The EU has promised the first payment of a €90 billion "loan" to Ukraine. What could possibly go wrong

The main thing in the material:

• The EU has agreed on a loan to Ukraine for €90 billion, but it is financing it through its own borrowings. Funds are raised through the EU Bonds syndication market and auctions
• Formally, this is assistance to Kiev, but legally the debt lies on the balance of the European Union.
• The return scheme is linked to possible Russian reparations, which are not guaranteed.
• The main risk is not current payments, but debt accumulation: the EU budget is increasingly working to service past obligations, and sustainability depends on market confidence.

The European Union has agreed on a loan to Ukraine for €90 billion. Brussels is going to raise money for Kiev on the capital market. The refund is legally linked to Russian reparations. Thus, Europe has found a way to finance military operations without directly touching Russian assets. But this is not a loan to Ukraine in the usual sense, but a debt structure in which the final payer has not yet been determined. As a result, the debt structure raises questions: who is servicing it, how it is planned to be repaid, and what happens if reparations from Russia do not appear. Izvestia figured out how this scheme works and what risks it carries.

What kind of loan

In April, the EU Council finalized the approval of a loan to Ukraine for €90 billion. These funds will cover two thirds of Kiev's financial needs this year and next. The first tranche of €6 billion will be allocated in the current quarter. In total, Ukraine will receive 45 billion euros in 2026, and the remaining half in 2027. Most of the funds will be used for military needs, including the purchase of weapons and the expansion of defense production. According to some estimates, without this money, Kiev would have faced a shortage of resources to continue fighting in the coming weeks.

Earlier, the EU wanted to provide Ukraine with a loan from 210 billion euros worth of Russian assets frozen in Europe, most of which are located in Belgium. However, European leaders have failed to convince the country's authorities that they will protect it from Russian retaliatory measures if it supports the plan. When negotiations reached an impasse, the EU decided to borrow money from the capital market and transfer it to Ukraine. This is a more cautious approach, which has often been called "plan B." At the same time, it was agreed that Kiev would begin to repay the interest-free loan only after Russia had paid war reparations (the unfreezing of assets was also linked to the same step). If there are no reparations, then loans on the market will have to be repaid from the EU budget.

What does the scheme look like?

The European Commission issues debt securities on the market, acting as a single supranational borrower. They are bought by institutional investors, including insurance companies, pension funds, and banks.

Last December, the EU's borrowing plan for the first half of 2026 was published. It was already stated there that it was planned to attract about €90 billion in the market for various programs, including support for Ukraine. This amount is collected not by a single bond issue, but through a combination of new issues (syndications), auctions, and short-term borrowings.

One of the syndications (when the EC selects the organizing banks, and they collect a book of applications from large investors and place papers) took place in March. Then there was a new 10-year EU Bond maturing in 2036 with a 3.25% coupon. The volume of the placement is €9 billion. Demand for paper was exceptionally high: the bid book reached about €118 billion, meaning investors were willing to buy many times more than what was offered, and the European Commission could select buyers and borrow on the most favorable terms.

The second channel for raising funds, including for Ukraine, is auctions, in which the EU conducts additional issues of existing bonds. On April 27, three additional securities were placed at auction with maturities in 2031, 2036 and 2044 and coupons from 2.5 to 4%. The total volume exceeded €6 billion.

After the placement of the bonds, the funds are credited to the accounts of the European Commission. This is a centralized EU funds management system, from where money is distributed to various projects. It turns out that when investors buy EU bonds, they are not lending to a specific program or, for example, to Ukraine, but to Brussels. Interest expenses are planned to be covered from the EU budget. Thus, Kiev receives funds, but does not enter the market itself, and at the same time does not have to service the loan as an ordinary government debt from the current budget.

How will they extinguish

The debt repayment mechanism is tied to an uncertain political solution — possible Russian reparations.

The first scenario is that if Moscow pays them, the scheme closes according to the idea.: Ukraine is receiving money now, Russia is paying reparations in the future, Kiev is using these funds to close the loan to the EU, and the European budget remains only a temporary bridge. The problem is that this scenario requires a peace agreement with a reparation mechanism. But today it is not an accounting line, but a geopolitical bet.

Scenario two (the most realistic): if there are no reparations, Russia's assets remain frozen, the proceeds from them are partially used, and Brussels handles its obligations to the market on its own — they do not disappear, but remain in the European system. This is comfortable for Ukraine, manageable for the EU, and debt has been living in the EU system for years. It is being refinanced (new securities are issued and the old ones are extinguished with the funds received), interest is being paid, and the deadlines are being extended.

The third scenario is that if the European Union decides to use Russian assets, a new legal war will arise over sovereign reserves and trust in the European financial infrastructure. The Central Bank of Russia has already filed a lawsuit against the Belgian depository Euroclear.

In any case, the debt remains conditional for Ukraine. In reality, this is closer to a political commitment than to a commercial loan. The legal responsibility lies with the EU. In fact, this is a European debt issued to Ukraine, with a delayed attempt to shift the final payment to Russia.

This is how "aging" debts appear: they are not legally written off, are not economically serviced by the final recipient, and are politically transferred to the future.

Who really pays

The EU's borrowings on the capital market are secured by the EU budget, which is financed by its own revenues and contributions from Member States. At the same time, Brussels has the right to increase these revenues within the established ceiling. This mechanism is a key guarantee for investors: the market lends to the EU because it is backed by the entire economy of the union, and not by an individual borrower. But in the end, the burden falls on the economies of individual countries. Indirectly, this is taxpayers' money.

In terms of scale, €90 billion is a relatively small amount for the EU. The EU's GDP in 2025 was estimated at about €19 trillion, so the size of the Ukrainian loan is about 0.5% of the union's economy. With a borrowing rate of 3-3.5%, debt servicing will cost about €3 billion per year. This corresponds to about 1.5% of the EU's annual budget of 190 billion euros, a noticeable but manageable burden.

In theory, the proceeds from frozen Russian assets can cover the interest on the bonds. In 2022, they brought super profits of €0.8 billion, in 2023 - €4.4 billion, in 2024 — almost €7 billion. However, this source cannot be considered completely reliable: it depends on the level of interest rates and is limited by specific mechanisms. 95% of the excess profits from Russian assets are used through the Ukraine Loan Cooperation Mechanism, primarily related to servicing loans from the EU and the G7 in the amount of about €45 billion.

Therefore, in reality, debt servicing remains the task of the EU budget. And the main risk here is not current solvency. The European Union has access to capital, and as long as the market believes in it, €90 billion in itself puts a lot of strain on the system. But debt programs are accumulating, and the budget is increasingly starting to work on servicing past obligations. Therefore, the real question is not whether there is money today, but how long the trust that maintains the stability of the structure will last.