Brussels sets terms for €150 billion defence loans

The European Commission is now borrowing on capital markets and lending the money to EU governments for military equipment, under conditions it writes. Through SAFE, the Security Action for Europe facility adopted in May 2025, Brussels has created a €150 billion loan instrument and made itself the financial gatekeeper of European rearmament (European Commission, EUR-Lex). For Malta, a small EU state in the Mediterranean with limited defence procurement weight of its own, the real point is the mechanism: Brussels is shaping what European militaries buy, and from whom.

The Commission issues bonds, investors buy them, and the EU lends the proceeds to participating member states. Each government repays its loan; the EU repays bondholders. The legal basis is Article 122 TFEU, an emergency treaty provision that lets the Council, where national governments sit, act without the European Parliament as co-legislator (EUR-Lex). That gave the EU a common defence-borrowing tool without the full democratic procedure normally attached to spending decisions.

The eligibility screen is the real lever

SAFE's power lies in its conditions. At least 65% of component value in funded procurement must come from the EU, EEA-EFTA countries or Ukraine (EUR-Lex, EU Perspectives). Governments still decide whether they want drones, missiles or surveillance systems. Brussels decides whether those plans qualify for cheaper EU-backed loans, and whether the suppliers are European enough. Access to capital becomes the policy lever.

Poland leads with up to €43.7 billion, treating SAFE as the cheapest route to rapid military expansion, with a 10-year grace period and repayments stretching to 2075 (PAP, Fakt). Romania is turning roughly €16.68 billion into hardware: 298 infantry fighting vehicles, counter-drone systems and Black Sea patrol vessels (Digi24, Stirile ProTV). France is channelling about €15.1 billion towards an industrial base where MBDA, Thales and KNDS dominate (Bloomberg, France Épargne). MBDA is already building a new missile factory near Orléans to absorb the surge in European orders (Le Monde). Greece signed for up to €787.7 million, targeting surveillance, secure communications and counter-drone systems in the Mediterranean (Euronews GR, To Vima).

Italy pulls back, the eastern flank wants grants

Italy shows where the politics runs out. Rome reportedly considered about €15 billion in SAFE loans before scaling back. Foreign Minister Antonio Tajani was quoted saying "this is not the moment" to borrow so heavily (Analisi Difesa). Together with Romania, Italy may leave €8–18 billion of the SAFE envelope unused. Several eastern-flank capitals are already telling Brussels they want grants, not more loans (Euronews).

The countries closest to the threat need the most equipment, but they also take on the most debt relative to their fiscal room. The EU found the political will for €150 billion in common defence borrowing. It has not applied the same logic to direct investment or cohesion-style spending, the kind of EU money Malta knows well because it reshapes roads, waterfronts and public infrastructure at home. If SAFE II emerges, the harder question will be whether rearmament should be financed through shared fiscal transfers, not only shared borrowing.

The accountability gap

Greece shows the oversight cost of moving fast. Public evidence confirms the SAFE agreement and broad capability areas, but named projects, procurement partners, industrial workshare and disbursement milestones remain undisclosed. PASOK, Greece's main opposition party, complained that lawmakers learned about Greek defence commitments from Brussels press conferences, not from their own parliament (Newsbeast). That opacity sits on top of the structural choice made at the start: Article 122 made SAFE possible, and also kept the European Parliament out of the legislative process, leaving oversight concentrated in national governments meeting as the Council.

Greek Defence Minister Nikos Dendias has made a different criticism, reportedly calling SAFE I a "wrong regulation" because it finances demand without fixing Europe's defence-production bottleneck (Tribune). Credit can steer demand and impose procurement rules. It cannot build factories, train workers or replace missing supply chains. Whether Europe's new financial lever produces real military capability, or debt carrying an EU label, depends on production decisions most governments have still not made.