EU to Replace SAFE With New Defense Lending Program

The European Union is working on a new defense financing mechanism to replace the SAFE lending initiative.

According to Bloomberg, citing sources familiar with the Brussels talks, the current €150 billion program is expected to be exhausted as early as this spring due to exceptionally high demand from EU member states.

The new financial model is intended to ensure uninterrupted weapons procurement and strengthen the bloc’s defense autonomy.

The European Commission is currently reviewing remaining funds after the signing of preliminary contracts and is developing the next mechanism to support military projects.

Experts are assessing the effectiveness of previous funding tranches to prevent delays in financing the European defense-industrial base. The primary focus is on developing a sustainable instrument to enable countries to plan long-term procurement.

The SAFE (Security Action for Europe) program focused on providing concessional loans for joint procurement of critical weapons for armed forces of EU member states.

Priority areas included air defense systems such as Germany’s IRIS-T and the Franco-Italian SAMP/T, as well as modern ground equipment. This model enabled member states to purchase equipment at significantly lower prices through economies of scale.

The program’s popularity stems from European countries’ desire to rapidly strengthen their capabilities in response to Russian aggression. Preliminary applications from member states significantly exceeded the available €150 billion limit.

Brussels is currently exploring ways to expand these limits to meet the needs of all participants.

The EU is now considering launching a second round of lending or creating an entirely new financial scheme to stimulate defense cooperation. The new mechanism could draw on resources from the European Investment Bank or use a joint-bond system to fund the budget.

The new mechanism would form part of a broader strategy to strengthen the EU’s autonomy and reduce its reliance on U.S. security guarantees.

Discussions on the format of the future program are still at an early stage, but the intensity of negotiations indicates the EU’s determination to maintain the pace of rearmament.

The new plans give special attention to standardizing weapons to address the challenge of operating dozens of different combat platforms. Joint procurement through a single fund would push countries toward standardized solutions, for example, in the areas of main battle tanks or infantry fighting vehicles.

The European Commission is also considering directing funds to expand the production lines of major defense companies such as Rheinmetall, Leonardo, and Saab. This would help reduce delivery lead times for new equipment, which currently reach several years for some air defense systems.

The final proposals to replace the SAFE program are expected to be presented by the end of spring 2026. The decision will require the approval of all member states; however, the threat from Russia remains the key factor driving the rapid approval of the budget.

The SAFE Credit Initiative

SAFE (Security Action for Europe) is a strategic European Union credit initiative created to rapidly finance joint defense procurement.

The mechanism allows member states to obtain preferential loans and financial guarantees at low interest rates to purchase weapons directly from manufacturers.

The main condition of SAFE is to stimulate cooperation: funding is primarily provided to projects in which several countries pool their orders.