EU Launches $170 Billion SAFE Plan to Boost Defense
EU approves $170 billion (150 billion euros) SAFE program to strengthen defense. Loans to be issued to member states with a focus on rapid military procurement.
On May 27, the European Union formally approved the SAFE (Security Action For Europe) program—a €150 billion ($170 billion) defense initiative aimed at overhauling the continent’s military readiness amid rising threats from Russia and Belarus.
SAFE is modeled on the EU’s COVID-19 recovery fund, using the bloc’s AAA credit rating to raise funds from capital markets and distribute them as long-term loans to member states. The initiative will help EU countries place rapid orders for arms and equipment while circumventing budget rules that previously limited military spending.
Unlike the pandemic recovery fund, SAFE does not include grants—only loans, repayable over 45 years, with the first 10 years payment-free. Member states won’t pay VAT on eligible purchases. Countries applying in the first year can do so individually; afterward, joint applications with at least one other EU state are required.
The regulation ensures that no more than 60% of the total fund can go to the top three recipients, allowing smaller or poorer members broader access.
Beyond the EU: Ukraine and EFTA Join In
Ukraine, Iceland, Liechtenstein, Norway, and Switzerland—non-EU members—are also eligible due to their defense cooperation with the bloc. SAFE opens a path for joint procurement, aiming to eliminate Europe’s fragmented defense market.
A key rule dictates that 65% of the value of purchased weapons must originate from the EU, EFTA, or Ukraine. The remaining 35% can come from partners like the U.S., provided they hold a formal Security and Defense Partnership (SDP) with the EU.
The inclusion of countries like the UK, Japan, and South Korea—thanks to their SDPs—marks a careful balance between boosting European defense autonomy and maintaining transatlantic and Indo-Pacific ties. The U.S. criticized its limited participation, but a compromise was struck to allow partial component sourcing.
Officials hope the SAFE plan will stimulate faster procurement, industrial coordination, and a more resilient European defense base as NATO urges members to raise military spending amid deepening global instability.