Ukraine has received €5.9 billion from the EU under ERA Loans and the Ukraine Facility, President Volodymyr Zelenskyy has announced. A key feature is that part of these funds is financed from profits on frozen Russian assets.

“Today, there is an important decision in support of our country from our partners. Importantly, the ERA Loans mechanism is financed from profits from frozen Russian assets, which makes Russia pay for its aggression,” Zelenskyy said.

Ukraine aims to access €140 billion of frozen Russian assets in Europe and use them to support the war effort

According to Zelenskyy, only pressure can work to achieve peace, so efforts must be intensified to use Russian assets.

The majority of these funds are held in the Euroclear financial depository in Belgium. A decision on whether to transfer the funds to Ukraine is expected in December 2025, Politico reports. 

Previously, Zelenskyy stated that it would be a significant loss for Russia if Ukraine were to succeed in accessing €140–160 billion of frozen Russian assets.

“We are counting on a swift political decision regarding the reparations loan and full use of these funds for Ukraine’s defense. I thank President Ursula von der Leyen for her leadership and support of Ukraine,” he summarized.

ERA Loans and Ukraine Facility — financial instruments for security and reforms

Meanwhile, Ukrainian Prime Minister Yuliya Svyrydenko has explained that €4.1 billion under ERA Loans is the final tranche of an €18 billion program, financed from profits on frozen Russian assets.

“This is an example of how Russia begins to pay for its crimes. At the same time, it is a signal of European solidarity and determination to support our ability to endure,” the official noted.

An additional €1.8 billion was received under the Ukraine Facility, reflecting confidence in Ukraine’s implementation of reforms and its European integration.

Over the past six weeks, the proposed EU “reparation loan” has moved closer to reality. It is backed by over $200 billion in frozen Russian Central Bank reserves held mainly in Belgium’s Euroclear.

This reparation loan, long in discussion, now appears closer than ever to reality. Belgium has raised reservations about the mechanism, though these are expected to be resolved through negotiations. Similar concerns from France and Germany could emerge, but have not been formally stated.

Still, while the EU and Ukraine have spent months refining the legal framework for confiscating Russian assets or profits derived from them, far less attention has been paid to a parallel question: how those resources should be deployed once secured.

A recent example offers a hint. On 22 October, Sweden announced that Ukraine would receive between 100 and 150 Gripen fighter jets manufactured by Saab. The announcement was vague on financing, but the timing—days after loan details emerged—suggests this may be funded through the reparation mechanism rather than Sweden’s aid budget.

If so, the pattern continues. And Saab may not be alone: Rheinmetall, Dassault Aviation, BAE Systems, Lockheed Martin, and MBDA could soon follow, each offering long-term contracts that align with their production schedules rather than Ukraine’s immediate tactical needs.

Aid as a procurement opportunity

The United Kingdom, for example, announced two funding tranches in February and July 2025, tied to major Thales contracts for 10,000 air-defence missiles. But timing mattered: Russia had just escalated to mass drone attacks—300 to 500 drones per night instead of dozens.

The Thales missiles worked against minor incursions but couldn’t scale to swarm defense. By the time contracts were finalized, Ukraine had already begun mass-producing FPV drone interceptors that cost a fraction of Western missiles and proved more effective against saturation attacks.

Would London have approved those tranches without the boost to a Belfast factory—and the accompanying pledge to protect or create hundreds of jobs? That remains a rhetorical question.

Long-term contracts vs. short-term survival

The situation with the Gripens may differ, but the broader EU logic is clear. Channeling the loan into contracts for Europe’s defence industry fits neatly into the bloc’s long-term strategy to revitalise its military-industrial base. Yet for Ukraine, linking the funds to long-term foreign contracts risks a critically negative outcome.

Initiatives like the “Danish model,” the PURL program, and partnerships with local manufacturers could deliver faster and more flexible results.

The Danish model allows Ukraine to procure equipment directly from manufacturers with Danish funding, bypassing lengthy European procurement rules. The PURL programme (Prioritized Ukraine Requirements List) similarly enables fast-tracked weapon supplies from the US

Finding the right balance between Ukraine’s immediate needs and Europe’s industrial ambitions is essential.

Why Ukraine wants control

The recent Reuters report that Kyiv wants to manage the loan independently makes perfect sense. The loan aims to ensure Ukraine’s stability amid a full-scale war—and, should peace talks eventually start, to strengthen its negotiating position.

Regardless, if Ukraine receives a package of expensive, long-term contracts instead of flexibility, this “support” will become largely symbolic. A year ago, the need for massive drone defence was far less urgent. No one can confidently say what Ukraine’s priorities will be six or twelve months from now.

Beyond battlefield needs

A portion of these funds must also be directed toward two other vital goals: reconstruction and compensation for losses. European partners remain reluctant to frame the use of Russian assets in terms of reparations, yet these questions are becoming unavoidable.

Proposals already exist to allocate even a small percentage of the loan to urgent reparations, which are also gaining traction within the international compensation mechanism.

Today, the war’s course—and perhaps even the outcome—may hinge on this decision. All parties must recognise that Europe’s security and the health of its defence industry depend on the success of Ukraine’s army—not at its expense.

Ivan Horodyskyy

Ivan Horodyskyy, Ph.D. (Law), is Managing Partner at Dexis Partners, co-founder of the Dnistrianskyi Centre, and a Board Member of the Ukrainian Bar Association.

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