Why the EU Failed to Make Headway on Its €140bn Loan to Ukraine

Following a recent gathering of EU leaders, the bloc faced yet another hurdle in its efforts to provide financial lifeline to Ukraine. The proposed €140 billion loan, intended to bolster the war-torn nation's economy, stalled due to persistent disagreements among member states. As Copenhagen prepares to host the European Political Community summit—including non-EU players like Britain and Norway—the lack of consensus underscores the complexities of European unity in times of crisis.

The Core of the Stalemate

At the heart of the issue lies a familiar divide: fiscal caution versus urgent humanitarian aid. Wealthier northern and western European countries, such as Germany and the Netherlands, have pushed for stringent conditions on the loan, emphasizing repayment guarantees and anti-corruption measures in Ukraine. In contrast, eastern members closer to the conflict, including Poland and the Baltic states, advocate for swift, unconditional support to counter Russian aggression.

This tension isn't new. Since Russia's full-scale invasion in 2022, the EU has mobilized over €100 billion in various aid forms, from military equipment to humanitarian relief. Yet, the €140 billion loan—part of a broader G7-backed initiative using frozen Russian assets—requires collective approval, which has proven elusive. Diplomats report that while leaders expressed solidarity in Brussels, no breakthrough emerged on funding mechanisms or timelines.

Broader Context and Implications

The delay comes at a precarious moment. Ukraine's economy, battered by over two years of war, faces skyrocketing reconstruction costs estimated at €500 billion or more. The loan would provide macroeconomic stability, allowing Kyiv to fund public services and defense without further depleting its reserves. However, without EU backing, Ukraine may turn increasingly to the U.S., where political uncertainties—particularly around upcoming elections—add another layer of risk.

This episode also reveals deeper fractures within the EU. As the bloc navigates enlargement talks with Ukraine itself, internal discord risks eroding credibility. Meanwhile, today's Copenhagen meeting offers a platform for wider dialogue, but analysts doubt it will resolve the loan impasse without concrete compromises.

Looking Ahead

For Ukraine, the wait continues, but hope persists. EU officials signal ongoing negotiations, with potential progress tied to upcoming budget summits. As one Brussels insider put it, "Solidarity is our strength, but unity demands tough choices." The path forward will test whether Europe can bridge its divides to stand firmly with its eastern neighbor.

This article is based on reporting from the Financial Times. For the full original story, read here.