Introduction: No More ‘Free Riding’
The return of large-scale warfare on European soil has shattered assumptions that war belonged to the past. Coupled with the erosion of security guarantees under the current US administration, the persistent capability gaps across EU Member States (MS), and an alarming dependency on non-European defence procurement, this new reality has thrust the European Union into an era of self-reliance, where strategic autonomy is no longer an aspiration but an existential necessity.
Against this backdrop, the European Commission unveiled a 5-pillar REARM Europe Plan in March 2025, coined ‘Readiness 2030,’ intending to funnel up to EUR 800 billion for defence by 2030. The proposal included a range of actions such as fiscal flexibility measures to accelerate national defence investments and expenditure, the possibility of redirecting cohesion funds for defence, and a plan to mobilise private capital through a Savings and Investment Union while envisioning a greater role for the European Investment Bank.
Most notably, it presented an ad hoc financial instrument, the Security Action for Europe (SAFE), to reinforce the European Defence Industrial Ecosystem through loans for common procurement. This article explores SAFE, outlining its structural features, eligibility criteria, and novel attributes. Furthermore, it examines certain challenges deriving from its legal base, broadened scope, and loan-based nature. Ultimately, it concludes that despite its constraints, SAFE constitutes a tangible effort, aimed at structuring the foundations of the Union’s defence industrial policy in the long run.
Unpacking SAFE: Innovation Through Pragmatism
Directly managed by the European Commission, SAFE will provide up to EUR 150 billion in low-interest loans to EU MS for defence investments, focusing on seven priority areas identified by the European Council. Its core objectives are deemed vital for the nascent European Defence Industrial Base, as it seeks to enhance its visibility while exponentially improving Europe’s manufacturing capabilities and addressing critical gaps in a timely manner. This entails shortening the development cycle of new defence products and improving the efficiency of existing ones. Moreover, its emphasis on common procurement offers a pathway for EU MS to mitigate the high cost, reduce their spending, and crucially improve their armed forces’ interoperability. Finally, beyond the internal strengthening of the Union, SAFE aims to provide military support to Ukraine, in recognition of the deteriorating security environment on Europe’s eastern flank. 
To achieve the aforesaid, SAFE does not function in isolation. It draws lessons from previous emergency programs, such as the Act in Support of Ammunition Production (ASAP) and the European Defence Industry Reinforcement through Common Procurement (EDIRPA). It also complements the European Defence Fund (EDF), the Union’s flagship defence program. Additionally, SAFE aligns with the targets of the European Defence Industrial Strategy (EDIS) and will be complemented by the European Defence Industry Program (EDIP), once adopted.
The rapid procedural framework of SAFE reflects its emergency nature. Following a call for expression of interest, Member States submit indicative loan requests within two months of the regulation’s entry into force. The Commission swiftly provides tentative allocations within a two-week timeframe, after which states must submit detailed European defence industry investment plans, describing the targeted defence product, planned activities, and expenditure within six months, underscoring the need for agility in responding to urgent defence requirements. To facilitate the implementation of activities under SAFE, a pre-financing of 15% of the respective loan allocation shall be provided. Endeavoring to find an equilibrium, the regulation also presents an anti-concentration rule where the share of loans to the three member states representing the highest allocation granted should not exceed 60% of the maximum allocation bestowed by SAFE.
Nonetheless, a significant novelty within SAFE, and indeed a major area of compromise, concerns its eligibility criteria. While adhering to strict rules regarding the establishment of contractors and subcontractors within the EU, the European Free Trade Association (EFTA), or Ukraine, and prohibiting control by third countries, with exceptions contingent on guarantees protecting the Union’s security and defence interests, SAFE introduces a notable departure from previous defence initiatives. It allows for the participation of acceding countries, candidate, and potential candidate countries in common procurement.
More controversially, it extends this possibility to third countries with whom the EU has signed a Security and Defence Partnership. Yet, pursuing a balance between inclusiveness and safeguard, albeit an imperfect one, the regulation underlines that components produced outside the EU should not exceed 35% of the estimated cost of the defence end product. Similarly, subcontractors from third countries should be eligible for financing as long as their invaluable contribution is demonstrated and will not exceed 35% of the contract’s total value.
