Europe divided as Ukraine warns of looming financial collapse
Ukrainian President Volodymyr Zelenskyy issued a stark warning in Brussels, cautioning that Ukraine faces a severe funding crisis unless the European Union secures new financial commitments by early 2026. Without urgent support, he said, Kyiv risks losing up to $50 billion in funding, forcing it to drastically reduce production of combat drones essential to its defense against Russian attacks.
During high-stakes discussions at the EU summit, member states diverged over how to sustain financial aid for Kyiv through 2026 and 2027. The International Monetary Fund estimates Ukraine will require nearly €135 billion during that period to cover its defense, energy, and reconstruction needs. European officials cautioned that Ukraine could run out of funds by spring if an agreement is not reached soon.
Belgium blocks frozen asset plan
Hopes of financing Ukraine through the use of roughly €210 billion in frozen Russian central bank assets were dashed after Belgium opposed the plan. Belgian Prime Minister Bart De Wever argued that authorizing a so-called “reparations loan” under EU law could expose Brussels to retaliatory lawsuits by Moscow. The dispute disrupted months of negotiations.
Polish Prime Minister Donald Tusk described a “strong political consensus” among leaders to eventually direct Russian assets toward Ukraine but admitted the legal framework remained unresolved. Late-night talks led the bloc to consider an alternative: raising €90 billion in joint EU debt through the bloc’s long-term budget, with the understanding that Ukraine would repay it once Russia provides war reparations a prospect still uncertain.
Three nations carve out exemptions
Hungary, Slovakia, and the Czech Republic secured exemptions from any future liability under the new loan structure. Hungarian Prime Minister Viktor Orban dismissed the financial plan, stating that Ukraine would be unable to repay the funds. Despite his objections, EU leaders insisted the coordinated loan remains the most viable means to guarantee Kyiv’s short-term stability.
Zelenskyy insisted that the model of tying Ukraine’s debt repayment to Russian reparations carries symbolic weight, showing Moscow that it must eventually compensate for its war. He pressed EU leaders to finalize the plan before the end of the year, warning that without sustained support, Russian President Vladimir Putin would see little incentive to pursue peace or negotiations.
European Council President Antonio Costa hailed the tentative deal as a show of unity and commitment. German Chancellor Friedrich Merz affirmed that the interest-free loan would meet Ukraine’s financial and defense needs through at least two years, ensuring continued resilience amid mounting economic strain.
