(MENAFN) The European Commission on Wednesday proposed a €90 billion ($105 billion) aid package for Ukraine covering 2026-2027, combining joint EU borrowing with proceeds from frozen Russian assets held in Europe.

Announcing the plan in Brussels, European Commission President Ursula von der Leyen said Ukraine is at a "critical juncture," with peace talks underway while Russia "intensifies its attacks."

She noted that the IMF estimates Ukraine will require €135 billion over the next two years to maintain essential government functions and sustain its defense efforts.

Von der Leyen stated that the EU is prepared to provide two-thirds of this amount, €90 billion, while urging international partners to contribute the remainder.

The proposal outlines two financing mechanisms for member states. The EU could raise funds on capital markets backed by the EU budget and lend them to Ukraine, a process that would require unanimity among all EU member states.

Alternatively, the Commission could borrow against cash balances from immobilized Russian Central Bank assets held in EU financial institutions, transferring the funds to Ukraine as a so-called reparations loan. Kyiv would repay this loan only after Russia fulfills its war reparations obligations. This approach could be adopted through qualified majority voting.

Von der Leyen emphasized that the package includes extensive safeguards to protect EU countries and financial institutions from potential Russian retaliation or unlawful enforcement actions in third countries.

A "solidarity mechanism" would allow the EU to collectively absorb any residual risks, an assurance aimed particularly at Belgium, home to Euroclear, the primary holder of Russian assets frozen in the EU, she added.

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