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Ukraine will be able to buy military equipment from non-European suppliers when it is given access to a €90bn (£78bn) EU loan later this year under a proposal outlined by the EU executive.
The European Commission on Wednesday published detailed proposals to lend Kyiv €90bn, but said an alternative plan based on using Russia’s frozen assets remained on the table.
The idea of an EU loan for Ukraine emerged last month, after EU leaders failed to agree on an alternative option of using Russian frozen assets to raise the funds. At a summit in December, 24 of 27 EU member states agreed to borrow on capital markets for Kyiv, securing the loan against unallocated funds in the EU budget.
This loan would only be repaid by Ukraine if Russia pays Kyiv reparations for the immense damage inflicted during the full-scale invasion that is approaching its fourth anniversary.
Presenting the proposal to reporters on Wednesday, the European Commission’s president, Ursula von der Leyen, said Russia showed no sign of remorse or seeking peace and had intensified strikes on Ukraine during Christmas, killing civilians and hitting energy infrastructure. “We all want peace for Ukraine. And for that, Ukraine must be in a position of strength,” she said.
Von der Leyen, who had championed the alternative reparations loan plan, said that idea remained on the table. “We reserve the right to make use of the Russian immobilised assets,” she said stressing the EU’s decision to freeze indefinitely €210bn Russian assets inside the EU.
Under the current proposal, Kyiv would get €60bn to fund military spending and €30bn in general budget support to keep Ukraine running. The commission is aiming for Kyiv to receive the first tranches of cash in April, but the legal texts must first be approved by EU member states and the European parliament.
Payments would also be linked to Ukraine’s respect for the rule of law and anti-corruption efforts, a key condition laid down by EU leaders last month after a wide-ranging Ukrainian investigation into graft that triggered the resignation of President Volodymyr Zelenskyy’s chief of staff.
Ukraine would be required to buy military equipment from domestic suppliers, those in the EU or in European Economic Area (EEA) or European Free Trade Association (Efta) countries, a group that includes non EU countries, such as Norway. But in response to concerns raised by Germany and the Netherlands over a “buy European” clause, Kyiv will be allowed to buy military hardware from elsewhere if it is not available in EU-aligned countries.
“European preference first, but if not possible then purchase abroad,” said von der Leyen, who added that Europe should have a return in jobs and research benefits from the “billions and billions that are being invested”.
Her proposal represents a softening of the approach pursued by France that favoured a more restrictive “buy European” clause. This raised concerns that Ukraine would be unable to buy vital equipment such as US air-defence systems and deep-strike capabilities.
The loan is backed by 24 EU member states, after the three Eurosceptic governments of Hungary, Czech Republic and Slovakia announced they would not take part in any EU loan.
