European Union leaders have forged a deal to provide a critical €90 billion (approx. KES 13.6 trillion) loan to Ukraine, securing the nation's military and budgetary needs for the next two years. The agreement, reached in the early hours of Friday in Brussels, marks a significant commitment to Kyiv as the war with Russia approaches its fourth year.

This financial lifeline addresses Ukraine's urgent warnings of a looming cash shortage that could have risked a battlefield collapse. Ukrainian President Volodymyr Zelenskyy immediately lauded the decision, stating on social media that the "significant support that truly strengthens our resilience" provides a crucial "financial security guarantee for the coming years."

A Shift in Strategy

The deal represents a strategic pivot. The EU's initial, more aggressive plan was to use some of the €210 billion in frozen Russian central bank assets held within the bloc to directly back the loan. However, this approach met strong resistance due to complex legal questions and political risks, particularly from Belgium, where the majority of the assets are held. Belgian Prime Minister Bart De Wever noted there were "a lot of loose ends" with the original plan.

Instead, the 27-member bloc will borrow the money on the capital markets against its own budget, a move that required careful negotiation to bring all members on board. To put the loan's value into perspective for Kenyans, the amount is more than three times the country's entire national budget for the 2024/2025 fiscal year, which stands at KES 3.992 trillion.

Navigating Dissent

The path to agreement was not smooth. Hungary, along with Slovakia and the Czech Republic, had expressed opposition. A compromise was reached ensuring these nations would not be required to contribute to the guarantees for the debt, allowing the package to pass without a veto from the Moscow-friendly Hungarian government.

Leaders from major EU powers championed the final deal as a pragmatic and powerful signal of unity. French President Emmanuel Macron called borrowing on capital markets "the most realistic and practical way" to fund Ukraine. German Chancellor Friedrich Merz emphasized that the funds are sufficient for Ukraine's needs for the next two years.

• Loan Amount: €90 billion (approx. KES 13.6 trillion)
• Purpose: To cover Ukraine's military and budgetary needs for 2026-2027.
• Funding Mechanism: A loan backed by the EU's common budget, borrowed from capital markets.
• Repayment Condition: Ukraine is expected to repay the loan only after Russia pays war reparations.

While the direct use of Russian assets was shelved, they remain a key part of the equation. The EU has reserved the right to use the immobilised funds to repay the loan if Russia fails to pay reparations for the damages caused by its invasion. This leaves open a future financial confrontation, tying the fate of the frozen assets directly to Moscow's post-war actions.