Federico Fabbrini (Full Professor of European Union Law at Dublin City University and Fellow in International Security at Harvard Kennedy School of Government)

On 14 January 2026, the European Commission presented a package of legislative texts aimed at implementing the commitment undertaken by the European Council before Christmas to provide €90 billion in funding to Ukraine for 2026–2027. On that occasion the European Council had politically agreed to grant a loan to Ukraine, authorising the Commission to issue common debt, while rejecting the option of using the assets of the Russian Central Bank frozen at European financial intermediaries as a consequence of the sanctions adopted after Russia’s aggression against Ukraine. At the same summit, however, the European Council stated that three countries – Hungary, Czechia and Slovakia – would be exempt from participation in the common financing, thus outlining a scenario akin to an opt-out from common financing, which was questionable from a legal viewpoint.

With the publication of three legislative proposals – to which a further proposal already advanced on 23 December 2025 must be added – the Commission has clarified the situation. This makes it possible to assess the true legal consequences of the political agreement reached at the end of 2025. Specifically, the Commission has proposed: (1) a revision of the regulation establishing the Multiannual Financial Framework (MFF) – the EU budget for 2021–2027 – which must be approved unanimously by the Council with the consent of the European Parliament (EP); (2) a new regulation of the EP and the Council implementing enhanced cooperation for the establishment of a loan to finance Ukraine for 2026–2027; and (3) a proposal to amend the 2024 regulation of the EP and the Council establishing the Ukraine Facility (a previous financing instrument worth €50 billion for 2024–2026). These three texts are then complemented by a fourth act, published by the European Commission on 23 December 2025, proposing a Council decision establishing enhanced cooperation among 24 EU Member States for the purpose of a loan to Ukraine: this act must be approved by the Council with the consent of the EP and, as will be seen, is a key element of the project.

The legal structure devised by the European Commission to secure financing for Ukraine is particularly complex from an EU law perspective. This reflects the legal constraints arising from the Treaties (the Treaty on European Union and the Treaty on the Functioning of the European Union) within which the European institutions must operate. Yet, this also reflects the political pressures at the European and international levels concerning support for Ukraine, which had already visibly emerged at the European Council summit of December 2025. At the same time, however, the complex regulatory architecture put in place by the Commission helps to obscure a reality that is actually much simpler than it appears. By reading the four acts mentioned above, what emerges is the following.

Through the proposal to amend the regulation establishing the MFF, a new provision is inserted into the MFF confirming that the €90 billion loan in favour of Ukraine is guaranteed by the EU budget as a whole. In addition, Article 24 of the proposed regulation of the EP and the Council implementing enhanced cooperation for the establishment of a loan in support of Ukraine explicitly provides that the Commission is authorised to issue, in the name and on behalf of the EU as a whole, €90 billion in European securities on the capital markets. These resources will then be transferred to Ukraine in the form of loans in accordance with the provisions contained in the same proposed regulation of the EP and the Council implementing enhanced cooperation for the establishment of a loan in support of Ukraine. This act – which largely mirrors the previous regulations establishing the Ukraine MFA+ 2023 and the Ukraine Facility 2024–2026 – provides that €30 billion will be used by Ukraine for macro-financial assistance and €60 billion to develop its defence industry, that is, for military purposes. Up to this point, thus, nothing particularly different from what had been done legislatively in previous EU financial interventions in favour of Ukraine – and no trace of any form of opt-out in favour of the three pro-Russian countries of Eastern Europe.

It is here, then, that the Commission’s proposal for a Council decision establishing enhanced cooperation in favour of Ukraine, advanced in December, becomes relevant. This text – which finds its legal basis in Article 329 TFEU (and, although not explicitly cited by the Commission, in Article 20 TEU) on enhanced cooperation – essentially contains a single article that merely authorises enhanced cooperation among 24 Member States. More importantly, the text includes in recital 15 a clarification that is essential to accommodate the request of Hungary, Czechia and Slovakia. Specifically, recital 15 states that “the Member States not participating in the enhanced cooperation on the establishment of the Reparations Loan should be entitled to an adjustment in accordance with Article 11 of Council Regulation (EU, Euratom) No 609/2014 [the act concerning the methods and procedure for making available own resources]. That adjustment should cover the expenditure of enhanced cooperation and any call on the guarantee for contingent liabilities.” Setting aside the technicalities, this means that in the event that the EU were unable to repay its debt to the financial markets and had to draw on the budgetary guarantees of the Member States (which are jointly and severally liable for the EU budget), Hungary, Czechia and Slovakia would benefit from an adjustment and would therefore be required to contribute proportionally less than other states to the EU’s debts.

It will be clear that the scenario envisaged by this recital – which is technically not even legally binding – is unrealistic. Given its financial prowess, the EU will have no difficulty in repaying €90 billion of common debt. Thus, the exemption in favour of Hungary, Czechia and Slovakia appears more hypothetical than real. In the meantime, however, the Commission will proceed to issue, in the name and on behalf of the entire EU, common debt guaranteed by the EU budget as a whole. In short, the issue of European financing for Ukraine reveals a discrepancy between rhetoric and reality; but, as often happens in the process of European integration, the complexity of the law is a consequence of politics.