In a dramatic week for Ukraine and its allies, European leaders agreed to a €90 billion ($105 billion) loan package to support Kyiv over the next two years, even as fierce debate and frustration simmered over the failure to tap into Russia’s vast frozen assets. The decision, announced on December 19, 2025, came amid continued fighting on the ground, high-stakes diplomatic maneuvering, and a fresh round of Russian threats and Ukrainian counterattacks.
The new loan, described by many as a lifeline for Ukraine’s embattled government, will be funded by bonds issued by the European Union and ultimately backed by European taxpayers. According to CEPA and The Independent, this funding will fill a significant portion of Ukraine’s projected €140 billion financing gap for the next two years. But the package falls short of what some in Kyiv and among its supporters had hoped: a bold move to make Russia pay for the war it started by using the roughly $250 billion in frozen Russian Central Bank assets held in the EU and UK.
“This is significant support that truly strengthens our resilience,” Ukrainian President Volodymyr Zelensky wrote on Telegram, expressing gratitude for the EU’s action. Yet, as The Independent and Politico reported, the deal means EU taxpayers will shoulder €3 billion per year in interest payments for the loan, a cost that has sparked criticism and concern across the continent.
The debate over whether to use Russian assets for Ukraine’s benefit was intense and, at times, acrimonious. Belgium, which hosts most of Russia’s frozen assets through the financial clearinghouse Euroclear, played a pivotal role in blocking the plan. Belgian officials cited legal, economic, and retaliatory risks, including warnings from Russian officials that using the assets would have consequences “for eternity.” According to CEPA, Belgium’s Prime Minister recounted direct threats from Moscow, and the country’s bankers faced a concerted Russian intelligence campaign designed to stoke fear and uncertainty.
Despite these warnings, many experts and some European officials argued that the legal risks were exaggerated. Russia has not pursued legal action in Western courts over the immobilization of its central bank assets, likely fearing the loss of sovereign immunity and potential counter-suits from Ukraine that could reach into the trillions. Instead, Russia’s Central Bank has filed suits in Russian courts—cases with no jurisdiction or enforcement power in Europe.
Timothy Ash, a senior strategist at RBC BlueBay Asset Management and associate fellow at Chatham House, was unsparing in his criticism. Writing for CEPA, Ash argued that the EU’s decision was “remarkable and disappointing for numerous reasons.” He contended that Western business interests—especially those with assets still stranded in Russia—had lobbied fiercely against using the frozen Russian funds, fearing Moscow would retaliate against their holdings. “If immobilized CBR assets are not being used to fund Ukraine so as to protect Western business interests still in Russia, then Western taxpayers will have to pick up the tab instead,” Ash wrote, calling it a “clear moral hazard play on several levels.”
Meanwhile, the war in Ukraine raged on. On December 20, Ukraine’s special operations forces claimed a nighttime drone attack had struck a Russian Okhotnik-class patrol ship and an offshore drilling platform in the Filanovsky oil and gas field, owned by Lukoil—a company under Western sanctions. The damage from the attack was still being assessed, but the strike marked another escalation in Kyiv’s campaign to disrupt Russia’s military and economic infrastructure. Drones also reportedly hit a radar system in annexed Crimea, and, just a day earlier, Ukraine claimed its first successful attack on a Russian “shadow fleet” oil tanker in the Mediterranean, more than 2,000 kilometers from home. These unregulated tankers have been crucial in helping Moscow bypass Western sanctions and fund its war effort.
The military developments unfolded as diplomatic efforts intensified. Ukraine’s delegation, along with European diplomats, traveled to the United States for talks with the Trump administration on possible peace proposals. Russian President Vladimir Putin’s special envoy, Kirill Dmitriev, was also en route to Miami for discussions, though sources told Reuters that no three-way talks with Ukraine were planned. US Secretary of State Marco Rubio emphasized the complexity of the negotiations, saying, “We’re trying to figure out what can Russia give and what do they expect to get and what can Ukraine get,” and stressed that any settlement would require sacrifices from both sides.
Amid these diplomatic maneuvers, US intelligence assessments reported by Reuters and The Independent warned that Putin’s ambitions have not changed since the 2022 invasion. The Russian president, they said, still seeks control over all of Ukraine and harbors intentions toward other former Soviet bloc states, including NATO members. “The intelligence has always been that Putin wants more. The Europeans are convinced of it. The Poles are absolutely convinced of it. The Baltics think they’re first,” said Mike Quigley, a Democratic member of the House Intelligence Committee.
On the domestic front, Putin held his annual end-of-year press conference, a marathon session lasting over four hours. Russian citizens peppered him with questions about inflation, economic stagnation, and the country’s digital isolation. “When will you return the ‘normal internet?’ It’s impossible to even send a question to the president!” one participant asked. Others demanded action on rising prices and wondered whether Putin would seek another term in 2030. The Russian leader used the occasion to reiterate his demands in the war and to threaten “grave consequences” if the West attempted to seize Moscow’s frozen assets.
Back in Kyiv, the mood was a mix of gratitude and apprehension. Ukrainian Finance Minister Serhiy Marchenko told G7 colleagues that the EU’s loan was insufficient to fully cover Ukraine’s needs, urging partners not to abandon the idea of a reparations loan based on Russian assets. “The reparations loan is a systemic, long-term solution. It will ensure sustainable defense capabilities and protect Europe from future conflicts,” Marchenko argued, warning that the risks to Europe from a Ukrainian defeat far exceeded the risks of introducing a reparations mechanism.
For now, Europe’s €90 billion loan will keep Ukraine afloat and send a signal to Moscow that the West’s support, while not as robust as some hoped, remains substantial. Yet the decision has left many with a bitter taste—especially those who believe that making Russia pay, rather than European taxpayers, is the only just and strategically sound path forward. As the war grinds on and diplomatic efforts continue, the question of who should bear the cost of Ukraine’s defense remains as contentious as ever.
With the battlefield still fluid, peace elusive, and the financial burden shifting to ordinary Europeans, the coming months will test both the resolve and unity of Ukraine’s allies—and the willingness of Western leaders to match their rhetoric with action.
