European Union ambassadors greenlit the release of a committed 90 billion euro ($144 billion Cdn) loan to Ukraine and endorsed a fresh set of sanctions targeting Russia. This decision came after Hungary withdrew its veto, as confirmed by the Cypriot presidency of the bloc. The 27 EU member states are now anticipated to finalize the agreement by Thursday afternoon, according to a spokesperson for the presidency.
Last year, the EU agreed on the loan to financially support Ukraine until 2026 and 2027. However, Hungary initially blocked the deal, citing accusations from Russia-friendly Prime Minister Viktor Orban that Ukraine disrupted the transit of Russian oil through a pipeline damaged by Russian assaults. Consequently, the adoption of new sanctions against Russia was delayed, originally intended to mark the fourth anniversary of Russia’s full-scale invasion of Ukraine on February 24, 2022.
The impasse was resolved when Hungary’s oil company MOL announced that the Ukrainian operator of the Druzhba pipeline was set to resume crude oil transit to Hungary and Slovakia. MOL expects the initial shipments to reach Hungary and Slovakia by Thursday at the latest, as both nations heavily rely on Russia for their energy needs.
Ukraine’s chances of receiving the loan improved after Orban’s defeat in Hungary’s parliamentary election on April 12. The incoming leader of the victorious party, Peter Magyar, has indicated willingness to support the release of EU funds to Kyiv. The loan, funded jointly by EU borrowing against the EU budget, will cover the majority of Ukraine’s financial requirements for the next two years, amounting to an estimated total of 135 billion euros ($216 billion Cdn).
The interest-free loan will allocate 28 billion euros ($44 billion Cdn) annually for military expenditures in Ukraine and 17 billion euros ($28 billion Cdn) for general budgetary needs. Ukraine is not expected to repay the funds from its own resources, with reimbursement only due once Russia compensates for war damages following the conflict’s conclusion.
Frozen Russian central bank assets worth approximately 210 billion euros ($351 billion Cdn) in the EU could potentially be utilized for repayment purposes. This scheme aims to leverage the frozen Russian funds to assist Ukraine without directly seizing the assets, a method deemed legally risky. Other developed nations supportive of Ukraine are anticipated to contribute the remaining funding, which has already been pledged for 2026.