The European Union is grappling with a momentous problem: how to meet Ukraine's budget and military needs for 2026 and 2027.
With the United States effectively out of the picture, the bloc will be compelled to increase its financial contribution to Kyiv to at least €90 billion for the next two years.
But how?
When leaders meet on Thursday to make a final decision, they will find two different solutions on the table. Plan A: issue a zero-interest reparations loan based on immobilised Russian assets. And Plan B: borrow the money jointly.
Both plans come with considerable pros and cons, which will weigh heavily in the room during a make-or-break summit in Brussels.
"It's clear there are not really nice options on the table," said a senior diplomat. "All the options are costly, complex and difficult."
Since taking on common debt requires unanimity, which would be virtually impossible to achieve at this stage, the focus is on Plan A: the reparations loan. But the proposal, which has no precedent in modern history, has sharply split the EU's leaders.
Here's who is in favour and who is against.
Who is in favour?
The reparations loan has two fierce advocates in Ursula von der Leyen, the president of the European Commission, and Friedrich Merz, the chancellor of Germany.
Von der Leyen first previewed the initiative during her State of the EU speech in early September, without providing any specifics. Days later, Merz made a passionate plea in an op-ed in the Financial Times, whose forceful tone took other capitals by surprise.
Under the scheme, the financial institutions that hold the assets of the Russian Central Bank, immobilised since February 2022, would transfer their cash balances to the Commission, which would then issue a zero-interest loan to Ukraine.
Kyiv would be asked to repay only afterMoscow ends its war and compensates for the damage its invasion has wrought. Moscow would then be able to recover its money, completing the cycle.
"It is a very clear message also to Russia that the prolongation of the war on their side comes with a high cost for them," von der Leyen said.
The bold attempt to use Russia's sovereign assets to support the country that Russia is invading quickly made headlines and attracted the support of key member states.
The three Nordic leaders – Denmark's Mette Frederiksen, Sweden's Ulf Kristerssonand Finland's Petteri Orpo – were among the first to throw their weight fully behind the reparations loan while rejecting the idea of issuing fresh debt. Poland'sDonald Tusk, Estonia's Kristen Michal, Latvia's Evika Siliņa, Lithuania's Gitanas Nausėda and Ireland's Micheál Martin quickly followed and joined the growing calls in favour of the loan.
"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 letter.
The Netherlands, one of Ukraine's largest financial donors, is also strongly in favour.
Other supporters, albeit less vocal in their enthusiasm, are Spainand Portugal, which stress the need to secure stable financing for Ukraine one way or another.
"We're working hard to be able to go ahead with the reparations loan. From the Spanish side, we're pushing ahead as well. We think that there is space to go ahead, both legally and politically," Spain's Economy Minister Carlos Cuerpo told Euronews.
And then there's La France.
President Emmanuel Macron is keeping a surprisingly low profile in the high-stakes debate, raising questions on where the bloc's second-largest state actually stands. Compounding the mystery is the fact that France holds an estimated €18 billion in Russian sovereign assets, kept in undisclosed private banks.
"That doesn't mean we aren't working on other options, or broader options, that would include sovereign assets in commercial banks," the Elysée says. "But again, the nature of these assets, and in particular the nature of the existing contracts, is not the same."
Though Macron is not considered to be against the reparations loan, his glaring absence from the public discourse has forced Merz to take up the mantle on his own. The European decision might very well redefine his standing as chancellor.
"Let us not deceive ourselves. If we do not succeed in this, the European Union's ability to act will be severely damaged for years, if not for a longer period," Merz has warned.
Who is against?
The sensational saga of the reparations loan cannot be understood without Belgium, the chief custodian of the Russian assets, and its prime minister, Bart De Wever.
De Wever has seized every opportunity, be it a speech, a press conference or an interview, to communicate in no uncertain terms his intense dislike for the proposal, which he considers "fundamentally wrong" and ridden with "multifold dangers".
"Why would we thus venture into uncharted legal and financial waters with all possible consequences, if this can be avoided?" De Wever told von der Leyen in a scathing letter.
"I will never commit Belgium to sustain on its own the risks and exposures that would arise from the option of a reparations loan."
