we approved a decision to provide €90 billion to Ukraine," European Council President Antonio Costa told a news conference early on Friday morning after hours of talks among leaders in Brussels. "As a matter of urgency, we will provide a loan backed by the European Union budget."

The leaders also gave the European Commission a mandate to keep working on a so-called reparations loan based on Russian immobilised assets, but that option proved unworkable for now, mainly due to resistance from Belgium, where the bulk of the assets are held.

The idea of EU borrowing initially seemed unworkable as it requires unanimity, and Hungarian Prime Minister Viktor Orban, who is seen as Russia-friendly, had opposed it. But Hungary, Slovakia and the Czech Republic agreed to let the scheme go ahead as long as it did not impact them financially.

EU leaders said Russian assets totalling €210 billion in the bloc would remain frozen until Moscow pays war reparations to Ukraine. If Moscow ever takes such a step, Ukraine could then use the money to repay the loan.

"This is good news for Ukraine and bad news for Russia, and this was our intention," German Chancellor Friedrich Merz said.

The stakes for finding money for Kyiv were high because without EU financial help, Ukraine would run out of funds in the second quarter of next year and could lose the war to Russia, which the EU fears would bring the threat of Russian aggression closer to the bloc.

The decision followed hours of discussions among leaders on the technical details of a potential loan based on frozen Russian assets, which proved too complex or politically demanding to resolve at this stage.

The main difficulty was providing Belgium, where €185 billion of the total Russian assets in Europe are held, with sufficient guarantees against financial and legal risks stemming from possible Russian retaliation for the release of funds to Ukraine.

"There were so many questions on the reparations loan that we had to go to Plan B. Rationality has prevailed," Belgian Prime Minister Bart De Wever told a news conference. "The EU has avoided chaos and division and remained united."

With public finances across the EU already strained by high debt levels, the European Commission had proposed using the Russian assets for a loan to Kyiv or joint borrowing against the EU budget.

Using the latter option allowed Orban to claim a diplomatic victory.

"Orban got what he wanted: no reparations loan, and EU action without the participation of Hungary, the Czech Republic and Slovakia," one EU diplomat said.

Several EU leaders arriving at the summit said it was imperative to find a solution to keep Ukraine financed and fighting for the next two years. They were also keen to show European resolve after US President Donald Trump last week called Europe "weak".

"We just cannot afford to fail," EU foreign policy chief Kaja Kallas said.

Ukrainian President Volodymyr Zelenskiy, who took part in the summit, urged the bloc to agree to use Russian assets to provide the funds he said would allow Ukraine to keep fighting.

"The decision now on the table – the decision to fully use Russian assets to defend against Russian aggression – is one of the clearest and most morally justified decisions that could ever be made," he said.