During an emergency summit that extended into the early hours of the morning, EU leaders are considering a breakthrough proposal: issuing joint bonds to provide Ukraine with loans of up to $106 billion. Viktor Orban, an ally of Putin, believes that the proposal to fund Ukraine using frozen Russian assets has reached a dead end.
According to a draft proposal seen by Bloomberg, the European Union is considering a plan to provide Ukraine with loans of up to €90 billion ($106 billion) through the issuance of joint bonds.
EU leaders meeting in Brussels failed to reach an agreement on using frozen assets of Russia's central bank as loan collateral and are weighing the option of using joint debt.
Under the draft summit conclusions, the loans would be guaranteed by the EU budget. Any use of the EU budget to guarantee the loans will not affect the fiscal obligations of the Czech Republic, Hungary, and Slovakia – all three of which have expressed skepticism about providing financial support to Ukraine.
After months of negotiations, the deadlock surrounding this controversial plan remains unresolved. Against this backdrop, EU leaders at this decisive summit in Brussels are facing increasing pressure to agree on a massive loan package for Ukraine. Without new funding, Ukraine risks running out of money by spring.
A spokesperson for the President of the European Council declined to comment.
Negotiations continued past midnight as leaders discussed various options to keep Ukraine operational. The joint borrowing proposal would offer the EU a temporary solution to help finance Ukraine’s war effort while committing to advancing plans to utilize Russian assets.
Prior to Thursday’s summit, leveraging Russian assets had been the EU’s preferred option to ensure Ukraine’s ability to service its debt over the next two years. However, Belgium, where most of the assets are held, strongly opposed the plan, fearing potential retaliation and legal risks from Moscow if Russia successfully recovers its funds through litigation.
EU leaders debated the proposal for hours behind closed doors until a new joint debt concept was introduced shortly after 1 a.m., leading to a temporary adjournment. They then resumed negotiations.
If the EU ultimately opts for joint borrowing, it would mark a significant retreat, as officials and leaders have repeatedly insisted for weeks that utilizing Russian assets was the best and only realistic choice.
German Chancellor Friedrich Merz argued that leveraging these assets serves as Europe’s primary leverage in U.S.-led peace negotiations, strengthening Ukraine’s position at the negotiating table.
Ukrainian President Volodymyr Zelenskyy, who attended the summit in Brussels, stated that using Moscow's funds is “the most appropriate” financing option, so that “Russia will understand that it must pay reparations for destroying our country.”
“We need this money so that Russia or any other country cannot use it as leverage against us,” Zelenskyy told reporters. “We hope this tool will support us. With this tool, we feel more confident than without it.”
Putin ally Viktor Orbán calls the use of frozen Russian assets a 'dead end.'
Hungarian Prime Minister Viktor Orbán told CNBC, as officials arrived at the European Council meeting, that the proposal to use these frozen assets to aid Ukraine had already been “killed.”
“It’s a dead end; it’s over,” he said. “(This plan) did not receive enough support.”
Orbán, widely regarded as Russia’s closest ally within the EU, has been openly critical of the plan to use potentially hundreds of billions of euros in frozen assets to provide reparations loans to Kyiv. However, Hungary is not the only country with reservations about these measures.
Given that a significant portion of the frozen assets are held at Euroclear, a clearinghouse headquartered in Brussels, Belgium's support is crucial. However, the country has expressed concerns about potential legal and financial risks. Italy and Bulgaria also back Belgium’s resistance to these proposals.
The Kremlin has stated that such moves amount to justifying war. Russia’s central bank announced last week that it had filed a lawsuit against Euroclear in a Moscow court “to recover damages caused to Russian banks.”
In a briefing on Wednesday, the European Parliament stated that Hungary had blocked the option of utilizing EU budgetary space to fund Kyiv. Decisions regarding the use of the EU’s own financial resources require unanimous approval from all 27 member states.
The European Parliament said on Wednesday: “If both options proposed by the European Commission are rejected, a ‘coalition of the willing’ may be the final choice.”
Before the meeting on Thursday, when asked whether his obstruction of the EU's use of Russian assets was serving the interests of Europe or Russia, Orbán stated that he was 'working solely for peace.'
"I think what we must do is take some steps towards peace rather than war," he said.
As peace negotiations drag on, Russian and Ukrainian forces are entering the fourth winter of their conflict. Talks are expected to resume this weekend, potentially in Miami, following weeks of multiple rounds of discussions involving delegations from the U.S., Russia, Ukraine, and Europe.
Despite Orbán’s skepticism, EU High Representative for Foreign Affairs and Security Policy Kaja Kallas told reporters in Brussels on Thursday that the EU, alongside Ukraine, is pushing for peace, but this effort remains 'unilateral.'
"We have not seen any willingness on the Russian side to take action or seriously discuss peace," she said. "We need to put pressure on Russia to move from pretending to negotiate to actually sitting at the negotiating table."
Unlike Orbán, she expressed optimism about advancing proposals related to reparations loans and the freezing of assets.
Editor/Doris