EU close to approving Ukraine loan after key condition met

It is reported that the issue of third countries' participation in agreements on the procurement of weapons for Ukraine has finally been resolved. The contracts were to be financed with credit funds.

The draft agreement will allow Ukraine to buy key weapons from the US, the UK, and other countries, but only under two conditions: either the EU has no equivalent, or there is an urgent and critical need.

What can be purchased

Weapons allowed under the agreement include air and missile defense systems, ammunition, fighter jet equipment, and "deep-strike capabilities" such as missiles and long-range drones.

The UK, if it wants to participate in contracts beyond this list, would need to make a financial contribution to cover interest payments on the loan to Ukraine.

"The British contribution — to be agreed in upcoming negotiations with the European Commission — should be proportional with the potential gains of its defense firms taking part in the scheme," the outlet notes.

France’s role in blocking the loan

France has recently blocked the final approval of the loan, demanding that countries paying interest on the loan receive maximum benefits from defense contracts.

Paris was less concerned about whether the EU defense industry could supply the weapons Ukraine needs immediately. To overcome France’s opposition and that of its allies, a new formulation was added to the draft.

"Any agreement with a third country must be based on a balance of rights and obligations… a third country should not have the same rights nor enjoy the same benefits," the text reads.

France’s position also strengthened the control of purchases outside the bloc. Ukraine will now have to "provide the information reasonably available to it demonstrating that the conditions for the application of this derogation are met."

Only after verification by the European Commission and consultations with the Ukraine Defense Industrial Capacities Expert Group will a decision be made on whether weapons can be purchased from third countries.

€90 billion loan for Ukraine: what we know

In January, the European Commission presented a plan to provide Ukraine with a €90 billion loan. The plan was initially agreed upon during the EU leaders’ summit in mid-December, with funds expected to be disbursed to Ukraine by April.

Of the total loan, €30 billion is earmarked for budget support, while €60 billion is intended for Ukraine’s defense needs. However, the defense spending component has sparked controversy within the EU.

Some countries, led by France, want to restrict Ukraine from using the funds to purchase weapons from the US. Meanwhile, other EU states insist that non-EU countries involved in contracts with Ukraine must pay a fee if the contracts are financed with money from the €90 billion loan.