Late on Thursday night, EU leaders finally accepted that their ambitious Ukraine funding plan had failed after months of intense debate. They had explored an unprecedented proposal to use frozen Russian central bank assets as the basis for a zero-interest reparations loan for Kyiv. Supporters saw the idea as morally justified and politically powerful, while opponents feared legal uncertainty, financial exposure, and unpredictable long-term consequences. As talks entered their final hours, political ambition gave way to caution, and leaders grew uneasy about crossing legal and financial lines without precedent. Rather than risk fallout they could not fully control, they returned to a familiar solution and agreed to raise €90 billion through joint EU borrowing, leaving the €210 billion in frozen Russian assets untouched.
Belgian Prime Minister Bart De Wever played a decisive role in stopping the plan. He repeatedly warned that seizing Russian assets would expose Europe to serious financial liabilities and weaken its leverage over Moscow. He argued that governments ultimately prefer certainty when potential risks multiply and consequences remain unclear. His position gradually gained support as more member states became hesitant about the scale of guarantees required. By the end of the talks, the reparations loan that the Commission had promised Ukraine no longer commanded enough backing to survive.
How the Proposal Gained Support and Lost Trust
The idea first entered the public debate on 10 September during Ursula von der Leyen’s State of the EU address in Strasbourg. She suggested using profits from frozen Russian assets to help finance Ukraine’s resistance and reconstruction. Her message carried strong political symbolism, stressing that Russia should pay for the destruction it caused, but she offered few technical details. Those details soon became the source of growing concern among several capitals.
German Chancellor Friedrich Merz then pushed the proposal further by endorsing it in a Financial Times opinion piece. He presented the plan as realistic and necessary, implying that broad support already existed. Many diplomats felt caught off guard by his confidence, and some accused Germany of trying to set the agenda without sufficient consultation. Tensions rose further when the Commission circulated a short, highly theoretical document outlining how the scheme might work.
Belgium reacted sharply to that move, pointing out that it holds around €185 billion of the frozen Russian assets through Euroclear. Belgian officials felt sidelined despite bearing the largest financial exposure. De Wever publicly warned against spending Europe’s strongest bargaining tool and demanded airtight legal certainty and full risk sharing. An October summit failed to reach agreement, and leaders instead asked the Commission to explore several funding options, even as von der Leyen continued to describe the reparations loan as the preferred path.
Why the Plan Finally Fell Apart
In November, von der Leyen presented three possible ways to raise €90 billion: voluntary national contributions, joint debt, and the reparations loan. She openly acknowledged that none of the options came without serious drawbacks. Her letter tried to address Belgian concerns by offering stronger guarantees and broader international participation, while also warning of reputational and financial risks for the eurozone. For a brief moment, external events appeared to strengthen the case for the loan, after US and Russian officials circulated a controversial peace framework that proposed exploiting frozen assets for shared commercial benefit, an idea European leaders immediately rejected.
Momentum collapsed again when De Wever sent a sharply critical letter to the Commission, calling the proposal fundamentally flawed and potentially dangerous for future peace negotiations. In December, the Commission released detailed legal texts, but the European Central Bank refused to provide liquidity support. Euroclear then criticised the plan as fragile and risky for investor confidence. Although several northern and eastern states defended the proposal publicly, opposition widened when Italy, Bulgaria, and Malta called for safer and more predictable financing methods.
At the 18 December summit, leaders faced the prospect of unlimited guarantees and massive liabilities tied to Belgian banks. Confronted with those risks, they abandoned the reparations loan and chose joint debt instead. De Wever said the outcome confirmed what he had expected all along, arguing that no financial solution comes without real costs and that free money simply does not exist.
