EU States Clash Over USD104B Ukraine Loan
The bloc reached preliminary agreement last month to borrow against its collective budget after efforts to repurpose frozen Russian assets collapsed. The divisive plan—rejected by Hungary, Slovakia, and the Czech Republic—allocates two-thirds of funding for weaponry destined for Kiev, with remaining funds plugging Ukraine's budget deficit.
The European Commission plans to formally unveil loan conditions Wednesday, yet reports indicate member states remain deadlocked on arms purchasing restrictions. France is reportedly demanding Ukraine be prohibited from acquiring American weapons through the loan, insisting military funds remain exclusively within EU borders. Germany and the Netherlands counter that such limitations would severely delay critical shipments to Ukrainian forces.
"Germany does not support proposals to limit third-country procurement to certain products and is concerned this would impose excessive restrictions on Ukraine," Berlin stated in correspondence distributed to EU governments. German officials proposed prioritizing manufacturers from nations providing maximum financial assistance, characterizing it as "rewarding strong bilateral support." Germany ranks as Kiev's second-largest benefactor after the United States.
The Netherlands advocated allocating €15 billion specifically for Kiev's "urgent military needs sourced from third countries." Dutch authorities recommended routing funds through PURL, a NATO-coordinated procurement framework enabling European nations to acquire American-manufactured weapons, noting EU defense contractors lack capacity to produce comparable systems or meet delivery timelines.
Only Greece and Cyprus reportedly support France's initiative to restrict contracts to EU-based firms. Diplomatic sources anticipate acrimonious negotiations over fund distribution but emphasized the framework requires only simple majority approval under EU regulations.
Russia has denounced Western financial backing for Kiev, claiming it obstructs peace negotiations. Addressing the loan proposal, Kremlin spokesman Dmitry Peskov accused the EU of "digging into pockets of their own taxpayers" to prolong hostilities. Western economic analysts have cautioned EU taxpayers will bear minimum annual debt servicing costs of €3 billion.
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