EU weighs fallback plan of €90 billion in bilateral grants for Ukraine

The European Commission has warned EU governments that, if the flagship plan for so-called “reparations loans” to Ukraine fails, the bloc will have to rely on a far more direct and politically sensitive alternative: non-repayable bilateral grants from member states worth €45 billion annually in 2026 and 2027. The proposal is part of a set of financing scenarios drafted by the Commission and signed by President Ursula von der Leyen on 17 November, seen by EUalive’s partner “European Pravda”.

According to the document, the Commission’s “options paper” outlines how the EU could support Ukraine’s fiscal stability in a period when its projected foreign-financing needs reach €135.7 billion, including €83.4 billion in military expenditure. The starting premise behind the scenarios is that the war should end by late 2026.

Bilateral grants as the default fallback

Should the scheme involving frozen Russian assets prove legally or politically impossible, the Commission proposes that member states step in directly to provide Ukraine with bilateral grants amounting to a minimum of €90 billion over 2026-27.

“The most direct way to provide the necessary financial support would be for member states to provide voluntary bilateral contributions, i.e. grants, to the European Union on the basis of contribution agreements to be approved by member states in accordance with their national procedures,” the paper states.

These contributions would allow the Union to channel irrevocable support to Kyiv, without creating new shared liabilities or requiring additional guarantees. However, the Commission notes that this approach “has an immediate impact on the budgets of the member states”.

To ease the burden, the contributions could be phased in from 2026, with the financial load distributed according to gross national income. Still, the document stresses that “a minimum annual targeted support of €45 billion, i.e. at least €90 billion for 2026-2027, appears necessary”, assuming the war ends in 2026 and that third countries cover remaining gaps.

Three options on the table

Von der Leyen’s accompanying letter to EU leaders confirms that the Commission is presenting three possible paths for financing Ukraine in the next two years: bilateral grants; an EU-level loan financed by borrowing from the financial markets; and a limited recourse loan backed by the cash balances of immobilised Russian assets.

“We have identified three main options: support to be financed by member states through grants, a limited recourse loan financed by the European Union through borrowing on financial markets, or a limited recourse loan linked to cash balances of immobilized assets,” the letter states.

The Commission President urged governments to reach clarity “as soon as possible” so that a firm political commitment can be sealed at the next European Council in December. She argues that moving ahead “will allow us to maintain pressure on Russia, deprive it of hope for victory, and lay the foundation for an end to hostilities and the basis for long-awaited peace talks”.

The option that couples EU borrowing with frozen Russian assets is currently stuck at the political level. Belgium, which hosts the majority of the frozen assets, has raised reservations about the legal consequences of using them as a basis for long-term financing. Its reluctance has effectively paused momentum behind the “reparations loan”, despite strong backing from several other member states.

Belgium’s Iron Wall: how one PM held up €140 billion for Ukraine

While the Commission insists that using immobilised Russian assets remains on the agenda, officials acknowledge that the final decision will not be taken before December 2025. This prolongs uncertainty at a time when Kyiv faces structural budget deficits and depends on predictable multi-year support.

A costly but unavoidable safety net

The Commission’s proposals underscore the growing urgency of guaranteeing Ukraine’s financial stability beyond 2025. With the war ongoing and reconstruction needs soaring, Brussels warns that member states must prepare for scenarios in which political or legal barriers render the asset-based solution unworkable.

In that case, EU governments would be called upon to finance Kyiv directly – at a scale far exceeding existing commitments and with immediate pressure on national budgets. For now, the Commission’s message to capitals is clear: without a breakthrough on frozen Russian assets, bilateral grants remain the only fully reliable path to sustaining Ukraine through 2026 and 2027.

Caption: European Commission President Ursula von der Leyen (L) speaks with Ukraine’s President Volodymyr Zelensky at the 7th meeting of the European Political Community (EPC) in Copenhagen, Denmark, 02 October 2025. The summit, bringing together leaders from across the continent, will focus on defense and support for Ukraine, the security situation in Europe, including economic security and migration. EPA/IDA MARIE ODGAARD