Lastly, concerning common procurement under SAFE, it will involve at least two EU MS, EFTA countries, or Ukraine, out of which at least one is supported financially by the instrument. However, due to the urgency for investments and to attract interest, procurements involving at least one member state supported under SAFE will be facilitated temporarily, as seen in the example of Poland, combined with a temporary exclusion from the value-added tax to defence products financed by the instrument. So far, this article has presented SAFE’s ambitious scope and unique elements. Nevertheless, the initiative is not without its challenges, which ought to be examined in the following section.
Navigating the Minefield: SAFE’s Challenges Unveiled
For all its novelty, SAFE’s loan-based nature may disincentivise some MS, given their preference for grants. This aligns with Daniel Fiott’s view that loans count towards national defence expenditure and eventually will need to be repaid, limiting their political appeal. Consequently, the issue of debt sustainability emerges. While some countries, such as Poland or Romania, may benefit from the lower EU borrowing costs, already indebted countries like France might struggle to make ends meet. Likewise, countries that can already borrow from the capital markets at a lower rate may not opt for financial assistance through SAFE, hinting at a potential uneven uptake of the loans.
The above statement is supported by the recent release of the tentative allocations per Member State. For instance, Germany, Sweden, and the Netherlands did not apply for loans, while Poland received the lion’s share, representing almost one-third of the total money, followed by Romania, France, and Hungary. Correspondingly, the sufficiency of the funding is also a pertinent question. While EUR 150 billion in loans for defence procurement is substantial, it pales in comparison to the estimated USD 1 trillion required to replace US military support, indicating that SAFE represents a stepping stone but not a panacea for Europe’s entire defence deficit.
In parallel, SAFE’s legal foundation has also presented issues. The instrument’s legal basis, Article 122 of the Treaty on the Functioning of the European Union (TFEU), justifying financial support due to a crisis of a non-financial nature, allowed the regulation’s adoption without requiring unanimity and sidelined the European Parliament’s role in the negotiation process. Subsequently, this move, reserved for emergencies like the COVID-19 pandemic, triggered an institutional clash, prompting the Parliament in August 2025 to submit a request to the Court of Justice of the EU (CURIA) for the annulment of the SAFE regulation, questioning its legal base.
Ultimately, SAFE’s most contentious point stems from its eligibility rules, a flexibility that mirrors industrial reality but risks political backlash. Specifically, the instrument’s expanded scope for third-country participation, while innovative, has raised concerns among certain MS. In particular, Greece and Cyprus have opposed the prospect of European money strengthening the defence industry of third countries like Turkey or facilitating their purchase of EU military equipment, considering their thorny bilateral relations and long-standing security concerns. Such debates around eligibility criteria for third countries have historically delayed other defence programs like EDIP, and SAFE is no exception, with the Council currently negotiating the participation framework for the UK and Canada.
Furthermore, the issue of design authority, referring to who holds intellectual property rights and ultimate control over the development and modification of a defence product funded by SAFE, arises. While the instrument’s regulation seeks to uphold the principle of no third-party control over EU-developed technology, exceptions depending on the type of weapons concerned exacerbate these worries. On top of that, the recent EU-US trade deal intersects with the above, given the possibility of an increase in the Union’s dependency on US defence firms and components. Despite the aforesaid, this balancing act between pragmatism and European autonomy in defence is a significant political compromise that the EU must navigate.
Conclusion
The purpose of this article was to present SAFE and critically assess its challenges. It is a bold initiative that aims to address Europe’s urgent defence needs by mobilising considerable financial resources and fostering common procurement. Its focus on speed and efficiency, coupled with the deliberate opening, within conditions, to third countries, signals a pragmatic recognition of the broader security landscape, echoing Robert Schuman’s declaration that “World peace cannot be maintained without creative efforts analogous to the dangers threatening it.”
However, as mentioned previously, the instrument does not come without flaws. Yet, irrespective of its structural constraints, SAFE embodies a concrete attempt at European solidarity. It emits a clear message that the EU is committed to spending “more, better, and together.” Therefore, it is not only a financial tool, but also a political commitment, as reiterating the words of the Commissioner for Defence and Space, Andrius Kubilius. With the submission of the National Defence Investment Plans underway, the instrument’s solid impact remains to be seen. Still, it is clear that Europe can no longer outsource its security, and SAFE symbolises an actual step toward this achievement.
