Paul Culley / Jan 2026
Photo: European Union 2025
Major decisions were needed at this leaders’ meeting as part of the Union’s comprehensive commitments to Ukraine. They needed to agree how to support the Kyiv government’s budget for 2026-27. There were other policies also to be agreed (mostly foreign affairs). Taking the final step to conclude the trade agreement with Mercosur wasn’t on the agenda, but it also needed a strategic discussion. All EUCO policy conclusions require consensus. Here I focus only on Ukraine.
The process for this decision is worth noting. Agreeing a solution for Ukraine’s budget was probably one of the most important negotiations for any of the leaders in 2025, either at home or in Brussels. Their permanent Ambassadors in Brussels spent weeks of lengthy meetings preparing this. The final decision was above their pay grade. The leaders came to Brussels for a very long and intensive day of negotiations. Apart from the urgency for Ukraine, there was also the uncomfortable pressure of hundreds of journalists on the ground floor broadcasting across the world, almost in real time, the twists and turns of the negotiation (as they understood it). These are extremely difficult conditions for leaders to take major, strategic decisions.
Instant analysis never gives the full picture. Journalists work hard and under pressure to deliver news fast. Speed is the enemy of quality. Following them on social media, you feel their frustration and fatigue with the chaos of rumours and contradictory, incomplete briefings. The common language of the press centre is English. The Anglophone press, headquartered and controlled mostly outside the Union, sets the tone of the reporting. Always negative. The language doesn’t change - “squabbles”, “bickering”, “fiasco” leading to a “compromise solution” that is treated as a failure, rather than an achievement.
A ground-breaking solution for Ukraine was required. Its implications were enormous - legally, financially and politically. There were major reputational issues - not just the Union’s ability to deliver its commitments to Kyiv, but also its respect for international law as well as, internally, the fairness of the burden sharing between Member States. EUCO found a solution that met these three main criteria. They did it with innovative techniques, while remaining on firm legal ground. Yes, it was a very long and tense day for them (and the journalists). And they dealt with other important business, too, including Mercosur.
Ukraine’s financial needs for 2026-27 are about 90 billion Euros. Nothing close to this was available in the Union’s budget 2021-27. Unlike national governments, the Union never borrowed on financial markets (not until EUCO agreed in 2020 to borrow for a post-pandemic recovery fund “without creating a precedent”). The preferred solution proposed by the Commission was to mobilise the frozen sovereign assets of Russia, most of which were held in a financial body in Belgium. These assets were to be used to advance a loan of 90 billion Euros to Ukraine.
Even in the two World Wars of the 20th century, such an action using sovereign assets had never been taken. It had major implications in international law, significant risks of successful legal retaliation by Russia and potential reputational damage to the Union’s financial system. Most of the risk fell on Belgium where most of the frozen assets were held. The October meeting of EUCO discussed this proposal without reaching an agreement. This left almost two months for experts, diplomats and experts to iron out the problems before the December EUCO.
These two months did not produce enough to convince Belgium that this was the best or the safest solution. In fact, the Belgian Prime Minister visited many of his colleagues in person during this time and several were persuaded to share his reservations. The numerous and lengthy meetings of Ambassadors confirmed this. At the December EUCO, after some hours of discussions among leaders, they explored the possibility of borrowing 90 billion Euros, guaranteed by the EU budget, to lend to Ukraine - a new version of the “never to be repeated” post-pandemic borrowing decision. Three leaders (from Hungary, Czechia and Slovakia) signalled that they would not oppose the implementation of this political decision, but they would not participate in sharing the guarantee.
Normally, European Council conclusions require consensus, and foreign policy and major budgetary decisions require unanimity (not exactly the same thing). This solution broke new ground in three ways.
Firstly, the leaders adopted the meeting’s outcome on Ukraine as a “text firmly supported by 25 [leaders]”. For legal nerds, these therefore are intergovernmental conclusions outside the Union’s treaties, because EUCO conclusions (according to the treaties) require consensus. Hungary and Slovakia chose not to join the consensus. This intergovernmental formula was used previously in 2025 for conclusions setting policy on Ukraine, in October, June and March (twice).
Secondly, there was political agreement for a major budgetary decision to be taken without the usual unanimity. The Union’s treaties provide for a technique called “enhanced cooperation”. Basically, it enables the Council to decide unanimously that a law can be adopted without all Member States participating (but a minimum of nine is needed). It has been used only on 5-6 occasions, never for budget decisions.
Thirdly, this was equally a foreign policy decision. Strategic foreign policy conclusions are always taken by consensus although specific legal actions (such as sanctions) are voted unanimously. In this case, the policy and method of supporting Ukraine was decided intergovernmentally by 25 leaders.
This was a successful process and a successful outcome. Mobilising Russia’s frozen assets might have appeared the most painless solution for most Member States. However, the leader of the mid-sized Member State that would have carried the greatest risks persuaded his colleagues that there was a better solution. The new solution created precedents both in budget and in foreign policy decision-making. The result for Ukraine is exactly the original objective - a loan of 90 billion Euro - but organised internally in the Union in a different way. It’s important to note that there was a combination of Treaty procedure and intergovernmental agreement. We should also note that Hungary, Czechia and Slovakia facilitated the Treaty-based part of the budget solution by agreeing the use of the “enhanced cooperation” option.
This strategic decision will be now followed by a Commission proposal to the Council. Expect further difficult discussions about the detail. A negotiation is not a squabble and a compromise is a success.
