European Commission President Ursula von der Leyen has urgently called on European Union member states to swiftly agree on a comprehensive funding plan to cover Ukraine’s substantial military and financial needs for the next two years. The estimated gap is a staggering €135.7 billion, according to a letter sent to the 27 leaders on Monday.
The plea comes just weeks before a critical December European Council meeting, where leaders are expected to make a decision on the matter. Ms. von der Leyen underscored the gravity of the situation, stating, “It will now be key to rapidly reach a clear commitment on how to ensure that the necessary funding for Ukraine will be agreed at the next European Council meeting in December.”
The Commission President emphasized that the scale of the required funding for 2026 and 2027 is “particularly acute.” Her assessment outlines two key areas of need: €83.4 billion to finance the Ukrainian military and €55.2 billion designated for economic stabilization and addressing the national budget deficit.
This financial calculation is based on estimates provided by the International Monetary Fund (IMF) and Kyiv’s authorities. Crucially, the projection operates on the uncertain assumption that Russia’s full-scale war will conclude by late 2026. However, a precondition for any eventual peace agreement—a verifiable ceasefire—remains elusive, adding complexity to the financial planning.
In her communication, Ms. von der Leyen outlined the three primary options currently under discussion for structuring the necessary financial support for Ukraine. Each option presents distinct fiscal and legal challenges for the bloc.
The first option is €90 billion in bilateral contributions from member states. This assistance would be provided as a non-repayable grant and would be accounted for against the contributing country’s national budget, including any associated interest payments.
The second alternative is €90 billion in joint EU debt. Under this model, the interest payments would need to be covered either by national guarantees or drawn from the bloc’s common budget. Implementing this option, however, would require amending EU budget legislation, which necessitates unanimous approval—a difficult prospect given the explicit opposition to current Ukraine funding mechanisms by countries such as Hungary.
A third, more novel option proposes a €140 billion reparations loan secured against the cash balances generated by Russia’s immobilised central bank assets. Kyiv would only be obliged to repay this loan after Moscow agrees to compensate for the damages caused by the invasion.
Ms. von der Leyen noted that the first two options—bilateral contributions and joint debt—would inherently increase the fiscal burden on member states, either through direct cash payments or by raising new money on financial markets.
In contrast, the reparations loan avoids creating fresh debt or impacting national budget contributions. The funds would instead be derived from the revenues generated by the frozen Russian Central Bank assets, the majority of which are held by Euroclear, a central securities depository in Brussels.
The use of immobilised Russian assets, however, faces significant legal hurdles and geopolitical risks, which Ms. von der Leyen acknowledged as “potential knock-on effects.” Belgium remains the main hold-out on this option, as the bulk of the funds are held there.
Brussels has demanded maximum legal certainty and a mechanism for total burden-sharing across the EU to protect itself against potential retaliation from Russia, should Moscow initiate legal action.
The Commission President met with Belgian Prime Minister Bart De Wever last Friday to advance discussions on the matter. Despite the ongoing high-level dialogue, reports indicate that progress on a definitive mechanism remains limited.
Concluding her argument for decisive action, the European Commission President stressed the necessity of avoiding indecision. “Clearly, there are no easy options,” she wrote to the leaders. “Europe cannot afford paralysis, either by hesitation or by the search for perfect or simple solutions which do not exist.” The December summit is thus set to be a crucial test of the EU’s commitment to supporting Ukraine’s long-term defense and reconstruction efforts.
