The European Union is exploring possibilities for new defense funding following the oversubscription of its initial €150 billion loan program. Specifically, according to Bloomberg agency, citing sources familiar with the matter, discussions are still in early stages as the European Commission continues to disburse funds from the existing loan program.
Read: EU: European Commission approves Greece’s national defense plan under “SAFE” framework
Bloomberg: New round of defense funding under consideration
Meanwhile, due to discrepancies between member state requests and final contracts, European officials estimate that several billion euros will remain in the fund.
However, once available funds are exhausted in spring, the European Commission will evaluate the process and consider the possibility of a new funding round, which may include a second loan program, the same sources reported.
The discussions reflect the EU’s willingness to rapidly increase local defense production to protect against Russia’s bellicose stance and US President Donald Trump’s desire to drastically reduce American security commitments in Europe.
EU: The “SAFE” program
As a reminder, last year the European Union created the loan program -called «SAFE»- to encourage joint procurement in the defense sector and streamline procedures for transferring military equipment across the continent.
The plan envisaged raising capital from financial markets and lending it to countries for purchasing specific products lacking on the continent, such as missiles, ground equipment, and missile defense systems.
The program proved particularly popular: EU member states initially submitted requests worth €190 billion. Subsequently, the European Commission approved approximately €150 billion and asked countries to prepare spending plans. The Commission is now processing these plans and disbursing funds in the form of long-term, low-cost loans.
The European Commission has approved plans for 19 countries
In recent days, the European Commission has approved plans for 19 countries. “The European Commission is currently evaluating the national SAFE plans of the three remaining member states,” Commission spokesman Thomas Regnier said in a statement. “At this stage, we will not speculate about a possible second SAFE fund.”
Because some spending plans ultimately require smaller amounts than those initially approved, unused funds are likely to emerge for redistribution by the European Commission, the same sources reported. Relevant officials are already working on this process.
Subsequently, the European Commission will examine available options for providing additional funding, with a new loan program being one of the possible solutions, the same sources added.
