With $39 Billion Loan for Ukraine, Europe Moves Ahead Without U.S.

Plans for a larger sum collapsed when Hungary blocked changes requested by Washington as the price for a joint initiative.

The European Union’s top official said on a trip to Kyiv on Friday that Europe would offer Ukraine a loan of 35 billion euros, about $39 billion, backed by frozen Russian assets. European leaders said the loan would move forward initially without contributions from the United States, after talks between American and European officials stalled in recent days.

The official, Ursula von der Leyen, president of the European Commission, met with President Volodymyr Zelensky of Ukraine to reiterate Europe’s continued support for his country. Her trip came days before Mr. Zelensky was expected to travel to New York for the United Nations General Assembly.

There, he will present President Biden with a proposal, which has not yet been made public, to bring about the end of Russia’s war in Ukraine. He will also meet with the two candidates seeking to replace Mr. Biden, Vice President Kamala Harris and former President Donald J. Trump.

The loan announced on Friday, which would provide Ukraine with a needed infusion of funds without increasing direct aid from the budgets of European countries, is smaller than the $50 billion that the United States and other large Group of 7 economies agreed to provide in June. Washington had intended to contribute $20 billion to $25 billion to the loan, but only under conditions that would have barred an E.U. review of sanctions against Russia for three years.

Still, the loan announcement will be a relief to Kyiv, which is running out of money for acquiring weapons and for rebuilding damaged energy infrastructure as it heads into another winter at war.

At a news conference with Mr. Zelensky, Ms. von der Leyen said, “We should make Russia pay for the destruction it has caused.” The trip to Kyiv was her eighth visit to the Ukrainian capital since Russia launched its full-scale invasion in February 2022.

The plan is to repay the $39 billion loan using interest from $300 billion of Russian central bank assets that were frozen in 2022, though there is a risk that falling rates could decrease the value of the returns on those assets.

E.U. member states and the European Parliament will need to vote on the loan announced on Friday; should the proposal gain the required votes, Brussels intends to release the funds before the end of the year.

Jacob Kirkegaard, a Brussels-based senior fellow at the Peterson Institute for International Economics, said the announcement that the European Union would move forward with the loan signaled that it was rising to the task of possibly becoming the dominant supporter of Ukraine. But by doing so, the bloc was also taking on the risks associated with the loan.

“Those assets aren’t 100 percent certain, so this is a common risk taken by the E.U. without unanimity,” he said. “That’s a huge deal.”

The proposal for a $39 billion loan leaves open the question of to what extent individual European countries might reduce their contributions to Ukraine from their budgets, potentially decreasing the financial impact of the loan.

European and American officials struggled to secure an agreement because of legal questions. One sticking point has been the requirement by the European Union, where two-thirds of Russia’s central bank assets are held, to review the sanctions that have frozen the assets every six months. Because any change in the sanctions could unlock the frozen Russian money serving as the basis of the loan, the United States has said that it will only move forward with its contribution if Brussels agrees to extend the sanctions review period to 36 months.

Any change to the review period requires the approval of all 27 E.U. member states, however, and Hungary, which has cultivated close ties with Russia, objected.

To resolve the impasse, E.U. officials decided to move forward with the smaller loan, which does not include participation from Washington, though Ms. von der Leyen said that she was “absolutely confident” that the United States and others would eventually contribute.

Ukraine faces enormous energy challenges as it heads into the third winter of the war. Russian attacks on power plants have intensified in recent months, and in late August, after Ukraine invaded the Kursk region of Russia, Moscow fired more than 200 missiles and drones on Ukraine that targeted its energy infrastructure.

Even before those attacks, Ukraine’s power generation was about a third of its prewar capacity. “This winter will be, by far, its sternest test yet,” Fatih Birol, the head of the International Energy Agency, said on Thursday.

In a report published on Thursday, the energy agency urged Ukraine and the international community to focus on increasing the security of critical infrastructure and on Ukraine’s capacity to import electricity and gas from the European Union. The agency also called on Ukraine to decentralize its power supply, since large energy assets were more vulnerable to attack.

Ms. von der Leyen’s visit to Kyiv comes as Ukrainian troops on the ground are in a precarious position. On the eastern front, they have been gradually retreating for months in the face of persistent Russian advances, and they are now grappling with Russian counterattacks in the small portion of the Kursk region that they captured last month.

Also on Friday, Ukraine announced that it would ban the use of the messaging app Telegram on the official devices of members of its government, military and security apparatus. The app was founded by Pavel Durov, a Russian citizen who was arrested in France last month as part of an investigation into criminal activities on the platform.

Citing threats to national security, the National Security and Defense Council of Ukraine warned on Friday that Russia may have access to messages and personal data on Telegram. The app has become a major platform of communication for people in both Ukraine and Russia during the war.

The ban was not expected to significantly affect communications within Ukraine’s military, which uses other platforms, such as Signal.

Alan Rappeport contributed reporting from Washington.

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• Biden Poised to Approve New Tactics: President Biden appears on the verge of clearing the way for Ukraine to launch long-range Western weapons deep inside Russian territory, as long as it doesn’t use arms provided by the United States, European officials say.

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