The European Commission is poised to initiate the disbursement of its €150 billion defence loan scheme, known as SAFE (Security Action for Europe), by the first quarter of next year. This initiative aims to support member states in the joint procurement of military equipment manufactured in Europe. Recently adopted by the Commission, the tentative funding allocation will benefit 19 member states that have expressed interest in accessing the program. Andrius Kubilius, the Commissioner for Defence and Space, highlighted this move as a significant advancement in enhancing Europe’s defence readiness amidst growing security concerns.
Among the member states applying for assistance, Poland stands out with a substantial request of €43.7 billion, accounting for a significant portion of the total funding. Other nations like Romania, France, Hungary, and Italy have also made considerable requests, creating an imperative need for detailed national investment plans to be submitted by the end of November. The Commission will evaluate these plans before they are forwarded to the European Council for final approval. Kubilius emphasized a need for prompt action, asserting that the current geopolitical climate demands more than just incremental improvements in defence capabilities.
The SAFE scheme prioritizes the procurement of critical defence products, including munitions, drones, air and missile defence systems, and cyber warfare capabilities. It mandates that the military equipment be primarily European-made, restricting external component costs to a maximum of 35%. Stricter criteria apply to more sensitive equipment, requiring European manufacturers to hold design authority, thereby ensuring operational independence from non-EU entities. This regulatory framework is designed to bolster Europe’s self-reliance in defence capabilities, which has become increasingly crucial given geopolitical tensions.
Moreover, the scheme enables third countries with an established security and defence partnership with the EU, like Canada and the UK, to join in on funding opportunities provided they negotiate bilateral agreements. This expanded participation reflects a strategic attempt to strengthen partnerships outside the EU, enhancing collective defence efforts across the continent and its allies. Meanwhile, successful member states had to strike a balance in their requests, which were scrutinized against their fiscal capabilities during the allocation process.
The SAFE loans will provide member states access to more favorable credit terms since the Commission’s credit rating is likely superior to those of some applicant nations. Interestingly, Germany, which has opted not to participate in requesting SAFE funds, may still utilize the program indirectly by benefiting from better pricing on military procurements. This highlights the relevance of the SAFE mechanism, not just for direct loan recipients but for broader participation in enhancing European defence capabilities.
As the Commission ramps up its defence financing efforts, it is also exploring additional funding mechanisms that will inform the upcoming Roadmap to Readiness 2030. This strategic outline, expected to be presented to member states in October, aims to further bolster Europe’s defence sector, ensuring that it remains adaptive and responsive to evolving security challenges. The escalating investment in military resources signifies a pivotal shift in Europe’s approach to collective security, emphasizing a long-term commitment to sustainability and readiness in defence.
