The EU has finally agreed to lend Ukraine another €90 billion. In the official communications of the Council of the EU, the package is presented as macro-financial assistance: Disciplined, conditional, and repayable. Yet the closer one looks at the mechanism, the harder it becomes to sustain the claim that this is a conventional loan in any meaningful financial sense.
Formally, the structure is straightforward. The European Commission will raise funds on capital markets, leveraging the EU’s creditworthiness, which is ultimately underpinned by its member states. These funds will be disbursed to Ukraine in tranches, financing both the war effort and the functioning of the state. On paper, this is a scaled-up extension of the EU’s macro-financial assistance framework, adapted to the demands of a prolonged war economy.
But the defining feature of this instrument lies not in how the money is raised or disbursed, but in how it is meant to be repaid. According to the agreed structure, repayment is not tied to Ukraine’s fiscal capacity, economic recovery, or debt sustainability trajectory. Instead, it is linked to future payments from Russia, in the form of reparations. In effect Ukraine is expected to repay the loan only once it has received compensation from Russia. For that to happen, Ukraine must first avoid defeat and, in more optimistic scenarios, prevail sufficiently to enforce such claims.
To be sure, the EU has already begun using profits generated from immobilised Russian sovereign assets to support Ukraine. This creates a limited and indirect revenue stream that partially bridges the gap between political ambition and financial reality. However, these proceeds are modest relative to the scale of the loan and do not constitute a comprehensive or legally settled repayment mechanism. The principal of those assets remains untouched, and any move to use it would raise substantial legal challenges.
The result is an unusual, and arguably unprecedented, triangular arrangement. The EU acts as creditor, raising funds from markets at low cost. Ukraine is the formal debtor, receiving and deploying the funds. But the expected ultimate payer is a third party, Russia, whose obligation to pay is decided on the battlefield and the negotiation table. That structure places the instrument outside the normal logic of sovereign lending. In conventional macro-financial assistance, even highly concessional loans retain a clear line of responsibility. Here, by contrast, repayment depends on a geopolitical outcome while we famously live in “uncertain times”. This of course shifts the nature of the risk. The central question is no longer whether Ukraine can repay, but whether the conditions under which repayment becomes possible will ever materialise.
This is where the structure begins to resemble what the German sociologist Wolfgang Streeck has described as “buying time”. Faced with political constraints and the absence of a fully articulated long-term strategy, governments resort to financial instruments that defer hard choices. The €90 billion Ukraine loan fits this pattern. By presenting the support as repayable debt, while tying repayment to uncertain future reparations, the EU avoids having to define the measure explicitly as a fiscal transfer. The immediate political objective, sustaining support for Ukraine, is achieved, but the underlying financial and strategic questions are postponed rather than resolved.
The EU’s reliance on its own borrowing capacity further underscores this point. The underlying exposure to Ukraine is effectively mediated through the EU’s balance sheet. This does not eliminate risk; it redistributes it. Ultimately, that risk is internalised within the EU’s fiscal architecture, meaning that member states, and, by extension, taxpayers, bear the residual burden if the expected repayment pathway does not materialise. For example, Germany’s share as the biggest guarantor amounts to around €23 billion, while the German Federal Government just proposed a new budget for 2027 containing a €34 billion hole.
It is at this point that the political compromises underpinning the agreement come into view. Not all member states are exposed in the same way. Czechia, Hungary and Slovakia secured an exemption from repaying the loan. The role of Viktor Orbán and his government is particularly instructive. Budapest did not initially support the package politically, despite ultimately allowing it to proceed. Its position was linked to parallel energy considerations, notably the terms under which oil continued to flow via the Druzhba pipeline. Only after those conditions shifted, in the days following the April 12 elections in Hungary, did the Hungarian government move from obstruction to acquiescence. This sequence illustrates a broader point. What appears externally as a unified EU financial decision is, in practice, the product of negotiated trade-offs across multiple policy domains. Financial support for Ukraine is intertwined with energy security, domestic politics, and intra-EU bargaining.
Looking ahead, this has implications for Hungary’s incoming leadership. The new Magyar government is likely to adopt a more cautious and procedural approach, but it will do so from a position shaped by the exemptions negotiated under Orbán. In effect, it inherits both the political settlement and the reduced fiscal exposure that accompanies it. This combination allows for a more moderate tone without materially increasing financial risk, a model that other member states may seek to emulate.
There are also legal dimensions that remain unresolved. The use of proceeds linked to immobilised Russian assets, and any future attempt to deploy the principal, could face scrutiny before the Court of Justice of the European Union. While the current structure avoids outright confiscation, it still rests on a legal and political pathway that has yet to be tested.
What emerges, then, is not a conventional loan in the strict financial sense, but a hybrid instrument: Part debt, part political commitment, whose repayment mechanism lies outside the financial system that created it.
In reality, this loan exposes a Union struggling to reconcile ambition with capacity. Constrained by limited fiscal room for manoeuvre, amid an economy that continues to lag other global powers, and lacking a coherent long-term strategy on Ukraine, the EU is turning increasingly to elaborate financial devices to sustain its position. What is presented as strategy begins to look more like improvisation. The EU is not resolving the problem, but financing its delay.
Richard J. Schenk is Research Fellow at the think tank MCC Brussels, where he leads the Democracy Interference Observatory Project, analysing EU influence on electoral processes across Europe