Mistake By President Zelensky Not To Offer To Repay EU Members For US$106 Billion Loan- Particularly Given Government Of Ukraine Wants To Join EU. Offer Itself Would Be Politically Beneficial
Mistake By President Zelensky Not To Offer To Repay EU Members For US$106 Billion Loan- Particularly Given Government Of Ukraine Wants To Join EU
“Ukraine will only have to repay the €90B loan to the EU if Russia pays reparations. We received €90B for 2026-2027. We expect to use all €210B of Russia’s assets. And Ukraine will return this interest-free loan of €90B only if Russia pays reparations to Ukraine.” Volodymyr Zelensky, President of Ukraine (2019-2024; term extended due to imposition of martial law in 2022)
EU: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Once again, President Zelensky missed an opportunity to deliver a message which would have positively resonated with the twenty-seven members of the Brussels, Belgium-based European Union (EU), a group the government of Ukraine wants to join. Particularly, a statement of intention for the government to Ukraine to try and repay the funds, no matter how many years it might require, would have optically and politically mitigated the decision by Czech Republic, Hungary, and Slovakia to opt-out of providing funding to the government of Ukraine.
Sometimes, the offer is more important than the reality. Taxpayers in EU-member countries would have appreciated an offer of repayment- while they know fully the likelihood is at best uncertain.
A reason for making the offer of repayment is the possibility for the approximately US$246 billion in assets of the Central Bank of the Russian Federation frozen since 24 February 2022 within EU-based institutions and approximately US$32 billion in assets of the Central Bank of the Russian Federation frozen by the government of the United Kingdom (England, Scotland, Wales, Northern Ireland), may not become available to the government of Ukraine.
The terms of US$106 billion loan from the EU provides for the EU to be repaid. There are efforts by the EU to seek repayment of the US$30 billion in a loan provided to the government of Ukraine in 2024. If the EU as a whole or some of its members have unplanned economic issues, there could be an effort to both demand repayment and to use frozen assets of the Central Bank of the Russian Federation to repay themselves- regardless of previously agreed to obligations, legally-binding or politically-binding. And there is the unknown about the outcome(s) of legal challenges to the seizure of the assets of the Central Bank of the Russian Federation which will certainly be filed worldwide on behalf of the government of the Russian Federation, Russian Federation-based companies, and individuals subject to the jurisdiction of the Russian Federation.
All of this means the government of Ukraine might not have access- at all or for years, to what was initially supposed to be a resource solely for the purpose of reconstruction in Ukraine, estimated to cost up to US$500 billion. If the funds are not there for citizens of Ukraine when they are expecting them, what will the government of Ukraine do and who will citizens of Ukraine blame?
President Zelensky should make clear to EU leadership and EU members that the goal of the current government of Ukraine and he expects for the next government of Ukraine, given he has indicated he will not seek another five-year term, will be to work earnestly to repay the generosity shown by taxpayers in the EU particularly since 24 February 2022.
Ukraine Business News (22 December 2025): “He [President Zelensky] emphasized that this is an important financial, geopolitical, and political victory. According to the Ministry of Finance, the funds received from the EU will be used to finance the state budget and defense needs. German Chancellor Friedrich Merz stated that the funds will be available to Ukraine at the beginning of next year. Europe will use frozen Russian assets to repay the loan if Russia does not voluntarily agree to do so after the war ends. The mechanism approved on December 19 envisions that all EU countries except the Czech Republic, Hungary, and Slovakia will join forces to raise €90B in total debt backed by the EU budget. This money will be lent to Ukraine over the next two years, with the EU paying about €3B in interest annually. Payments will start in 2027, initially about €1B, and will triple starting in 2028. Since paying reparations to Ukraine seems unlikely, the EU will either need to continually roll the debt over or use frozen Russian assets to repay it. However, Ukraine requires an additional €135B to meet its needs over the next two years, meaning that the recently approved funding alone is insufficient. According to the IMF, Ukraine faces a €72B funding shortfall next year.”
The Washington, DC-based International Monetary Fund (IMF) estimates the government of Ukraine will have a total funding deficit of US$160 billion for 2026 and 2027. The EU estimates the loan to the government of Ukraine will provide US$106 billion of the US$160 billion shortfall. In 2024, the Gross Domestic Product (GDP) of EU was approximately US$19 trillion.
