Action plan for 90 billion euros: how the EU is preparing assistance to Ukraine and what it will demand from Kiev

As in the current mechanisms of macro-financial support, this money will be provided in exchange for the implementation of reforms: Kiev will be required to continue the reform of public administration, the rule of law, the energy market, and also – to successfully fight corruption.

Official Brussels plans to complete all the necessary preparatory work within a month and a half. However, it is advisable to hurry - in order for Ukraine to receive the first tranche of credit funds in April, all the necessary technical and legislative work must be completed by the beginning of March.

This is important, because precisely at the beginning of the second quarter, according to economists, Ukraine is facing a lack of funding for both key budget sectors and the Armed Forces of Ukraine.

Whether such plans are feasible, we will discuss in this text.

Two-thirds – for the Armed Forces of Ukraine, one-third – for the budget

“During the Christmas holidays, Russia intensified its strikes, killing civilians and attacking energy infrastructure. This must stop. We all want peace for Ukraine. And for that, Ukraine must be in a strong position. That is why we agreed in the autumn to cover Ukraine’s military and budgetary financial needs for 2026 and 2027. The European Commission has adopted legislative proposals implementing this agreement,” said European Commission President Ursula von der Leyen in Brussels on January 14.

This is a €90 billion loan for 2026 and 2027, which the European Union will provide to Ukraine.

Of these funds, according to von der Leyen, about two-thirds – or about €60 billion – will be allocated for military assistance to Ukraine, and the rest – about €30 billion – as general budgetary support.

The “military” funds will be used in accordance with the SAFE loan mechanism for joint European defence procurement. The money from the EU loan will be used to purchase equipment: mainly in the EU, but also in Ukraine and the EU’s partner countries in the European Economic Area and the European Free Trade Association (for example, Norway or Switzerland).

But if the necessary weapons or ammunition are not available either in the EU or in the listed partner countries, they can still be purchased in other countries. For example, in the UK or the USA.

Ukraine will be disbursed €30 billion in budget support under the same conditions, and in fact with the same methods and means, as the macro-financial support from the Ukraine Instrument. The main idea of providing budget financing to Ukraine by the EU can be briefly formulated: money in exchange for reforms.

The specific conditions for obtaining these funds have yet to be determined. At present, the European Commission notes that in order to receive the funds, Ukraine will have to carry out reforms to improve democratic processes, the rule of law and the fight against corruption.

 

 

Initially, it was planned that financial and military assistance to Ukraine in 2026-27 would be provided using frozen Russian assets, which are mainly stored in the EU on the territory of Belgium.

But after the strong resistance of the Belgian side, which demanded that the EU provide it with a number of guarantees that proved impossible for most partners, an alternative way was found - providing Ukraine with funds that the European Union itself would borrow on international financial markets.

 

A night more expensive than 90 billion. How the EU avoided a catastrophe and saved the stability of Ukraine

 

However, official Kiev will be obliged to return this money only after and if Russia pays it reparations for the damage and destruction caused by the war.

Legislative proposals for the implementation of this plan were presented by the European Commission on January 14.

A few details. The European Union will provide Ukraine with a loan of 90 billion euros for 2026 and 2027 within the framework of the EU's enhanced cooperation mechanism with the participation of 24 of the 27 member states.

Three countries, Hungary, Slovakia and the Czech Republic, will not participate in the loan to Ukraine - this was a condition for not vetoing this initiative at the European Council in December.

The use of this mechanism will allow the EU to make changes to the long-term budget, increasing it through external borrowing for financial support to a third country (i.e. Ukraine).

However, such a mechanism required the EU to adopt legislative changes.

What exactly, it became known on January 14, when the European Commission published drafts of three documents.

Among them are proposals for providing loans to support Ukraine (based on Article 212 of the Treaty on the Functioning of the European Union, TFEU) in the amount of 90 billion euros. Then, proposals for amendments to the Regulation on the Instrument for Ukraine (based on Article 212 of the TFEU), as one of the instruments for implementing budgetary support to Ukraine. And finally, proposals for amendments to the Multiannual Financial Framework Regulation (based on Article 312 TFEU) to allow the loan to be covered by the EU budget's "headroom".

The adoption of these documents will ensure that Ukraine's financing for the next two years is secured through joint EU borrowing on the capital markets.

The loan to Ukraine will be guaranteed by a "manoeuvre" of the EU budget, as is the case with other financial assistance programmes for Ukraine implemented since 2023, such as the Facility for Ukraine and the macro-financial assistance loan under the G7-led Emergency Revenue Acceleration (ERA) initiative.

It is worth adding that the interest on the loan to Ukraine will be covered by contributions to the EU budget of the Member States participating in the loan (27 minus Hungary, Slovakia and the Czech Republic).

