The fall of Viktor Orbán is beginning to be noticed in the community institutions. This Wednesday, the Twenty-Seven have unblocked, after numerous vetoes chained since last December, the ninety billion euro reparation loan for Ukraine, as well as the twentieth package of sanctions against Russia. European ambassadors breathe more calmly after managing to get rid of one of the most entrenched issues in recent months in Brussels.
The president of Ukraine, Volodymyr Zelenskyy, announced just a day ago that repair work on the Druzhba oil pipeline had been completed, a route for transporting Russian crude oil to Central Europe and the main source of supply for Hungary, which was the victim of an attack by the Kremlin a few months ago. “As agreed with the European Union, Ukraine has completed repair work on the section of the Druzhba oil pipeline that was damaged by a Russian attack,” the leader indicated on social media.
This was one of the conditions that the Hungarian prime minister, Viktor Orbán, demanded to give in on the final vote for the loan of reparations for Kyiv. A decision that, although it had been made by European leaders at the European Council meeting last December, still required a vote at the ambassadorial level.
Cyprus plays the game
In a last-minute move by the Cypriot presidency of the Council, in view of how events were unfolding regarding this issue in the last few hours, it was decided to include an item on the agenda for this Wednesday to facilitate its approval.
“The Cyprus Presidency has worked tirelessly to ensure that the EU continues to firmly support Ukraine and exert pressure on Russia,” state diplomatic sources present at the meeting. Now, both the ninety billion loan and the twentieth sanctions package will go through a written procedure for final adoption by the Council.
Where does the money come from?
The member states are going to make ninety billion euros available to Kyiv to strengthen its military capacity. More specifically, two-thirds of the funds will be allocated to the defense spending of the invaded country and the remainder will be directed to civil society.
“It is very important to send the signal of Europe’s commitment to Ukraine’s future security. The proposal divides the appropriations into two parts. The Defense appropriation will be allocated to European products. If necessary, because the required material cannot be found, products outside the economic space covered by the European Union may be acquired,” explained at the time the President of the European Commission, Ursula von der Leyen.
How does the Union intend to do it? Through the issuance of eurobonds, as it did during the COVID-19 pandemic. This was not the favorite option of President Ursula von der Leyen, who defended her proposal to use Russian assets frozen in European banks until practically the end.
Belgium, where the bulk of the Kremlin's money resides, maintained the standoff and managed to tip the scales towards the proposal put forward by the President of the European Council, António Costa, to issue joint debt. "Faced with attempts to see us as weak, we must be aware that the EU is a historical anomaly that has built the democratic values it defends," celebrated the Spanish president, Pedro Sánchez, when the measure was reached.
A decision at dawn
Near two in the morning of that summit, the Portuguese presented the proposal, which would end up being approved an hour later, to use the common credit to cover the most immediate needs of the Ukrainian people. The conclusions approved unanimously entrusted the Commission to continue working on the repair fund initially proposed and which has been announced today. In any case, this would be used in the long term.
In this way, Article 20 of enhanced cooperation of the treaties would be used to guarantee that the mobilization of European resources that certify European debt "does not impact the financial obligations of the Czech Republic, Hungary, and Slovakia." The Executive calculates that in the next two years Kyiv will need a loan of 90,000 million that it is now going to mobilize.
Once the conflict ends, Ukraine would return what was lent through Russia's contributions to reconstruction. In the event that the Kremlin does not comply with international law, the continent reserves the right to take other actions.
Reinforced cooperation as a solution
This legal mechanism allows a group of Member States to advance European integration in areas of non-exclusive EU competence when it is not possible to achieve it with all members within a reasonable timeframe. In any case, the ratified document departs from what the Commission initially proposed. The German [woman] sold the indefinite blocking of assets as a success, despite the fact that they will not be used at this time.
It was estimated that Volodímir Zelenski's needed close to ninety billion euros. When? For 2026 and 2027, hence the need to accelerate negotiations. The Ukrainian himself conveyed to his counterparts his country's desire that Russian money not remain in the hands of the Kremlin, explaining that the European decision could influence those that powers like the United States or Japan might take in the future.
This was not enough to convince Belgium, which has the bulk of these assets in its entities. In fact, during the day, the Belgian prime minister, Bart De Wever, met bilaterally with Zelensky.
Details of the new regulation
The new regulation proposed by the Commission shapes the loan, conceived to support the country during 2026 and 2027 in a context of prolonged war. Brussels emphasizes that the central objective is to preserve Ukraine's macroeconomic and financial stability and, at the same time, strengthen its defense industrial capacity through economic and technical cooperation with the EU.
One of the most novel elements of the scheme is its reimbursement system. The loan is structured as a limited resource instrument, which implies that Kyiv will only have to return the capital when it receives war reparations or financial compensation from Russia. Until that happens, the immobilized assets of the Russian Central Bank will remain blocked and Brussels reserves the possibility of using them to cover the reimbursement.
With this formula, the Commission aims to prevent the loan from increasing the financial pressure on Ukraine, whose public debt is already around 85% of GDP, and also to limit the impact on member states.
The aid will be channeled through two main pillars. On the one hand, macroeconomic assistance, intended to cover the deficit of the Ukrainian budget and conditioned on the fulfillment of reforms included in a Memorandum of Understanding, focused on revenue mobilization, the fight against corruption, and fiscal transparency.
On the other hand, a specific block for defense industrial capabilities, aimed at modernizing the country's technological base, promoting its progressive integration into the European industry of the sector, and facilitating joint acquisitions and increases in productive capacity.
Political conditions and control
In terms of governance, the regulation relies on the enhanced cooperation mechanism, authorized for 25 Member States under Article 20 of the EU Treaty. This implies that the financial obligations associated with the loan will not fall on the Czech Republic, Hungary, and Slovakia, which opted not to join the initiative. The European Commission will assume the management of the instrument and the raising of resources through debt issuance in the capital markets.
Access to the funds will be subject to strict political and monitoring conditions. Ukraine must continue to respect democratic principles, the rule of law, and human rights, including those of minorities. In addition, it will have to present a Financing Strategy each year detailing its needs and sources of income.
The regulation also provides for the creation of a group of experts on defense industrial capabilities and the opening of a specific account for funds intended for this area, which may be supervised by Brussels.
To avoid adding an additional burden to Ukrainian coffers for the duration of the conflict, the EU is considering the possibility of assuming the costs of interest and administrative expenses associated with the loan. This subsidy of borrowing costs reinforces the idea of long-term support that combines financial backing, political control, and direct involvement in the country's reconstruction and defense.