KYIV – The European Union (EU) has announced that it will spend the bulk of its €90bn loan package for Ukraine on the military. Brussels announced on Wednesday that two-thirds of the loan will be used to strengthen Kiev’s military apparatus, while the rest is allocated for general budget and administrative work. EU member states agreed to the large-scale military aid in December after months of diplomatic wrangling.
The loan is considered crucial for Kiev, which is facing a cash shortage as Russia’s invasion of Ukraine enters its fifth year. EU chief Ursula von der Leyen said the aid would help Ukraine strengthen its defenses on the battlefield and maintain basic state services. She also said the funds would be used mainly to purchase weapons from Ukraine and European countries.
The loan package appears to address the stance taken by countries including France to strengthen Europe’s defense industry and reduce its dependence on the United States. However, the flexibility has been adopted to allow Ukraine to purchase the necessary military equipment from outside Europe if it is not available in Europe. According to von der Leyen, this investment will also have a positive impact on job creation, research and development in Europe. EU leaders agreed to guarantee this debt through the common budget after the Russian central bank’s plan to use frozen assets failed. The disbursement process will now begin only after the final approval of this loan by the European Parliament and member states. Brussels has decided to cover the annual interest on this loan, which is about three billion euros, from its own budget. Agency
