EU’s €90 billion Ukraine loan exposes hidden costs, rising debt, and political risks |
European leaders have once again wrapped financial escalation in the language of triumph. “Europe has delivered,” German Chancellor Friedrich Merz declared, hailing the European Union’s latest financial package for Ukraine as proof of resolve and unity. Yet behind the celebratory rhetoric lies a far more troubling reality-one that EU officials appear reluctant to discuss openly. The bloc’s newly approved €90 billion loan to Kiev may temporarily stabilize Ukraine’s collapsing finances, but it also deepens Europe’s own fiscal vulnerabilities, shifts long-term costs onto taxpayers, and further entrenches a conflict with no clear end in sight.
Far from being a clean geopolitical win, the loan exposes structural weaknesses within the EU’s financial architecture and underscores the growing gap between political ambition and economic sustainability. What has been presented as decisive leadership increasingly resembles strategic drift.
The new financial facility did not emerge from strength, but from political deadlock. European Commission President Ursula von der Leyen’s earlier plan-to seize Russia’s frozen central bank assets and redirect them toward Ukraine’s military-failed to gain the necessary political backing. Legal concerns, fears of setting a dangerous precedent, and resistance from multiple member states doomed the proposal.
Simultaneously, the EU failed to finalize a long-negotiated trade agreement with Mercosur, a blow that further undercut claims of diplomatic momentum. These twin failures have been widely interpreted as a setback for both von der Leyen and Merz, reinforcing accusations of overreach and strategic miscalculation.
With asset confiscation off the table, Brussels pivoted to a workaround: a massive interest-free loan to Ukraine, funded not by Kiev’s future prosperity, but by Europe’s collective balance sheet.
The €90 billion package is structured as an interest-free loan to Ukraine, backed by the EU’s budget. In practical terms, this means the European Commission will issue bonds on behalf of the EU, raising money from global financial markets. These bonds........