There was no plan B, they said. Until there had to be one.
At a little after 9pm on Thursday, the EU’s 27 leaders were presented with an updated version of a proposal, championed by Germany, to use Russia’s frozen assets for a €90bn loan to Ukraine. But the scale of its complexity alienated even sympathetic leaders.
“It was never going to fly,” said a senior EU diplomat briefed on the discussions. “Something that technical and obscure spooked the leaders . . . it felt like an ambush.”
At that moment, months of diplomatic wrangling over using the Russian state assets to fund Ukraine collapsed. The complex measures needed to accommodate the legal concerns of Belgium — which houses the bulk of the assets — saw previously supportive capitals abandon their position.
“It was always a little bit of magic, to use the assets,” said one EU official involved in the negotiations. “And it all became too much.”
Inside the room, French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni voiced concerns about the prospect of their national parliaments agreeing to the financial guarantees demanded by Belgium to share the risk of potential repayment of the loan.
Two of the EU’s biggest beasts opposing the plan shifted the mood, officials said. “Meloni was the killer,” said an EU diplomat, adding that Macron was mostly silent.
After 17 hours of talks, leaders eventually agreed to instead borrow the €90bn for Kyiv on the capital markets against the EU budget.
“Common sense prevailed — we were able to secure the resources that are needed but to do so with a solution that has a solid basis from a legal and financial perspective,” Meloni told reporters after the summit. On the eve of the meeting, she had expressed concerns about the legal and financial implications for Italy of the Russian assets plan.
Macron said that joint debt “emerged as the most realistic and the most practical solution”.
The pivot marked a victory for Belgium and its maximalist stance. Belgian Prime Minister Bart De Wever had spent the weeks leading up to the summit refusing to countenance any use of the assets without “unlimited” guarantees for his country — a red line for most other member states.
As if to prove his point, Russian President Vladimir Putin on Wednesday said that European “swine” supporting Kyiv would be removed from power. He previously described any moves against the Russian assets as “theft”. The Russian central bank has already filed a lawsuit against Euroclear, the central securities depository in Brussels, where they are being held.
As the formal summit tackled the EU’s shared budget, enlargement and the Middle East, a visibly distracted De Wever and other leaders traipsed in and out of the room for bilateral talks and informal huddles. De Wever sat down with Ukraine’s President Volodymyr Zelenskyy, who pleaded with him to agree to use the assets.
“The summit was the sideshow,” said a person present for the talks. “The real action was going on outside the big room.”
But De Wever ultimately did not need to move. When the scale of his legal and financial reassurances was presented to the other 26 leaders, they killed the plan for him.
“It was clearly just too complicated,” said German Chancellor Friedrich Merz, who had initially floated the reparations loan idea in an opinion article in the Financial Times in September.
An alternative proposal, championed by Belgium and its backers, was quickly put forward. Two days previously, Hungary had signalled to the European Commission that while it was opposed to joint debt for Ukraine, it could agree to borrowing against the budget if Budapest was exempt from repaying it, two officials told the FT.
That offered the other leaders a far simpler solution to the reparations loan. At about 1.30am on Friday, a single page of text was presented to them: the EU would borrow the money on the capital markets against its shared budget.
The feared prospect of a veto by Russia-friendly countries Hungary, Slovakia and the Czech Republic was avoided by granting them an exemption from any repayment obligations.
Just an hour of discussion was needed before the leaders unanimously agreed on plan B. In a small concession to Merz, they agreed to “continue working” on the possibility of linking the Russian assets to the loan should Moscow refuse to pay reparations.
“We have found a way to build a bridge between the two models,” said Denmark’s Prime Minister Mette Frederiksen. “I preferred the one before we started the meeting, but I think the other is quite good.”
De Wever, a Flemish nationalist who united his country behind his uncompromising stance, has emerged as an unlikely winner, having turned the tables on Merz over his reluctance to agree to more joint debt for Ukraine.
“Politics is not a softball game, it’s hardball,” De Wever told journalists after the summit. “And if there are big interests at stake, it can clash.”
He also won sympathy from several smaller member states, EU diplomats said. Commission president Ursula von der Leyen had for weeks teamed up with her fellow German officials to push the reparations loan proposal, irking many capitals.
“Small member states don’t like this ganging up — they know it could be them next,” said one diplomat.
Additional reporting by Andy Bounds in Brussels and Amy Kazmin in Rome
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