International Relations15 Oct 2026 · about 6 min

EU Will Need to Increase Ukraine Funding to Plug Gap: Merz

The brief

Ukraine faces a major budget shortfall next year. Russian bombardments have damaged its economy, while the country still needs money to operate and withstand the war. The European Union already has a large loan arranged, but Kyiv warns that it will not cover all its needs. At the EU summit, Friedrich Merz said Europe must help Ukraine through the winter and support it next year. He said the bloc would need to increase funding again to assist Ukraine on a lasting basis. The European Commission is working with Kyiv to establish a definitive figure for next year's requirement. The article does not give a final total. It says Ukrainian authorities expect to need tens of billions more. EU leaders must therefore decide how to close the gap, while also responding to Russia's continuing strikes and strained support from the United States.

What funding shortfall is Ukraine facing, and why does Germany’s chancellor say the EU must provide more money?

At the EU summit, Friedrich Merz said Europe must help Ukraine through the winter and support it next year. He said the bloc would need to increase funding again to assist Ukraine on a lasting basis. The European Commission is working with Kyiv to establish a definitive figure for next year's requirement.

The article does not give a final total. It says Ukrainian authorities expect to need tens of billions more. EU leaders must therefore decide how to close the gap, while also responding to Russia's continuing strikes and strained support from the United States.

How much financial support has the EU already arranged for Ukraine, and how long was the existing loan meant to last?

The EU has already arranged substantial financial support for Ukraine through a 90-billion-euro loan, valued at $101 billion in the article. This package was meant to keep Kyiv funded for several years, rather than provide only short-term emergency assistance.

The loan was set to help cover Ukraine's funding needs through the end of 2027. That gives the existing arrangement a multi-year horizon. However, Russia's strikes have damaged Ukraine's economy, and Ukrainian authorities now warn that the planned amount may not be enough.

The key issue is a growing gap between the loan's planned coverage and Ukraine's projected needs. EU leaders are opening discussions about additional funding for next year. The European Commission is working with Kyiv to determine the exact amount required before governments decide how to respond.

What consequences could Ukraine face if its funding runs out while Russian strikes continue damaging its economy?

If Ukraine's funding runs out, the country could face severe difficulty covering its budget needs while the war continues. The article describes a major shortfall next year and says Russia's strikes have already battered the economy. That combination creates pressure on both public finances and daily national functioning.

The immediate danger is a dire winter. Moscow has stepped up bombardments, and Chancellor Merz said Europe must help Ukraine through the winter. Without enough money, Ukraine could have less capacity to respond to wartime needs and repair or sustain an economy damaged by attacks. The article does not list specific services that would be cut.

The longer-term consequence would be a deeper financing gap. Kyiv says it needs tens of billions more, while the existing EU loan was designed to last through 2027. EU leaders must determine the extra amount and how to provide it as strikes continue.

What does it mean for the EU to finance Ukraine through a loan rather than a direct grant?

Financing Ukraine through a loan means providing money that is generally expected to be repaid, usually under agreed conditions and over time. A direct grant is different: it is funding given without a normal repayment obligation. Loans can stretch support across several years, while grants place the cost on the funder immediately.

In this case, the article says the EU has arranged a 90-billion-euro loan for Kyiv. That loan was intended to help cover Ukraine's funding needs through the end of 2027. The article does not explain its interest rate, repayment schedule, or who ultimately carries the repayment responsibility.

The distinction matters because Ukraine is facing a major budget shortfall during a continuing war. More loans can provide urgent support but may add future financial obligations. More grants would not create the same repayment burden for Ukraine, though the article does not say whether proposed additional EU funding would be loans, grants, or both.

What are frozen Russian central bank assets, and how could they be used to support Ukraine?

Frozen Russian central bank assets are funds belonging to Russia's central bank that have been blocked in Europe. The freeze prevents them from being freely used while they remain under European control. The article does not explain the precise legal form of the freeze or whether it applies to the principal, earnings, or both.

The proposed mechanism is to use around 200 billion euros in frozen assets to help finance Ukraine. EU leaders have faced renewed calls to tap that money because Kyiv expects a major budget shortfall. Using the assets would create a potential funding source separate from new loans or grants raised from European budgets.

There is little momentum behind the proposal. Belgium, where most of the funds are held, remains opposed. Germany's Friedrich Merz also rejected any US attempt to obtain some of the money through peace negotiations, saying the assets are frozen in Europe and Europe will decide what happens to them.

Why is Belgium, where much of the frozen Russian money is held, concerned about using those assets for Ukraine?

Belgium is important because most of the frozen Russian central bank assets are held there. The article says Belgium remains opposed to using about 200 billion euros of those funds for Ukraine. However, it does not identify the Belgian government's specific reason or describe its detailed objections.

In general, a country holding frozen foreign assets may worry about legal challenges, possible retaliation, and responsibility for losses if the assets are transferred. It may also be concerned about confidence in financial institutions. These are general considerations, not reasons confirmed by the article. The article only establishes Belgium's opposition and its role as the main location of the funds.

That opposition helps explain why the proposal has little momentum. Although the assets could offer a major source of support for Kyiv, European leaders have not agreed to use them. Merz insists that Europe, not Washington, should decide their future.

Why does a major war require governments to raise large amounts of money, and how do military spending and economic damage affect a country's budget?

A major war requires large sums because governments must fund military operations, protect people, maintain public services, and repair damaged infrastructure. At the same time, fighting can weaken businesses, production, trade, and tax revenues. The government therefore faces higher costs just as its income may fall.

The article illustrates both pressures in Ukraine. Russia has stepped up bombardments, and its strikes have battered the Ukrainian economy. Ukraine must keep responding to the war while dealing with the financial effects of that damage. The article does not provide a breakdown of Ukraine's military spending, tax revenue, or repair costs.

This combination produces a budget shortfall and increases the need for outside support. The EU arranged a 90-billion-euro loan, but Kyiv warns that tens of billions more will be needed. EU leaders are now considering further funding as the war continues and Ukraine prepares for a difficult winter.

This brief was written by AI from the original reporting and checked by other models. Names, figures and quotes come from the source; read it for full context.