Ukraine’s Widening Budget Hole Puts Brussels on the Spot
Ukraine has opened a new and uncomfortable conversation with its European backers, telling the European Union that it is short by roughly €23 billion this year and asking Brussels to find the money faster than originally planned. The request, delivered by President Volodymyr Zelenskyy during a gathering of allied leaders in Kyiv, has landed at a delicate moment for a bloc that thought it had already settled the question of how to keep Ukraine’s war effort funded through 2027.
The appeal came during Ukraine’s 35th Independence Day commemorations, when close to a dozen European heads of state and government travelled to Kyiv to stand alongside Zelenskyy at St Sophia Square. The visit doubled as a meeting of the so-called Coalition of the Willing, the informal grouping of more than 30 countries that has coordinated military and financial support for Kyiv since 2025. It was co-chaired by UK Prime Minister Andy Burnham, French President Emmanuel Macron and German Chancellor Friedrich Merz, with European Council President António Costa also present.
A Shortfall That Wasn’t Supposed to Happen This Soon
Back in December, EU leaders thought they had found a workable formula. After months of wrangling, they agreed to back a €90 billion loan for Ukraine covering 2026 and 2027, financed through joint borrowing rather than by seizing Russia’s frozen central bank assets outright — an idea that Belgium, hosting the bulk of those assets through the Euroclear clearing house, had blocked over legal and financial liability concerns.
That compromise was meant to buy the EU some breathing room. Instead, Ukraine’s Defence Ministry is already running low on cash, and Zelenskyy is asking Brussels to bring forward part of next year’s instalment to cover this year’s gap. The European Commission’s initial reaction has been cautious, according to officials familiar with the discussions, largely because accelerating the timeline risks reopening a settlement that took EU leaders the better part of a year to negotiate.
The Return of the Frozen Assets Question
A more far-reaching option was also floated at Monday’s meeting: dipping into the roughly €210 billion in Russian central bank assets still frozen across the EU, the vast majority of them sitting in Belgium. “Wherever these assets are, we need to find a fair way to use them for protection against Russia’s war,” Zelenskyy told the gathered leaders.
The idea is not new. It was the Commission’s original preferred route for financing Ukraine through 2026 and 2027, before Belgium’s objections derailed it in December and forced EU leaders toward the joint-borrowing alternative instead. Some capitals, however, never fully let go of it. Latvia’s Prime Minister Andris Kulbergs was blunt about where he stands: “We have to agree to use Russian frozen assets, not the EU citizens’ money, but Russian frozen in order to pay this bill,” he said, standing alongside Zelenskyy.
Whether that view can win over Brussels — let alone Belgium — remains to be seen. Belgian officials have previously warned that unilaterally repurposing sovereign assets could expose the country, and by extension the EU, to costly legal challenges from Moscow and to broader financial-stability risks if other states start to doubt the safety of holding reserves in euros.
Why Timing Matters
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The debate is not simply about how much money Ukraine eventually receives, but about how fast it arrives. Kyiv’s Defence Ministry has bills to pay now — salaries, munitions contracts, equipment maintenance — and a shortfall that widens month by month as Russia keeps up its bombardment of Ukrainian cities and infrastructure. Leaders at Monday’s meeting condemned what they described as escalating and increasingly indiscriminate Russian strikes, including damage to a children’s hospital in Kyiv and to cultural heritage sites such as the Kyiv-Pechersk Lavra.
For the EU, the dilemma is structural as much as political. Member states have already committed billions in bilateral aid, loan guarantees and military assistance since the invasion began, and further ad hoc requests test the limits of what capitals can approve without returning to already-strained parliaments. Rushing forward parts of the 2027 loan tranche could ease Kyiv’s immediate cash crunch, but it also risks setting a precedent that leaves less certainty for the following year — precisely the kind of financing chaos the December deal was designed to avoid.
What Comes Next
No formal decision was taken in Kyiv, and EU officials say the funding gap will likely be picked up again at the ministerial level in Brussels in the coming weeks. For now, the Commission appears to be leaning toward finding ways to work within the existing €90 billion framework rather than reopening the frozen-assets debate outright. But with the shortfall growing and winter approaching — a season that historically sees intensified Russian strikes on Ukraine’s energy grid — pressure on EU finance ministers to act quickly is unlikely to ease.
Zelenskyy, for his part, made clear he sees the funding question as inseparable from Ukraine’s ability to keep fighting. Whether that argument moves reluctant capitals, or whether Brussels sticks to its slower, more cautious script, will shape how Ukraine enters what could be another difficult winter.
