The European Union has reached a preliminary agreement on a €150 billion ($170 billion) fund called Security Action for Europe (SAFE).
This fund aims to strengthen Europe’s defense capabilities by providing loans to EU member states and some partner countries, including Ukraine, for defense projects and to support the European arms industry. The plan was proposed by the European Commission in March and will be financed through joint borrowing by the EU.
SAFE requires that at least 65% of the value of any funded weapon system be produced within the EU, Ukraine, or associated European countries.
The remaining 35% can come from other countries, but some partner nations with Security and Defence Partnerships with the EU—such as Norway, South Korea, Japan, and the UK—may qualify for higher participation.
The fund also includes safeguards to ensure European companies maintain control over key components and software in defense equipment.
If formally approved by EU member states on May 27, countries will have two months to submit joint projects involving at least two nations.
The European Commission will review these proposals and, if approved, allow disbursement of up to 15% of the project’s cost initially, with further payments based on progress reports.
The loans will have favorable terms, including up to 45 years to repay and a 10-year grace period, backed by the EU budget to protect member states from rising interest costs.
This initiative reflects growing concerns about security threats from Russia and uncertainties about future U.S. defense commitments to Europe.
EU defense spending has increased by over 30% in the past three years, but leaders believe more coordinated investment is necessary. SAFE is part of the broader ReArm Europe program, which also aims to ease fiscal rules to allow an additional €650 billion for defense spending.
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