It was so bold that, at times, it seemed impossible — and in the end, it was.

The European Union’s attempt to channel the immobilised assets of the Russian Central Bank into a zero-interest reparations loan failed when the bloc’s 27 leaders, faced with a leap into the unknown, chose to support Ukraine’s resistance with the tried-and-tested method of joint debt.

“If you take money from (Russian President Vladimir) Putin, you are exposed,” said Belgian Prime Minister Bart De Wever, the chief opponent of the reparations loan, explaining its failure. “If you’re exposed, then people like certainty, and where can you find certainty? In charted waters.”

The bloc will now go to the markets to raise €90 billion on its own, without touching the €210 billion in Russian assets, which will remain immobilised until Moscow ceases its war of aggression and compensates Kyiv for the damages.

The choice means that there will be no reparations loan — and not what the European Commission had promised to Ukraine, a complex proposal that advocates thought ingenious and detractors said was foolhardy.

Euronews has pieced together the events of the last four months to understand how and why the reparations loan spectacularly fell apart.

September: The pitch

The first appearance of the loan proposal dates back to 10 September, when European Commission President Ursula von der Leyen delivered her hour-long State of the EU speech in Strasbourg.

There she proposed using the cash balances from the immobilised Russian assets held in the EU to issue a reparations loan to support Ukraine. She did not provide any details at the time.

“This is Russia’s war. And it is Russia that should pay,” von der Leyen said. “It should not only be European taxpayers who bear the brunt.”

But it was not von der Leyen who would define what was about to become the most energy-consuming political debate of 2025. It was German Chancellor Friedrich Merz.

A few days after von der Leyen’s speech, he published an opinion piece in the Financial Times that offered a full endorsement of the project, presenting it as a foregone conclusion despite its lack of precedent.

“That decision should, ideally, be unanimous,” he wrote. “Failing that, it should be adopted by the large majority of member states who are firmly committed to Ukraine.”

The so-called “Merz op-ed” caught diplomats and officials by surprise. Some saw it as yet another example of Germany exploiting its position as the largest member state to single-handedly set the agenda for the entire bloc.

Subsequently, the Commission put forward a two-page document that outlined, in highly theoretical terms, how the initiative would work in practice.

The chain of events triggered one country in particular.

October: The pushback

Belgium holds the bulk of the Russian assets — about €185 billion — in central securities depository Euroclear, and felt it should have been adequately consulted before the Commission’s two-page proposal was circulated.

The Belgian resistance burst into the open in October when De Wever delivered a remarkably frank press conference in Copenhagen in which he argued the reparations loan would deprive the EU of its most powerful leverage vis-à-vis the Kremlin.

“The question now is: can we eat the chicken?” De Wever said. “The first problem, of course, is that you lose the golden eggs if you eat the chickens. You have to consider that. If you put the chicken on the table and you eat it, then you lose a golden egg.”

De Wever then delineated, one by one, his demands for the untested project: bulletproof legal certainty, full mutualisation of risks and real burden-sharing among all countries holding Russian sovereign assets.

He reiterated his concerns about the plan during a closely watched summit in mid-October, where leaders hoped to endorse the reparations loan. De Wever held his ground, and the meeting ended with a vague mandate tasking the Commission to design several “options” that could meet Ukraine’s financial and military needs for 2026 and 2027.

Von der Leyen, however, seemed to interpret the mandate as an implicit affirmation of her bold idea, which she framed as the only viable option.

“There are points to be clarified and have a deep dive,” she said at the end of the summit. “We agreed on the what, that is, the reparations loan, and we have to work on the how, how we make it possible (and) what’s the best option to move forward.”

A few days later, the EU’s three Nordic leaders publicly ruled out issuing joint debt to support Ukraine. Danish Prime Minister Mette Frederiksen went as far as to declare that “for me, there is no alternative to the reparations loan”.

November: The shock

The inconclusive summit revealed that without Belgium’s consent, the reparations loan would not be possible. The Commission accelerated bilateral talks with De Wever’s team to address the sticking points and sketch out a landing zone.

On 17 November, von der Leyen sent leaders a letter detailing three options to raise €90 billion for Ukraine: bilateral voluntary contributions, joint debt and the reparations loan.

