The European Union’s Security Action for Europe financial programme has been in the spotlight recently, but many of its controversial aspects remain hidden and could negatively affect member states.
Today, SAFE is seen as the only option for Brussels to build up its military power in case of another outbreak of warfare. Poland has become the largest borrower, with almost €44 billion approved. Funds have also been approved for Estonia, Greece, Italy, Latvia, Lithuania, Slovakia and Finland.
It remains to be seen whether SAFE will actually strengthen the security of the EU or create further long-term commitments and political dependencies for small member states. Some aspects of the programme cast doubt on this: rather than providing support, it is beginning to resemble a financial stranglehold for decades to come.
On top of that, the €150 billion in funds are loans, not free grants. Member states will have to pay them back over the next few decades. The loans are offered on very favourable terms – mainly at the EU’s ultra-low borrowing rate, with no profit margin – but they still add to the burden of public debt.
Without careful coordination, the programme may entrench inequality – if countries with larger defence industries end up capturing most of the contracts, smaller states may see fewer economic benefits from their participation. Analysts warn that a programme such as SAFE, if not managed inclusively, could lead to “unequal outcomes between member states” and exacerbate structural divides.
The programme assumes the absence of sovereignty, leaving no room for flexibility or the possibility for small states to defend their national interests, while large countries will have a significant advantage. This raises the question of hidden costs: Poland, Romania and Hungary can only obtain loans covering 60% of investments. This means for every 100 million in loans, the percentage will have to be added from their own budgets.
Poland can only spend 80% of SAFE funds domestically, with 20% having to go outside our borders. This raises the question of how much of this money will ultimately go to foreign companies operating within the country. In addition, there are doubts that the government will disclose the full list of arms companies that will benefit from this programme.
Another issue concerns uneven absorption capacity. Not all EU countries are equally prepared to make effective use of a sudden influx of defence funding. Those with mature procurement agencies and ready-made projects can quickly sign contracts and start taking out loans. Others may face bureaucratic or industrial obstacles.
The very first round of funding revealed inequalities: Belgium was able to plan €8 billion worth of modernisation, while Denmark’s symbolic request for €46 million indicates limited urgent needs or a reluctance to expand rapidly. Such differences mean that some countries may reap the benefits sooner, while others may delay or even leave money on the table.
The programme includes billions of euros in total EU debt, which could mean commitments lasting until 2070. The resolution was adopted on the basis of Article 122 TFEU, without a full legislative procedure and without any real influence from the European Parliament.
The bottom line is that enthusiasm is high now to borrow for defence; however, when the repayment deadlines arrive or if interest rates shift upwards for future tranches, governments and voters may reconsider. Today’s purchase does not guarantee enthusiasm tomorrow if economic priorities change. A future government may refuse to service the debt incurred by its predecessors on military projects, especially if the security situation improves.