 

 

Despite the fact that the EU has chosen the path of supporting Kiev by attracting credit funds, it still does not exclude the possibility that at some point frozen Russian assets will still be involved.

“There is another element that I would like to emphasize, which was agreed in parallel with today's package at the December European Council meeting. That is, our proposal for a reparations loan remains on the agenda...

 

It is also extremely important to send a sharp reminder to Russia: we reserve the right to use frozen Russian assets,” Ursula von der Leyen said on January 14.

The European Commission President recalled that Russian assets in the EU “will remain frozen until the end of the war and until reparations are paid.”

“This can also be seen in the fact that Ukraine is not obliged to repay the loan until reparations are paid. So, to sum up: today we are demonstrating our long-term and unwavering support for Ukraine,” Von der Leyen added.

"The condition for Ukraine to repay the loan is that Russia pays reparations for the destruction it is causing in Ukraine. Therefore, it is important that part of this proposal is that the EU reserves the right to use funds from frozen Russian assets to repay this loan in support of Ukraine. This is an important element," said European Commissioner for Economic Affairs Valdis Dombrovskis, leaving no room for ambiguity.

 

 

The key question is whether the EU can get through all the bureaucratic procedures in just a month and a half?

"We are counting on a swift approval of these proposals by the European Parliament and the Council. In this way, we can ensure that Ukraine receives its first tranche very quickly, already in April," said Ursula von der Leyen.

"Of course, we are aware of the significant and urgent financial needs of Ukraine. That is why we are really keen to start these payments in April. On the one hand, we will work with EU legislators to ensure a swift legislative process, which we hope will be completed by early March, which will allow for the payments in April," Valdis Dombrovskis explained in more detail.

At the same time, the European Commission will work with the Ukrainian authorities to prepare Ukraine's financial strategy for 2026, so that all the necessary documents for obtaining the loan are prepared and steps can be taken in a timely manner.

In parallel, another process is underway: Brussels is working with other international partners providing financial support to Ukraine to encourage them to make appropriate financial contributions at the beginning of the first quarter of 2026, in order to cover the financial gap that Ukraine is facing already in the first quarter.

So, the legislative process in the EU should be completed by the beginning of March. What is the current situation?

On December 23, the European Commission adopted a draft EU Council decision "On the approval of enhanced cooperation on the establishment of a loan facility for Ukraine", which was already preliminarily approved by the Committee of Permanent Representatives (Coreper) at the level of EU ambassadors in early January and sent for further approval to the European Parliament.

MEPs are expected to approve the decision at the plenary session in Strasbourg from January 19 to 22, after which it will be finally adopted by the EU Council (there will be no problems, as only a qualified majority is required).

The decision to approve enhanced cooperation with Ukraine should be the first step and the basis that allows Ukraine to move forward and move to, in fact, budgetary and financial operations.

On 14 January, the European Commission also submitted new legislative proposals to the Council of the EU for consideration and further adoption - and to be sent to the European Parliament for approval.

 

As European Truth learns, the first discussion of the proposals at the level of EU ambassadors in Brussels has raised a number of questions, which, however, is not yet a problem – there is still time, and a lot of it.

 

 

But the European Commission reminds us that obtaining funds by Ukraine does not depend only on the speed of the legislative process or the further implementation of approved decisions.

“As with other mechanisms of EU financial support for Ukraine, this package will be supported by strong conditionality mechanisms. This includes measures to strengthen the rule of law and fight corruption, as foreseen in the Roadmap for Ukraine,” the European Commission said.

What exactly is expected of Ukraine, explained EU Enlargement Commissioner Marta Kos.

“Our proposal includes the Instrument for Ukraine as the basis for the loan, closely linking it to a rigorous reform agenda to advance accession negotiations. This reflects our continued determination to support the implementation of an accelerated reform agenda in Ukraine, which is crucial for shaping a credible path towards EU membership,” Kos said.

Commissioner Kos also added:

“Brussels knows very well that implementing reforms is not easy.”

This was apparently in response to the words of Ukrainian President Volodymyr Zelensky, when he asked Western partners not to make “excessive demands” on Ukraine regarding reforms in exchange for financial support.

“They (reforms) are difficult for any government, and even more so when the country is at war. But the Ukraine Support Mechanism has experience in effectively achieving these reforms for the sake of Ukraine’s future in the most difficult circumstances. And it works,” Kos stressed.

The Commissioner said that 63 of the 68 steps planned for the latest disbursement requests have been completed under the Ukraine programme.

However, the EU wants the reform process not only not to stop, but to be strengthened and accelerated.

That is why the draft amendments to the existing financial instrument for Ukraine, which the correspondent of “European Truth” had the opportunity to review, included a provision stating that the current reform plan agreed with Ukraine should be updated, “including measures to strengthen the rule of law and fight corruption.”

So, the most interesting is yet to come.