European Commission presents solutions to support Ukraine's financial needs: EU borrowing, 'reparation loan'

The European Commission (EC) has presented two proposals for future financial support for Ukraine for the period 2026-2027: a European Union loan and a reparation loan.

"To bolster Ukraine's financial resilience amidst the ongoing Russian war of aggression, the European Commission today proposes two solutions to address Ukraine's financing needs for 2026-2027: EU borrowing and a Reparations Loan. These two solutions are underpinned by a comprehensive set of five legal proposals. With Russia continuing to show no sign of willingness to commit to a just and sustainable peace, the strain on Ukraine's resources continues to grow, making sustained EU support all the more vital," the European Commission said in a press release published on Wednesday.

The document notes that as Russia "continues to show no signs of readiness to commit to a just and sustainable peace, the pressure on Ukraine's resources continues to grow, making continued EU support even more important."

The EC noted that with these legal proposals, the Commission proposes two possible solutions: EU borrowing, which would rely on the EU budget (the "reserve"), and a reparation loan, which would give the Commission the right to borrow cash balances from EU financial institutions holding immobilized assets of the Russian central bank. "The proposed solutions mark a pivotal step in responding to the European Council's commitment to address Ukraine's future budgetary and defence needs on 23 October 2025. The proposals build on the options presented by President von der Leyen on 17 November 2025 following the call by the European Council for the Commission to present options for financial support to Ukraine and further discussions with Member States," the European Commission explained.

The press release details that the package consists of: a proposed Regulation establishing the Reparation Loan; a proposal to prohibit any transfer of frozen assets of the Central Bank of the Russian Federation back to the Russian Federation; two proposals introducing important safeguards for the Reparation Loan, designed to protect EU Member States and financial institutions from possible retaliation.

"Two proposals that put in place important safeguards for the Reparations Loan, designed to protect EU Member States and financial institutions from possible retaliation measures. The two joint proposals to amend Council Regulation 833/2014 will be made public once the Council takes position on them, according to the applicable procedures," the EC explained.

Commenting on the proposals presented, European Commission President Ursula von der Leyen said: "With today's proposals, we will ensure Ukraine has the means to defend themselves and take forward peace negotiations from a position of strength. We are putting forward solutions to help cover Ukraine's financial needs for the next two years, support the State budget and strengthen its defence industry as well as its integration into the European defence industrial base. We are proposing to create a Reparations Loan, using the cash balances from immobilised Russian assets in the EU, with strong safeguards for our Member States. We are increasing the cost of Russia's war of aggression. And this should act as a further incentive for Russia to engage at the negotiating table."

The next European Council, to be held in Brussels on 18-19 December, is expected to reach clear commitments on further action.