EU rejects Kyiv’s early loan payout bid, demands reforms

The European Union has turned down, for now, Ukraine's request to speed up loan payments that would cover an unexpected gap in this year's military funding. People familiar with the matter told Bloomberg that Brussels wants Kyiv to carry out agreed reforms first. The pushback follows Ukraine's admission over the summer that the rising cost of the war had left it about €27 billion short. It has also revived a long-running argument over whether Europe should use frozen Russian central bank assets to pay Ukraine's bills.bloomberg+1

Reforms first, then money

EU officials say the priority is getting Ukraine the money already promised under the bloc's €90 billion loan for 2026 and 2027, not putting together a new package. The European Commission has so far paid out about €15 billion of the €45 billion set aside for 2026. Further payments depend on reforms, especially anti-corruption measures.kyivpost+1

"Our message to our Ukrainian friends is clear: deliver the agreed reforms, so we can continue supporting you financially," EU Enlargement Commissioner Marta Kos said at a donor coordination meeting in Brussels on Sept. 29. Speaking to Le Monde, one frustrated European diplomat said: "It feels like we're watering the desert".glavnoe+1

Ukrainian Finance Minister Serhiy Marchenko said in Brussels that Kyiv had found ways to shrink this year's shortfall. He warned that Ukraine could need about €69 billion in 2027, roughly €40 billion for defense and €29 billion to keep the state running. "We're very happy with the €90 billion," he said. "But it's not sufficient". The Commission says it has not yet confirmed Kyiv's figures. Marchenko said he hopes parliament will make progress on the reform conditions after it returns in mid-October. He also said some EU proposals would mean new taxes, which he described as difficult while Ukrainian businesses are under heavy pressure.kyivpost+1

Frozen assets back on the table

The funding request has brought back the question of the roughly €210 billion in immobilized Russian state assets held in Europe, most of them at the Belgian depository Euroclear. Marchenko has urged governments to take "bold actions" on the assets. Germany and its allies are pushing the idea again, and 122 members of the European Parliament have signed a letter calling for talks to restart.yahoo+2

Belgium still opposes the idea because of legal and financial risks. France and Italy also remain skeptical. Russia's central bank has sued the EU over the indefinite freeze, and a Moscow court has ordered Euroclear to pay damages. Instead of new money, the Commission has floated other options, such as about €20 billion left unallocated in the EU's €150 billion rearmament loan program, or the European Peace Facility.glavnoe+2

EU leaders are set to take up support for Ukraine at a summit in Brussels on Oct. 15 and 16. They are also negotiating the bloc's next long-term budget, which includes a €100 billion Ukraine package for 2028–2034, while Germany and other countries push for spending cuts.yahoo+1