European Union leaders have approved a €90 billion loan package for Ukraine and imposed a 20th round of sanctions against Russia after Hungary withdrew its veto, clearing the way for financial support that will be funded through EU borrowing with the expectation that Russian reparations will cover repayments. The loan is expected to provide two-thirds of Ukraine's financial needs in 2026 and 2027.
European Commission President Ursula von der Leyen announced the agreements, stating that "While Russia doubles down on its aggression, we are doubling down on our support to the brave Ukrainian nation, enabling Ukraine to defend itself and putting pressure on Russia's war economy." Von der Leyen indicated the first tranche of the €45 billion funding planned for 2026 could be disbursed by the end of June, with initial payments earmarked for Ukraine's domestic drone production.
Pipeline Dispute Resolution
Hungary lifted its vetoes over the long-delayed loan and sanctions after a dispute over the Druzhba oil pipeline was resolved. Russian oil deliveries to Hungary and Slovakia resumed Thursday, according to Hungarian energy group MOL, after the pipeline was repaired. Both countries, heavily dependent on Russian crude, had blocked EU support for Ukraine until the oil flow resumed.
Viktor Orbán, the Hungarian prime minister who was defeated by his Conservative rival, Péter Magyar, earlier this month, will not attend what would have been his final EU summit. Ukrainian President Volodymyr Zelenskyy joined other leaders in the Cypriot resort of Ayia Napa, writing on social media that "It matters that Ukraine is securing this level of financial certainty." He outlined spending priorities including arms production, procurement of weapons from partners, and preparing the energy sector for next winter in response to Russia's attacks on Ukraine's energy infrastructure in recent months.
Sanctions Target Russian War Economy
The latest sanctions package blacklists Russian banks and energy companies, as well as entities in the United Arab Emirates, Thailand, and China, including Hong Kong, for helping Moscow evade western restrictions. The package includes a ban on exporting hi-tech machine tools and telecoms equipment to Kyrgyzstan, which the EU says has shown "systematic and persistent" failure to prevent their re-export to Russia, where they are used to make missiles and drones. The former Soviet republic has previously said it is working to comply with western sanctions.
European Council President António Costa welcomed the agreements and said "the next step is to open the first cluster of negotiations for the Ukrainian accession to the European Union." Hungary has also been blocking the opening of clusters of negotiating topics that would allow Ukraine to make progress on its application to join the EU, which was filed a few days after the full-scale Russian invasion in the fifth year of the conflict. While other member states support the start of talks, many are wary of any fast-track procedure for Kyiv.
Energy Dependency Concerns
EU leaders are expected to discuss how to respond to surging energy prices and the wider ramifications of war in the Middle East. The European Commission warned Wednesday of the EU's "dangerous dependency on fossil fuels" as it said the bloc had paid an additional €24 billion in oil and gas imports since the outbreak of the Middle East conflict in February. Leaders are expected to discuss ideas to respond to rising energy prices, including a proposed cut to electricity taxes and incentives to accelerate the shift to green energy. Despite a boost to wind and solar power since the energy crisis of 2022, the EU has been slower to scale down the use of oil and gas in other parts of the economy, such as transport and housing.
Defense Clause Discussion
Cyprus President Nikos Christodoulides has called for a discussion on how to "give substance" to the EU's mutual assistance clause. Article 42.7 of the EU treaty obliges member states to provide "aid and assistance by all the means in their power" to a fellow member that is a victim of armed aggression on its territory. Cyprus, which is not a member of NATO, wants the EU to take that clause more seriously after a drone hit a British base on the island in March. The clause has only been activated once, by France after the Paris terrorist attacks of 2015, but many officials are unsure how it works in practice. Other member states want to ensure talks about the pact do not undermine NATO's mutual defence clause, article 5. Gitanas Nausėda, president of Lithuania, a NATO member, said: "For me it is an absolutely crucial thing that article 5 is absolutely key to our defence and security and it will remain so."
Why This Matters:
The €90 billion loan represents a significant fiscal commitment by EU taxpayers, structured on the assumption that Russian reparations will materialize to cover repayments—a prospect that remains uncertain given the ongoing conflict and Russia's economic resilience. The resolution of Hungary's veto highlights the vulnerability of EU decision-making to energy dependencies, with Budapest and Bratislava prioritizing access to Russian crude over unified sanctions policy. The additional €24 billion in oil and gas imports since February underscores the bloc's continued reliance on fossil fuels despite renewable energy investments, raising questions about the effectiveness of the EU's energy transition strategy. The discussion of Article 42.7 reflects growing security concerns, but the primacy of NATO's Article 5 remains essential for transatlantic defense cooperation and deterrence against aggression.