EU Secures 90 Billion Euro Loan for Ukraine Amid Oil Dispute Resolution

European Union member states have reached an agreement to unblock a crucial €90 billion loan intended for Ukraine, as well as a new sanctions package against Russia. This decision follows Ukraine's resumption of oil shipments to Hungary and Slovakia, leading Budapest to lift its earlier veto on the financial support. Cyprus, which currently holds the bloc's rotating presidency, announced that member states’ ambassadors have initiated written procedures for the final approval of both the loan and sanctions package, with a formal sign-off expected by Thursday afternoon. The EU initially agreed in December on the loan essential for maintaining Ukraine's financial stability in 2026 and 2027. However, Hungary's outgoing Prime Minister Viktor Orbán, supported by Slovakia, vetoed the loan in March due to a dispute with Ukraine regarding the damage to the Druzhba oil pipeline. Orbán accused Ukraine of intentionally delaying repairs to the pipeline, which plays a significant role in transporting oil to both Hungary and Slovakia. Ukrainian authorities contended that the pipeline—which has a capacity of 12 to 14 million barrels per day—was severely damaged by Russian drone strikes and that they were working as quickly as possible to restore it. On Wednesday afternoon, Hungary's MOL oil firm reported an update from the Druzhba's Ukrainian operator that crude oil was arriving from Belarus and was expected to reach Hungary and Slovakia by the next day. Ukrainian President Volodymyr Zelenskyy welcomed the news as an encouraging sign, emphasizing that ongoing support for Ukraine was essential to apply pressure on Russia to cease its military aggression. He stated that Ukraine was upholding its obligations within its relations with the EU concerning the Druzhba pipeline, and it was vital for the European support package to become operational swiftly. The disagreement over the loan, which aims to cover about two-thirds of Ukraine’s financing needs in 2026 and 2027, has also delayed the implementation of new sanctions against Moscow. The EU had hoped to adopt these measures in conjunction with the fourth anniversary of Russia's full-scale invasion, which began in February 2022. Orbán's recent electoral defeat had given rise to hopes within the EU that the funds could finally be unlocked, yet officials had initially expressed concerns about potential delays until the new Prime Minister, Péter Magyar, takes office in May. Despite Orbán's ability to block the loan, he, alongside Slovakia and the Czech Republic—countries friendly towards Moscow—were granted exemptions that meant they would not contribute to the joint borrowing. The EU plans to provide Ukraine with two interest-free loans of €45 billion each in 2026 and 2027, with €28 billion allocated for military spending and €17 billion for general budgetary needs each year. Economists have warned that Ukraine may begin to face financial difficulties by June without the EU loan. According to EU Economic Commissioner Valdis Dombrovskis, the first disbursement is likely to occur by the end of May or early June. The loan is structured so that Ukraine is not expected to repay the funds until after the conflict resolves and Russia begins paying reparations; potentially using the estimated €210 billion of its central bank's frozen assets held in the EU. A draft of the EU’s 20th sanctions package against Moscow includes further maritime and energy restrictions intended to limit Russia's oil exports, as well as a financial sector crackdown and bans on trade and industrial activities. The new sanctions are set to add over 40 ships to the existing list of 600 vessels banned from entering EU ports, and a comprehensive ban will be implemented on maritime services related to Russian oil transport. Additionally, the sanctions package includes travel and transaction bans targeting approximately 120 individuals and entities, including 20 Russian regional banks. Measures aim to complicate both domestic and international transactions for Russian businesses, with crypto platforms and digital assets facing scrutiny, along with third-party banks that facilitate trade in restricted military goods. Furthermore, about €930 million worth of specific goods—including metals, chemicals, and critical minerals—are set to be added to import and export bans. In a related note, the German government announced that the German subsidiary of Russia’s state-owned oil company Rosneft informed them of a suspension in oil flow from Kazakhstan through the Druzhba pipeline to a refinery in eastern Germany effective May 1. The PCK refinery, which supplies significant fuel to the Berlin region, is not expected to be greatly affected by this change, according to the government spokesperson. Related Sources: • Source 1 • Source 2