The European Union on 25 June transferred the first €3.2 billion of a €90 billion loan facility to Ukraine, with a further €6 billion earmarked for drone manufacturing set to begin flowing within days. The disbursement, announced by Commission President Ursula von der Leyen at a reconstruction conference in Gdańsk, Poland, marks the start of a two-year financing package designed to keep the Ukrainian state functioning and its defence industry expanding.

The funds come with explicit procurement restrictions. Brussels has stipulated that the €5.9 billion drone component of the first tranche may not be used to buy US-manufactured weapons unless European companies cannot supply equivalent systems and the Commission grants a special waiver. A Commission spokesman confirmed that Ukraine can request exceptions but there is no guarantee of approval. The requirement extends a broader “buy European” condition attached to the entire €90 billion credit line, which European officials say will channel the bulk of military spending to EU defence contractors.

Separately, Sweden announced a 1.49 billion kronor (€130 million) support package focused on repairing and protecting Ukraine’s energy infrastructure, with funds directed to a dedicated energy fund, the Swedish Civil Contingencies Agency, and the IAEA for nuclear plant security. The macro-financial portion of the EU loan—€30 billion of the total—is conditional on Kyiv meeting reform benchmarks agreed with the International Monetary Fund, including steps toward energy tariff liberalisation, improved tax collection, and anti-corruption measures. Ukrainian Prime Minister Yulia Svyrydenko, speaking in Gdańsk, described the loan as “almost a grant” because repayment is theoretically linked to future Russian reparations, though EU officials acknowledge the legal and political obstacles to such a mechanism.

The loan’s approval was delayed for months by Hungary, which lifted its veto only after Prime Minister Viktor Orbán’s electoral defeat. The Gdańsk conference, co-hosted by Poland and Ukraine, was overshadowed by a diplomatic row over historical grievances that led President Volodymyr Zelensky to cancel his attendance, though Polish Prime Minister Donald Tusk sought to de-escalate tensions. The next concrete milestone is the second EU tranche of approximately €3.7 billion, expected in September, contingent on Ukraine’s progress on the agreed reform agenda.