Czechia, Hungary, and Slovakia will not participate with the other 24 EU countries in sharing the debt burden but have agreed not to hinder Ukraine’s financing needs. The Commission will propose an enhanced cooperation proposal next week for the 24 countries to legally raise joint debt.
Elements of the €210 billion financing package for Ukraine will carry over to the new common debt plan, including payout structures in tranches, anti-corruption safeguards, and spending outlines for Kyiv’s military and budgetary needs.
Joint debt was pursued by European governments after failing to reach consensus on leveraging frozen Russian assets.
The new plan promises Ukraine €45 billion next year, providing crucial aid as it continues its conflict. The remaining funds will be dispensed in 2027.
Borrowing costs will be significant. The EU is expected to incur €3 billion annually in interest from 2028 via its seven-year budget, primarily funded by EU governments. Interest payments start in 2027 at €1 billion.
Ukraine’s repayment is contingent upon Russia ending the war and paying reparations. If unlikely, the EU may roll over the debt or utilize frozen Russian assets for repayment.
This would need a fresh political consensus among EU leaders, as Belgium opposes using the frozen assets held primarily in Euroclear in Brussels.
Belgium’s opposition led to the common debt approach. Belgian Prime Minister Bart De Wever sought unlimited financial assurances against the Russian asset-backed loan, a demand not met by his counterparts.
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