European Union leaders have agreed to provide Ukraine with an interest-free loan worth $105 billion over the next two years. The decision, announced by European Council President António Costa, aims to support Ukraine’s defense and budget needs without relying on frozen Russian assets. The financing will instead be raised from capital markets and secured against the EU budget, according to reports from Reuters and Al Jazeera.

Ukrainian President Volodymyr Zelensky expressed gratitude to the EU, noting that the funds will help cover Kyiv’s budget deficit and strengthen its defense capabilities amid the ongoing conflict with Russia. The agreement was reached after lengthy late-night negotiations on December 18, marking a significant show of unity among EU leaders.

By opting for market-based financing, the EU temporarily steps away from the contentious plan to use seized Russian assets to fund Ukraine’s war effort. Analysts say the move could ease internal divisions within the bloc while ensuring continued financial backing for Ukraine through 2027.