For weeks, Ukraine had been caught in a bind. A path to ending the war seemed increasingly illusory, as peace talks with Russia went from yielding no results to being put on hold. That meant Kyiv needed to prepare to fight indefinitely, even as vital financial support from the European Union remained frozen.
A breakthrough now finally appears within sight.
After Hungary dropped its opposition to a $106 billion E.U. loan to Ukraine the day before, European leaders were expected to unblock the funds on Thursday. The money, which had been held up since December, will cover a large share of Ukraine’s financial needs over the next two years. Once those funds are exhausted, an additional $117 billion from the bloc’s long-term budget is expected to be allocated to Ukraine.
Taken together, the pledges appear to put Ukraine on firmer financial footing at least through 2029, said Hlib Vyshlinsky, head of the Kyiv-based Center for Economic Strategy. The pressure, he added, now shifts to Moscow, which is facing growing economic strain in sustaining its own war effort.
The European Union’s extended commitment to Ukraine has largely filled a void left by the Trump administration. Last year, European countries provided nearly all of Kyiv’s military, financial and humanitarian support, while U.S. aid fell by 99 percent, according to the Kiel Institute for the World Economy, a German research center.
Unlike previous E.U. assistance packages, the latest one is heavily weighted toward defense spending. Some $70 billion of the loan will go to the military, giving Kyiv a substantial pool of money to buy costly air defense systems and expand production of drones, its most effective tools for blunting Russian ground assaults.
The emphasis on military financing reflects what many European and Ukrainian officials have expressed privately for months: that Ukraine must prepare for a prolonged war by strengthening its defenses.
Russia has refused to agree to a cease-fire, and the Trump administration, which has mediated peace talks, has not put significant pressure on Moscow to compromise.
The negotiations are now on ice as the United States has entangled itself in another Middle Eastern war. Sergey V. Lavrov, Russia’s foreign minister, has said that resuming negotiations is not Moscow’s top priority.
That comes as no surprise to European leaders. “The truth is, anyway, Russia has never taken them seriously,” Boris Pistorius, Germany’s defense minister, said about the talks during a meeting of European and Ukrainian defense ministers last week. “This is why it is all the more important to support Ukraine.”
President Volodymyr Zelensky has reshaped his cabinet to reflect the likelihood that the war will not end soon. He appointed a new defense minister, Mykhailo Fedorov, a tech enthusiast who has embraced drones as central to pushing back Russian forces.
While neither Russia nor Ukraine has any clear path to victory, Mr. Fedorov has said his mission is to make the fight futile for Moscow and compel a settlement.
“The president has given the Ministry of Defense a clear task: alongside diplomacy, strengthen our defense in such a way that we force the enemy into peace,” Mr. Fedorov said in a February statement outlining his blueprint.
The interest-free E.U. loan — which Ukraine would have to repay only if Russia paid reparations — will, in part, provide the financial foundation for Mr. Fedorov’s strategy.
The loan will be disbursed evenly over the next two years, with $33 billion allocated to military needs and $20 billion to nonmilitary expenses in the first year, according to Valdis Dombrovskis, the European commissioner for economy. He added that a first tranche of money was likely to arrive in Ukraine in late May or early June.
That funding will go to drone production, Mr. Dombrovskis said. Ukraine is producing nearly 1,000 drone interceptors each day, according to Mr. Zelensky. With the money, it could double that amount and better protect its skies, he said. “We need this money very much,” he told CNN. “It’s really a question of our life.”
Overall, the European Union said the new loan would cover about two-thirds of Ukraine’s external financing needs for military and nonmilitary spending for the next two years, which the bloc estimates at $135.7 billion. The remaining one-third is expected to be covered by other institutions like the I.M.F.
With the loan, Ukraine’s spending should be covered for the coming years, according to some Ukrainian and European authorities. The reality, however, is more complicated.
Kyiv’s official budget projects $66 billion in military expenses this year. But the Ukrainian defense ministry said earlier this year that the country would need $120 billion to successfully implement its strategy to halt Russia’s assault.
To bridge the gap, the ministry said it was counting on additional assistance. Mr. Fedorov has been touring Western capitals to present his plan and seek more funding. Germany agreed to a new package of military aid worth more than $4.5 billion, while Belgium and Spain each committed $1.2 billion.
