The EU’s €90bn Bet on Ukraine: Who Actually Profits?
Quick Answer: The European Parliament has approved a €90 billion loan to Ukraine for 2026-2027, funded through joint EU debt backed by the bloc’s budget. Of that, €60 billion is earmarked for defence procurement and €30 billion for budget support. Ukraine will only repay the loan once Russia pays war reparations. For European defence contractors, reconstruction firms, and Ukrainian industry alike, this is the single largest financial commitment in the war’s history — and it reshapes the business landscape on both sides.
On 24 February — the fourth anniversary of Russia’s full-scale invasion — the European Parliament held an extraordinary plenary session in Brussels and formally approved the largest financial support package the EU has ever assembled for a non-member state. The €90 billion Ukraine Support Loan covers 2026 and 2027 and passed under urgent procedure with 458 votes to 140.
The numbers are significant. But the structure, where the money goes, and what it signals for European fiscal policy matter more for businesses trying to understand what comes next.
What the Money Actually Covers
The €90 billion breaks into two streams. Sixty billion euros goes to defence — strengthening Ukraine’s defence industrial capacity and procuring weapons, ammunition, and military equipment. The remaining €30 billion provides macro-financial assistance: budget support to keep the Ukrainian state functioning, paying salaries, pensions, and funding the institutional reforms required on Kyiv’s path toward EU membership.
The defence allocation is the more consequential figure. Under the loan’s terms, procurement must be sourced in principle from Ukrainian, EU, and European Economic Area defence industries. Derogations allow sourcing from other countries only when specific equipment is unavailable from European suppliers. This is explicit industrial policy: the EU is using Ukraine’s wartime needs to build out its own defence manufacturing base.
The IMF estimates Ukraine’s total funding gap for 2026-2027 at approximately €136 billion. The EU’s €90 billion covers two-thirds. The remaining third is expected from G7 partners, though US commitments remain uncertain following the withdrawal of direct military aid.
How It’s Funded — and Why That Matters
The loan is funded through common EU debt, raised on capital markets and backed by the bloc’s budget. The EU has issued joint debt before — notably during the pandemic recovery fund — but each instance moves the bloc closer to a normalised model of shared borrowing that countries like Germany have historically resisted.
That Germany agreed is itself a signal. Berlin’s longstanding opposition to Eurobonds has softened under wartime pressure, and analysts at the European Council on Foreign Relations have noted the Ukraine loan may pave the way for future joint debt issuance in areas like defence spending and industrial resilience.
Debt service costs are estimated at roughly €1 billion for 2027, rising to €3 billion per year from 2028. Crucially, Ukraine is not required to repay the principal until Russia pays war reparations — a condition that may never be met, effectively making this a grant in legal disguise. The EU has reserved the right to use approximately €210 billion in immobilised Russian central bank assets to cover repayment if necessary. Hungary, Slovakia, and the Czech Republic secured full exemptions from all financial obligations, including interest payments.
What It Means for European Business
For Europe’s defence industry, the €60 billion procurement stream is transformative. Companies across the EU and EEA are now preferred suppliers for a two-year, fully funded pipeline of military orders covering ammunition, armoured vehicles, drone systems, communications equipment, and logistics infrastructure. Firms in France, Germany, Sweden, Italy, Spain, and the Baltic states stand to benefit most directly, though the requirement to source from European industry creates opportunities across the entire supply chain.
The Competitiveness Council — meeting this same week — is debating the European Competitiveness Fund and emergency plans for industrial resilience, feeding into the broader push to reshore defence manufacturing.
Beyond defence, the €30 billion in budget support sustains Ukraine as a functioning economic partner. European exporters, insurers, logistics firms, and financial institutions with Ukrainian exposure benefit from the certainty that Kyiv can meet its obligations. The loan also supports Ukraine’s integration into the EU regulatory framework, reducing friction for European firms operating across the border.
What It Means for Ukrainian Business
For Ukraine, the loan buys time and stability. The country’s 2026 budget allocates €57 billion to defence and security, of which €51.6 billion is expected to be covered by in-kind military assistance. Without the EU loan, Kyiv would have faced a funding cliff in spring 2026 — weakening its negotiating position and destabilising its domestic economy.
The budget support component allows Ukrainian businesses to operate in an environment where government contracts are honoured, civil servants are paid, and basic infrastructure is maintained. For the country’s tech sector, agricultural exporters, and reconstruction contractors, this is the difference between a functioning economy and collapse.
Reconstruction is the longer-term prize. The World Bank estimates Ukraine’s total recovery needs at over $480 billion. The EU loan does not directly fund reconstruction, but it keeps the country solvent enough to begin planning for it — and the requirement to source defence equipment from European and Ukrainian industry creates a template for how reconstruction contracts may be structured.
Peace talks between the US, Ukraine, and Russia in the UAE in late January produced no breakthrough. Until they do, this €90 billion is the financial architecture keeping Ukraine in the fight and at the table.
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