As Ukraine continues its defense against Russia, teh European Union is weighing unprecedented financial mechanisms to ensure Kyiv’s economic stability [[1]]. Facing dwindling aid from the United States, Brussels is considering the issuance of perpetual debt – perhaps through common eurobonds – to fund a planned €90 billion loan package for Ukraine starting in 2026 [[2]]. The proposal, which hinges on the possibility of future reparations from Russia, underscores the long-term financial commitment – and inherent uncertainties – of supporting Ukraine’s war effort [[3]].
EU Considers Perpetual Debt to Fund Aid to Ukraine
The European Union may need to establish a long-term debt structure, utilizing common bonds known as eurobonds, to finance ongoing aid to Ukraine. This move reflects the complex financial challenges of supporting Kyiv as it defends against Russian aggression.
A planned €90 billion loan package for Ukraine, slated for disbursement in 2026 and 2027, will only be repaid “when” – and crucially, “if” – Russia provides reparations for the damage caused by its invasion, a senior EU official stated. The development underscores the uncertainty surrounding the long-term financial outlook for Ukraine and its reliance on external support.
“There is no fixed maturity date for the loan to Ukraine, which will be subject to rollover,” explained European Commissioner for Economy Valdis Dombrovskis. However, the EU “reserves the right to use cash flows from frozen Russian assets to repay this loan.”
While this option faced resistance during the European Council meeting in December – particularly from Belgium, led by Bart De Wever, and with support from Italy’s Giorgia Meloni and France’s Emmanuel Macron – it remains under consideration for the future. Concerns over potential risks for Belgium were key to the initial blockage.
European Commission President Ursula von der Leyen emphasized the exceptional nature of issuing common debt to fund aid to Kyiv. She noted that the decision was made through an enhanced cooperation framework involving 24 member states, rather than requiring unanimous approval from all 27. “In extraordinary situations, we have already incurred EU debt for specific objectives,” she said, referencing the Next Generation EU recovery fund. “And we have done so here as well.”
The strategy echoes arguments made during the rollout of Next Generation EU, where then-German Chancellor Angela Merkel stressed the program was a “one-time” measure justified by the COVID-19 pandemic, in an effort to gain public acceptance for the initiative.
