Late Thursday night, EU leaders accepted that their ambitious Ukraine funding plan would fail.
They had tried to design a reparations loan with no modern precedent.
The plan aimed to redirect frozen Russian central bank assets to support Ukraine.
The idea looked daring and morally compelling.
It also forced governments into legal and financial uncertainty.
When leaders faced that uncertainty, they stepped back.
Rather than seize Russian assets, leaders chose a familiar route.
They agreed to support Ukraine through jointly issued EU debt.
They avoided touching the €210 billion in immobilised Russian funds.
Belgian Prime Minister Bart De Wever opposed the plan from the start.
He warned that taking Russian-linked money exposed Europe to major risks.
He argued governments prefer certainty when stakes grow high.
The EU will now borrow €90 billion from financial markets.
Russian assets will remain frozen until Russia ends the war and pays damages.
Ukraine will not receive the funding structure the Commission originally promised.
How the Idea Emerged and Met Resistance
Commission President Ursula von der Leyen introduced the proposal on 10 September.
She raised it during her State of the EU address in Strasbourg.
She suggested using profits from frozen Russian assets to finance Ukraine.
Von der Leyen offered no technical details at the time.
She argued Russia should pay for the destruction it caused.
She said European taxpayers should not carry the entire burden.
German Chancellor Friedrich Merz then pushed the idea forcefully.
He endorsed it in a Financial Times opinion article.
He described near-unanimous approval as both desirable and achievable.
Many diplomats reacted with surprise.
Some felt Germany tried to steer EU policy alone.
The Commission later shared a brief, theoretical outline of the scheme.
Belgium reacted strongly to that document.
The country holds about €185 billion of the frozen assets through Euroclear.
Belgian officials felt excluded from early discussions.
In October, De Wever publicly voiced his opposition.
He warned that spending the assets would destroy Europe’s leverage over Moscow.
He demanded airtight legal guarantees and shared financial responsibility.
An October summit ended without agreement.
Leaders asked the Commission to explore multiple funding options.
Von der Leyen still framed the loan as the preferred path.
Why the Plan Ultimately Collapsed
In November, von der Leyen presented three funding options to leaders.
They included voluntary contributions, joint debt, and the reparations loan.
She admitted every option carried serious consequences.
Her letter tried to answer Belgium’s concerns directly.
It promised strong guarantees and broad international participation.
It also warned of financial and reputational risks for the eurozone.
External events briefly strengthened the loan’s appeal.
US and Russian officials circulated a controversial peace proposal.
That plan suggested exploiting frozen assets for mutual benefit.
European leaders rejected that idea immediately.
They insisted Europe must control decisions within its jurisdiction.
The reparations loan briefly regained momentum.
De Wever then sent a sharply critical letter to von der Leyen.
He called the plan fundamentally wrong and highly dangerous.
He warned it could damage future peace negotiations.
In December, the Commission released detailed legal texts.
The European Central Bank refused to back the plan with liquidity support.
Euroclear criticised the proposal as fragile and overly experimental.
Several northern and eastern states defended the loan publicly.
They argued it respected Ukraine’s right to compensation.
Senior Commission officials echoed that position repeatedly.
Momentum faded when Italy, Bulgaria, and Malta raised objections.
They called for safer and more predictable funding methods.
Other leaders quietly shared those concerns.
At the 18 December summit, leaders sought a final compromise.
They discussed unlimited guarantees and full reimbursement commitments.
That prospect alarmed exhausted negotiators.
Leaders feared massive liabilities tied to Belgian banks.
They abandoned the reparations loan and chose joint debt.
De Wever said he expected the outcome.
He argued that no funding plan comes without real costs.
He said free money simply does not exist.
