Why the EU’s Plan for Ukrainian ‘War Compensation Loans’ Failed

WISE NEWS PRESS / BRUSSELS, BELGIUM — DEC. 20, 2025

The European Union’s ambitious attempt to transform frozen Russian Central Bank assets into a zero-interest "war compensation loan" for Ukraine has collapsed. After four months of intense debate, leaders of the 27 member states chose to bypass the high-risk mechanism, opting instead for the bloc to borrow €90 billion on its own.

The proposal, initially presented by European Commission President Ursula von der Leyen in September, aimed to ensure that Russia, not just European taxpayers, paid for the war's damages. However, the plan faced insurmountable resistance from Belgium, which hosts Euroclear—the entity holding approximately €185 billion of the frozen Russian funds. Critics labeled the proposal "foolhardy," while supporters saw it as a "creative" solution that ultimately proved too experimental for the Eurozone's financial stability.

The Belgian Resistance and the ‘Golden Egg’ Analogy

Belgian Prime Minister Bart De Wever emerged as the primary opponent of the mechanism. During a press conference in Copenhagen, De Wever argued that seizing Putin’s money would weaken the EU’s strongest leverage against the Kremlin. He famously compared the assets to a goose, stating, "If you eat the chicken, you lose the golden egg".

Belgium demanded several safeguards before considering the plan:

• Full legal certainty for the host institutions.

  
  

• The complete mutualization of financial risks across all member states.

• Requirement that all countries holding Russian assets share the potential burden.

Financial Risks and the Pivot to Joint Borrowing

By December, the momentum for the compensation loan evaporated. The European Central Bank refused to provide liquidity support, and Euroclear warned that the "fragile" plan could trigger an exodus of foreign investors from the Eurozone. While nations like Estonia and Poland supported the initiative, others—including Italy, Bulgaria, and Malta—called for "more predictable and less risky" alternatives.

During the critical summit on December 18, leaders ultimately retreated from the mechanism when faced with the prospect of unlimited guarantees and compensation liabilities. Under the final agreement, the EU will borrow the funds independently, while roughly €210 billion in Russian assets will remain frozen until Moscow ends its war and compensates Kiev for damages. De Wever summarized the outcome simply: "There is no free money in the world. There never has been".

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