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A historic agreement with the European Union opens Ukraine’s first multi-year defense funding line
On May 28, 2026, the Verkhovna Rada of Ukraine ratified an agreement with the European Union for a loan of up to €90 billion for 2026–2027. This is one of the largest financial support packages provided to Ukraine by the EU during the full-scale war. The first tranches were expected as early as June 2026 (EU Commissioner Valdis Dombrovskis mentioned late May or early June).
Of the total amount, approximately €30 billion will be directed toward the macrofinancial support for the state budget — stabilizing public finances, paying pensions, public-sector wages, and supporting critical government services. The remaining €60 billion will constitute direct funding for Ukraine’s defense-industrial complex (DIC). These funds will go toward the mass production of various types of drones, ammunition, air-defense systems (ADS), and toward strengthening missile and strike capabilities.
It is important to understand: this is not a grant but a loan that Ukraine must repay. The terms are concessional, with an extended repayment period, and repayment is linked to future reparations from Russia — the loan becomes repayable only after Russia has paid war reparations.
For the European Union member states, as well as for the EU itself as a supranational institution, this instrument serves simultaneously as humanitarian, economic, and security support: the money stays within the European financial system, is partly used to purchase European-made products, and — most importantly — strengthens Ukraine’s ability to deter aggression on Europe’s eastern flank.
Read the FULL article by Danylo Yershov, political scientist specializing in international relations, junior expert at the United Ukraine Think Tank.
Yershov notes that the political decision on the aid package was made at the European Council level on December 18, 2025, and the European Parliament approved it in February 2026 — though final adoption stalled for months because of vetoes from Hungary and Slovakia tied to the Druzhba pipeline. Only once those objections were withdrawn did the EU Council finalize the legislation on April 23, 2026. He points out that European Commission President Ursula von der Leyen announced the memorandum’s signing on May 27, and the Verkhovna Rada ratified both the agreement and the accompanying memorandum the very next day.
The expert argues that this sequence created a full legal basis for the first payouts to begin. He explains that the financing model relies on the EU borrowing on capital markets with the EU budget as backing, which lets large sums be mobilized quickly without an immediate hit to individual member states’ budgets.
Yershov emphasizes that these funds are meant to expand output of unmanned systems — FPV drones, medium-range and reconnaissance drones, and naval drones — along with ammunition such as artillery shells, mines, and missiles. He adds that the support will also go toward air-defense production, especially systems for shooting down drones and cruise missiles, as well as building up manufacturing infrastructure and bringing on new production capacity, including through public-private partnerships.
The expert notes that a portion of the money may go toward buying finished European-made equipment, giving the EU’s own defense sector a demand boost. He highlights that the military share of the loan includes a “Made in Europe” requirement, steering the bulk of spending toward European rather than American producers — something he frames as significant for European taxpayers, since it effectively channels the funding back into Europe’s own defense industry.
Yershov observes that a decade ago Ukraine barely had a military drone industry, yet it now ranks among the world’s leaders in the pace and scale of drone innovation. He cites figures showing Ukraine built around 4 million robotic and autonomous systems in 2025, with 2026 projections ranging from 5 to 7 million units depending on the source (Atlantic Council and Aviation Week put it near 7 million, CFR around 5–6 million), while Ukraine’s domestic FPV production capacity alone tops 8 million annually. The expert further points to statements from Ukraine’s Deputy Defense Minister that, with adequate allied funding, annual output could reach as high as 20 million drones — nearly double the prior year’s total and a dramatic multiplication of pre-war capacity.
The expert describes how dedicated unmanned-systems units have been formed, with drone companies and battalions folded into brigade and corps structures. He points to the emergence of “middle-strike” capability at the operational-tactical level — coordinated strikes on enemy rear positions alongside artillery and missiles. Citing Commander-in-Chief Oleksandr Syrskyi, Yershov notes that May alone saw roughly 2,000 middle-strike operations, hitting 414 command posts, control points, and troop concentrations.
Yershov argues that this has let Ukrainian forces mount successful counteractions and inflict disproportionate losses on several fronts. He references Syrskyi’s June 2026 estimate that Ukraine holds around a 1.5:1 advantage in FPV drones, which, paired with middle-strike operations, opens room for local initiative even where overall resources remain unequal.
The expert concludes that Ukraine now has a chance to convert its existing drone-warfare edge into a lasting industrial base — one that lets it not just endure but actively shape the war’s trajectory, something he says it has already demonstrated by turning results into further innovation. For the EU, he frames this as proof that backing a frontline partner is itself the most effective form of self-defense. Yershov predicts that by the summer and autumn of 2026 the world will see how directing €60 billion toward the right priorities can shift the battlefield balance, adding that Ukraine has shown it can turn innovation into results — and is now gaining the resources to do so at far greater scale.
Read the FULL article on The Gaze: How the EU’s €90 Billion Loan Could Reshape Ukraine’s Defense Industry
Read also: A Truce on Borrowed Time: Why the U.S.-Iran Memorandum Is So Fragile
