EU clears €90bn Ukraine loan and imposes 20th sanctions package on Russia

The European Union has given final approval to a €90 billion loan for Ukraine alongside a new round of sanctions against Russia, ending a prolonged diplomatic impasse that had stalled support for Kyiv. The decision was reached after Hungary and Slovakia dropped their objections, a move that followed Ukraine's agreement to restart oil flows through the Druzhba pipeline following necessary repairs.

EU Foreign Policy Chief Kaja Kallas confirmed the resolution of the deadlock, noting that the measures signify a shift where Russia's war economy faces increasing strain while Ukraine secures a major financial boost. The approval comes at a critical juncture four years into the conflict, addressing severe budget deficits in Ukraine at a time when United States support has largely diminished and sanctions on Russian oil exports have been eased in the context of the US-Israeli war on Iran.

Hungary's outgoing Prime Minister Viktor Orban had previously stalled the loan approval, leveraging the issue to pressure Ukraine into repairing the pipeline that carries Russian oil to his landlocked territory. Following a recent election defeat, Orban maintained this stance until the infrastructure repairs were completed and oil flows resumed, thereby unblocking the path for the substantial financial aid.

Ukrainian President Volodymyr Zelenskyy welcomed the development, describing it as an important day for defence and relations with the European Union. He emphasised the necessity of securing this level of financial certainty after more than four years of full-scale war and specifically urged that the first tranche of the loan be disbursed by May or June to plug budget black holes.

The accompanying sanctions package, the 20th imposed by the EU since the invasion began in 2022, targets Russia's energy, banking, and trade sectors. The measures include restrictions on the shadow fleet of ageing tankers used to bypass oil export limits and curbs on Russian cryptocurrency traders, though a full maritime ban on vessels carrying Russian crude was deferred pending alignment with G7 partners.

In a notable expansion of its enforcement mechanisms, the EU also halted sales of specific machinery to Kyrgyzstan to prevent these goods from being diverted to Russia. This marks the first instance where the bloc has used a mechanism to halt entire categories of exports to a third country specifically to avoid sanctions circumvention.