“The options presented in this note are stark both in their design and in their implications. Clearly, there are no easy options,” she said.

The section devoted to the reparations loan was explicitly written to mitigate the Belgian concerns. It addressed two of De Wever’s key demands: providing “legally binding, unconditional, irrevocable and on-demand guarantees” and securing the participation of all EU and G7 countries holding Russian sovereign assets.

The letter also acknowledged the disadvantages of the reparations loan, warning of reputational damage to the eurozone and “knock-on effects” for its financial stability.

Just as diplomats were digesting von der Leyen’s matter-of-fact assessment, a hurricane swept through Europe: the now-infamous 28-point plan drafted by US and Russian officials to end the war in Ukraine that, among other things, proposed using the immobilised assets for the commercial benefit of both Washington and Moscow.

The plan incensed European leaders, who quickly closed ranks and emphasised that any issue within European jurisdiction would require full European involvement. Rather than weakening the case for the reparations loan, the 28-point plan seemed to strengthen it.

But then, De Wever re-entered the scene with a strongly worded letter to von der Leyen describing her blueprint as “fundamentally wrong” and riddled with “multifold dangers”.

“Hastily moving forward on the proposed reparations loan scheme would have, as collateral damage, that we, as the EU, are effectively preventing reaching an eventual peace deal,” De Wever said in the most controversial segment of the letter.

His invective revealed the chasm that still existed between Belgium and the Commission, and raised the bar even higher for a compromise.

December: The collapse

Undeterred by De Wever’s castigations, von der Leyen forged ahead and unveiled the legal texts of the reparations loan in early December — just as the European Central Bank declined to provide a liquidity backstop for the measure.

The complex proposal, which diplomats said arrived too late in the process, further expanded the guarantees to protect Belgium, erected safeguards to nullify arbitration and created an “offset” mechanism to recoup any eventual losses.

“We want to make very sure to all our member states, but specifically also to Belgium, that we will share the burden in a fair way, as it is the European way,” von der Leyen said.

This time, the pushback came from Euroclear itself, rather than De Wever. In a statement to Euronews, the depository decried the texts as “very fragile,” describing them as excessively experimental and liable to trigger an exodus of foreign investors from the eurozone.

As uncertainty over the project deepened, the leaders of Estonia, Finland, Ireland, Latvia, Lithuania, Poland and Sweden came together in its defence.

“In addition to being the most financially feasible and politically realistic solution, it addresses the fundamental principles of Ukraine’s right of compensation for damages caused by the aggression,” they wrote in a joint statement.

High-level Commission officials, from Kaja Kallas to Valdis Dombrovskis, echoed von der Leyen’s message and framed the reparations loan as the most credible option.

The proposal was bolstered after member states, fearing a repeat of the 28-point plan, invoked an emergency clause to indefinitely immobilise the Russian assets, something that on paper could help alleviate one of Belgium’s most pressing concerns.

Yet the momentum proved to be short-lived.

In an unexpected twist, Italy, Bulgaria and Malta joined Belgium in urging the Commission to explore “alternative solutions” to finance Ukraine with “predictable parameters” and “significantly less risks”. Separately, Andrej Babiš, the newly appointed prime minister of the Czech Republic, called on the Commission to “find other ways”.

The reservations set the scene for the make-or-break summit on 18 December.

During the closed-door talks, officials worked to address all the outstanding Belgian concerns and unblock the reparations loan. But in the end, the effort backfired, instead laying bare the scope of commitment that governments were required to undertake.

At one point, a compromise was floated: to provide “uncapped” guarantees and reimburse “all amounts and damages” stemming from the scheme.

The wording was too much for the sleep-deprived leaders: all of a sudden, they were staring down the prospect of bailing out the entire Belgian banking system.

Faced with mounting concessions and liabilities, leaders shelved the reparations loan and opted for joint debt.

“I knew beforehand that the enthusiasm for the reparations loan was not so big as people thought it would be,” De Wever said, suggesting that von der Leyen, while doing an “excellent job,” had been misled by Germany, the Nordics and the Baltic states.

“It turned out, as I knew it would, that many more countries that hadn’t spoken yet were extremely critical of all the financial aspects of it, finding out that a simple truth: there is no free money in the world. It just does not exist.”