Late Thursday night, EU leaders conceded that their most ambitious proposal to finance Ukraine would not succeed. After months of discussion, the plan to turn frozen Russian central bank assets into a zero-interest reparations loan collapsed under political, legal, and financial pressure. Supporters called it morally compelling and strategically innovative, while critics warned it carried unpredictable risks and complex legal exposure. As the negotiations reached their final hours, caution overtook ambition, and leaders returned to more familiar territory.
Rather than seize Russian assets, governments chose a solution they could control and understand. The European Union will now raise €90 billion through joint borrowing on the markets, leaving the €210 billion in frozen Russian funds untouched. Those assets will remain immobilised until Moscow ends its war and compensates Ukraine. The decision marks a retreat from the European Commission’s original plan and underscores how fragile consensus can become when liability and risk enter the equation.
Belgian Prime Minister Bart De Wever played a central role in the plan’s failure. He repeatedly warned that accessing Russian assets would expose Europe to serious financial risks and weaken its leverage over Moscow. He argued that governments favor certainty when potential consequences are massive, especially if banking systems might be implicated. Over time, his concerns resonated with hesitant member states, and his opposition became a turning point in the discussions.
From Proposal to Political Debate
The idea first entered public view on 10 September during Ursula von der Leyen’s State of the EU speech in Strasbourg. She proposed using the income from frozen Russian assets to fund Ukraine’s military and reconstruction efforts. The political message was clear: Russia should pay for the damage it caused, and European taxpayers should not shoulder the burden alone. Yet the speech lacked concrete technical details, leaving questions about implementation unresolved and opening the door to intense debate.
German Chancellor Friedrich Merz then propelled the idea further, endorsing it in a Financial Times opinion piece. He presented approval as realistic and necessary, implying that broad support already existed. Many diplomats felt blindsided, accusing Germany of attempting to steer the bloc without sufficient consultation. The Commission later circulated a short, theoretical outline of the plan, which deepened concerns among cautious member states.
Belgium reacted particularly strongly, holding roughly €185 billion of the frozen assets through Euroclear. Belgian officials felt excluded despite carrying the largest financial exposure. De Wever publicly warned against spending Europe’s most potent leverage over Moscow and demanded airtight legal certainty with full risk-sharing. An October summit failed to reach agreement, and leaders asked the Commission to explore alternative funding options even as von der Leyen continued to present the reparations loan as the preferred solution.
Collapse in December
In November, von der Leyen presented leaders with three options to raise €90 billion: voluntary contributions, joint debt, and the reparations loan. She acknowledged that none of the options offered an easy path and tried to address Belgian concerns with stronger guarantees and wider international participation. At the same time, she warned about the potential reputational and financial risks to the eurozone.
The political debate briefly gained momentum when US and Russian officials circulated a controversial peace framework that proposed using frozen assets for shared commercial benefit. European leaders quickly rejected the idea, insisting that Europe must control decisions on its assets. For a moment, the reparations loan regained support, but that momentum faded as De Wever sent a sharply critical letter, describing the plan as fundamentally flawed and dangerous.
In December, the Commission released detailed legal texts, but the European Central Bank refused to provide a liquidity backstop. Euroclear criticized the plan as fragile and experimental, warning it could undermine investor confidence. Opposition widened when Italy, Bulgaria, and Malta urged safer, more predictable financing options. At the 18 December summit, leaders faced the prospect of unlimited guarantees and massive liabilities tied to Belgian banks. They shelved the reparations loan and chose joint debt instead.
De Wever later reflected that the outcome had been inevitable. He argued that no financial plan comes without real costs and that free money does not exist, a reminder that even the most ambitious and creative ideas are constrained by political and economic realities.
