EU member states have reached an agreement to unlock a €90bn (£78bn) loan for Ukraine and approve a new sanctions package against Russia, after Hungary lifted its veto. The breakthrough followed Ukraine’s resumption of Russian oil pumping to Hungary and Slovakia via the Druzhba pipeline, a key point of contention that had blocked the deal since March.
Cyprus, holding the EU rotating presidency, confirmed that ambassadors launched written procedures for final approval, with formal sign-off expected by Thursday afternoon. The loan, agreed in December, is vital for Ukraine’s financing needs this year and next. Hungary’s outgoing Prime Minister Viktor Orbán had vetoed it, backed by Slovakia, accusing Ukraine of deliberately delaying repairs to the pipeline damaged by Russian drone strikes. Ukraine insisted repairs were proceeding as fast as possible.
On Wednesday, Hungary’s MOL oil firm reported that crude oil from Belarus was flowing through the pipeline and expected to reach Hungary and Slovakia imminently. Ukrainian President Volodymyr Zelenskyy welcomed the news, stating that both support for Ukraine and pressure on Russia are necessary for Moscow to end its war. He added that the European support package must become operational swiftly.
The loan will be disbursed as two interest-free tranches of €45bn in 2026 and 2027, with €28bn for military spending and €17bn for general budget needs each year. The EU will borrow the funds on capital markets backed by its budget. Ukraine is not expected to repay the principal until Russia pays reparations after the war, potentially using €210bn of frozen Russian central bank assets.
The impasse also delayed the EU’s 20th sanctions package against Russia, which now includes further maritime and energy restrictions, a financial sector crackdown, and trade and industrial bans. More than 40 additional ships will be added to the list of vessels banned from EU ports, and comprehensive bans on maritime services linked to Russian oil transport will be introduced. Approximately 120 individuals and entities, including 20 Russian regional banks, face asset freezes and travel bans.