De Wever's preferred option is joint debt – he has called on the "Coalition of the Will" to turn into the "Coalition of the Bill" – but says he might approve the reparations loan if three crucial conditions are granted: full mutualisation of risks, effective liquidity guarantees and total burden-sharing by countries that hold Russian assets.
Since then, ambassadors have been working non-stop to revise the legal texts presented by the Commission and accommodate the Belgian concerns.
But De Wever is far from alone in his crusade: a new poll shows that 65% of Belgian citizens oppose the reparations loan. Euroclear, the institution that holds €185 billion in Russian assets and has already been sued by Moscow, has also been critical towards the proposal, calling it "very fragile", financially risky and legally experimental.
De Wever's resistance campaign received an unexpected boost last week when Italy, Bulgariaand Maltajoined Belgium in a declaration urging the Commission to explore "alternative solutions" with "predictable parameters" and "significantly less risks".
These solutions, they said, should act as a "bridge" to ensure Kyiv remains financed and leaders have more time to debate the two main options on the table. Though the declaration fell short of outright rejecting the reparations loan, it deepened uncertainty.
"We still have to clarify better the type of reservations they have," said an EU official.
Meanwhile, Andrej Babiš, the new prime minister of the Czech Republic, said he agreed with De Wever, whom he met last week in Brussels, and suggested the Commission "must find other ways" to assist Kyiv.
"In any case, we will not financially contribute to the aid," Babiš said. "We cannot provide any money from the Czech budget or guarantees."
Unrelated to Belgium is the hard-line opposition of Hungary's Viktor Orbán, who refuses point-blank to approve any new assistance to Ukraine, regardless of the method.
"Europe wants to continue the war, and even to expand it. It wants to keep it going on the Russia–Ukraine front line and expand it into the economic hinterland by confiscating frozen Russian assets," Orbán has said. "This step amounts to an open declaration of war, one that will be met with retaliation from the Russian side."
His close ally, Slovakia'sRobert Fico, has vowed to oppose any fresh military aid for Kyiv. Fico, however, is willing to earmark new funds to support Ukraine's post-war reconstruction and advance its EU accession bid, which Orbán has vetoed.
"If for Western Europe the life of a Russian or a Ukrainian is worth shit, I do not want to be part of such a Western Europe," Fico said, in a rare use of profanity by an EU leader.
"I will not support anything, even if we have to sit in Brussels until the New Year, which would lead to support for Ukraine's military expenditures."
So what might happen?
In the lead-up to the summit, the arithmetic is becoming increasingly tricky.
Technically, the reparations loan could move forward with a qualified majority: a minimum of 15 member states representing at least 65% of the bloc's total population.
This means that the seven aforementioned sceptics – Belgium, Italy, Bulgaria, Malta, the Czech Republic, Hungary and Slovakia – are not enough to derail the plan.
"When you work with a qualified majority, member states have a much keener interest in getting on board because there's a possibility of being outvoted," said a senior diplomat.
"This is an issue which is extremely delicate and difficult, and on such issues, you always make extreme efforts to take into consideration the concerns of all member states. It's not something you do lightly."
With Germany, Spain, Poland, the Nordics and the Baltics all in favour, the opposing group would need France – the only heavyweight available – to make a U-turn and position itself against. But a hard "non" is improbable given Macron's personal commitment to ensuring Ukraine's fate as a sovereign and independent nation.
At any rate, diplomats and officials admit that approving the reparations loan, with all its risks and uncertainties, over De Wever's head would be politically unsustainable.
"The leaders are very much aware of the disproportionate stakes of Belgium in the reparations loan, and that is being taken into account," a senior EU official said.
"If we're being realistic, 27 countries won't be possible," the official added, referring to Hungary. "We hope to be as close to 26 as possible."
If both the reparations loan and the joint debt prove intractable, the Commission will be asked to roll out an interim financial solution to prevent Ukraine's default. The country needs a fresh injection of foreign aid as early as April, so the clock is ticking fast.
For Ukrainian President Volodymyr Zelenskyy, the reparations loan is as much about finances as it is about accountability.
"The frozen assets could probably balance some reductions in certain countries. Because this would be truly serious support. I do not see, without this support, the possibility of standing firmly, economically firmly, for Ukraine," Zelenskyy has warned.
"I do not see that we will be able to cover such a deficit with some unclear alternatives or vague promises."
