The EU advances in the issuance of debt as a temporary solution to finance Ukraine

Brussels.- The leaders of the European Union (EU), who are still meeting at a summit in Brussels to find a financial solution for Ukraine, are now negotiating to use a joint debt issuance to support the country temporarily while they continue working on a loan financed with frozen Russian assets.

After several hours of negotiations, first at a technical level and then between the heads of state and government, doubts persist about the proposal for a repair loan financed with the cash generated by 210 billion euros in frozen Russian sovereign assets, despite progress having been made to resolve the doubts of Belgium, which holds the majority of them.

«After lengthy discussions, it is clear that the repair loan will require more work since the leaders have to analyze the details», explained a European source. You can also read: Therefore, leaders continue to debate both this option and the possibility of using the margin of the EU budget to issue debt, as well as combining both.

The issuance of a temporary joint debt

In particular, on the table is the idea of first granting a credit financed with the issuance of joint debt so that Ukraine can already receive, at the beginning of 2026, part of the 136,000 million euros it will need for that year and the next, according to calculations by the International Monetary Fund. This would give more time for the States to continue analyzing the option of the 90 billion euro repair loan, on which negotiations have focused in recent weeks, in particular with the aim of overcoming the opposition of Belgium, which holds 185 billion euros in Russian assets (27% of its GDP) and fears economic and legal reprisals from Moscow. The government led by Flemish nationalist Bart de Wever demanded from the other countries guarantees that would fully and unlimitedly mutualize the risk from day one, as well as including in the credit all the assets frozen in the bloc, not only in its territory. The text outlined between the technical teams of Belgium and the European Commission that reached the leaders’ table largely addressed the country’s concerns, but generated new questions from other member states, particularly regarding the possibility of granting unlimited guarantees.

The financial impact on member countries

After noting that more work would be needed to finalize a plan that satisfies the Twenty-Seven, the new proposal being debated by the leaders suggests using the issuance of joint debt, which until now had been considered as a “plan B” temporarily to finance Ukraine. This would require the unanimity of all member states to modify the rules governing the margins of the community budget, something that in recent days numerous diplomatic sources had considered impossible due to the opposition, in particular, from Hungary.

After Thursday’s debates, however, that unanimity could be within reach, according to some sources.

Beyond the lack of support, the possibility of issuing joint debt generated reluctance in some countries due to the impact it could have on national public finances.