The President-elect of the European Commission, Ursula von der Leyen, travelled to Kyiv on Friday 20 September to announce new Macro-Financial Assistance (MFA) of up to €35 billion, which will be guaranteed by windfall profits from frozen Russian assets.
“It’s a huge step forward”, she stressed, alongside Ukrainian President Volodymyr Zelensky. While the EU has helped Ukraine with more than €118 billion since the start of the conflict, “relentless Russian attacks means Ukraine needs additional support”, explained the President-elect.
According to Ms von der Leyen, this loan, which will be paid directly into the Ukrainian national budget, will help to improve Ukraine’s macro-financial stability and provide “important and much-needed” fiscal room for manoeuvre.
“You will decide how best to use the funds, which will give you maximum flexibility to meet your needs”, the Commission President-elect explained to Mr Zelensky, who has already announced that the funds will be “earmarked for the energy sector, protection, bomb shelters in schools, medical care and weapons”.
While the European treaties prevent lethal equipment from being financed from the EU budget, once the funds have been paid into the budget of a third country, that country can use them as it wishes. According to Mr Zelensky, Ukraine, which is facing an upsurge in air attacks, particularly against its energy infrastructure, could use the funds to buy air defence systems.
In addition to this Macro-Financial Assistance, on Thursday 19 September the EU announced a further €160 million in support for Ukraine’s energy sector (see EUROPE 13486/1).
Procedure. In parallel with Ms von der Leyen’s visit to Kyiv, the European Commission and the High Representative of the Union for Foreign Affairs unveiled a legislative package aimed at increasing Western macro-financial assistance to Ukraine, in line with the decision by the G7 summit in June to grant a $50 billion loan to Kyiv (see EUROPE 13433/23).
The Ukraine Loan Cooperation Mechanism (ULCM) would be set up, funded by future profits generated by the Bank of Russia’s frozen assets, as well as voluntary contributions from Member States and third countries. These funds will be distributed to Ukraine to help it repay new bilateral loans from the EU and G7 countries.
In order to provide greater legal certainty for this mechanism, which is linked to EU sanctions against Russia, it is proposed to increase the frequency of renewal of sanctions against the Bank of Russia from six months to three years. The aim is to reassure Europe’s partners, such as the United States, that the system will remain stable in the future.
According to a European source, two conditions must be met for EU sanctions against Russia to be lifted: Moscow must put an end to its war of aggression against Ukraine and compensate Kyiv for the destruction it has caused.
Due to the extensive destruction of Ukraine’s energy infrastructure by the Russian army, Ukraine’s financing requirements have increased by “twelve billion” euros for 2025, noted a European source. According to the IMF, which is asking the West to make progress on future assistance before paying out its own support to Kyiv, they now stand at 36 billion dollars.
MFA. The Commission is therefore proposing that the EU grant new Macro-Financial Assistance (MFA) of up to €35 billion in the form of long-term loans (maturing in 35 to 40 years), which Kyiv will repay using funds received from the ULCM mechanism. It stresses the importance of reaching a decision on this aid before the end of 2024.
In the event that the Bank of Russia’s assets are unfrozen more quickly than envisaged, the financial reparations that Russia would have to pay to Ukraine as compensation for its military aggression would also help to repay the macro-financial assistance.
The G7 countries participating in the ULCM mechanism will have to bear the risks incurred for their own bilateral loans. If these loans are substantial, the EU’s share of the overall package could be less than €35 billion. Asked about the possible non-participation of the United States, a European source said that this would not prevent the mechanism from being put in place. The source said it also hoped for the participation of non-G7 countries.
The Commission and the High Representative are also proposing to change the distribution of the profits generated by the Bank of Russia's assets in the EU, which is currently set at 90% for the ‘European Peace Facility’ (EPF), the instrument that enables Member States to be reimbursed for the purchase of arms for Ukraine, and at 10% for the ‘Ukraine Facility’, the financial instrument for EU assistance to Kyiv to the tune of 50 billion euros over the period 2024-2027 (see EUROPE 13413/21).
In March 2025, this breakdown would be 95% for the EPF and 5% for the ‘Ukraine Facility’. In July/August 2025, it would be 5% for the EPF and 95% for the ULCM mechanism.
Apart from the proposal to increase the duration of sanctions on Bank of Russia assets, all other proposals will require a qualified majority of Member States in the EU Council.
The attitude of the Hungarian Presidency of the EU Council, and in particular its ability to push forward work on this legislative package in support of Ukraine, will be particularly scrutinised, given that Hungary generally puts the brakes on any decisions in this area.
Penalties. The Ukrainian President also called for sanctions against Russia to be stepped up. “We must not allow the aggressor to adapt to our pressure”, said Mr Zelensky, adding that work on the 12th sanctions package should continue. (Original version in French by (Mathieu Bion with Camille-Cerise Gessant and Pauline Denys)