EU leaders discuss Iran, Ukraine at Cyprus summit

Leaders from the EU's 27 member states gathered in Cyprus on Thursday to discuss the geopolitical challenges facing the bloc, including the wars in Iran and Ukraine.

Here's what's on the agenda:

Ukraine

The two days of meetings began with leaders greenlighting a long-discussed €90 billion ($105 billion) loan to Ukraine and agreeing to even more sanctions on Russia. German Chancellor Friedrich Merz said on arrival that he was "very grateful" that the loans were now "definitively approved."

Ukrainian President Volodymyr Zelenskyy joined leaders in the seaside town of Ayia Napa on Thursday for talks on Russia's war with Ukraine.

"For us it's a very important decision and I'm very thankful to all the leaders for their unanimity," Zelenskyy told reporters, saying the funds would serve multiple purposes. 

"It's strengthening our army, it's our internal production of drones and systems of electronic warfare. It's our life, because it's also about surviving. We had quite a difficult, you know, really, awful winter with all these ballistic attacks and massive drone attacks, we destroyed 90% plus of it, but not everything," the president said. "And that's why our energy system was under massive attacks and it was very difficult for us. We have now make a lot of progress in reconstruction — of energy, first of all, to prepare for the next winter — and we need money for that." 

The money had been held up because of opposition from outgoing Hungarian Prime Minister Viktor Orban, who was not expected to travel to Cyprus, along with his Slovak counterpart Robert Fico. Preliminary approval for the funds was given by diplomats on Wednesday, as oil supplies to Hungary and Slovakia via Ukraine restarted.

Other European leaders hailed the decision. Latvia's Prime Minister Evika Selina said the Baltic member had been "working a lot for this issue" and described the outcome as a "fruitful result." 

Irish Taoiseach (or prime minister) Micheal Martin said Ireland "very warmly" welcomed unblocking the funds. 

"This will create great resilience in Ukraine now, and I think it sends a very strong signal that Europe is in it for the long haul, behind Ukraine," Martin said, adding that he hoped this signal of solidarity would also prove a catalyst for the stalled peace negotiations with Russia. 

Middle East

On Friday in Nicosia, European leaders are to be joined by Lebanese President Joseph Aoun, Egyptian President Abdel Fattah el-Sissi, Syrian President Ahmed al-Sharaa, and Jordanian Crown Prince Hussein bin Abdullah.

During a working lunch, they are set to discuss the situation in Lebanon, where a 10-day ceasefire is in place to quell hostilities between Israel and the Iran-backed militant group Hezbollah.

A separate ceasefire is also currently in place in the US-Israel war with Iran.

Iran's effective closure of the Strait of Hormuz has sent energy prices surging and sparked fears about a potential shortage of jet fuel in Europe. About 20% of the jet fuel consumed in the EU relies on imports via the key waterway.

Latvia's Prime Minister Silina said she thought it was "very important we discuss what to do with Hormuz," because she said she believed the European Commission's set of tools to handle rising fuel and energy costs could prove insufficient. 

"I think we need to discuss what else we can do," Silina said. "Is there something else that we as Europe can do to stop this high rise of prices which can affect our inflation rate?"

Ireland's Martin, whose country will take over the rotating EU presidency from Cyprus later this year, said leaders would discuss the war in the Middle East, both in terms of the "impact that war is having on the people of the area in terms of devastation and death," and also "its impact on the global economy." 

"IMF forecasts are downgrading economic growth across the world and so it's extremely important that we get that conflict ended as well," he said. 

Will the Iran war cause a global recession?

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Raising the EU budget

Also on Friday, leaders are expected to discuss the bloc's upcoming long-term budget for 2028-2034 for the first time.

The EU executive wants a bigger budget worth around €2 trillion ($2.3 trillion). A major challenge will be figuring out how to finance goals like boosting the EU's competitiveness and defense capabilities at a time when many member states are short on funds.

A final agreement is hoped for by the end of 2026.

Edited by: Sean Sinico, Alex Berry