This is a breakthrough moment. But if SAFE is to deliver lasting security, it needs to be matched by a second financial engine — one that supports not just purchases but also industrial capacity — a dedicated multilateral Defense, Security and Resilience (DSR) Bank.
SAFE is rightly being hailed as a historic milestone. For the first time, EU institutions will collectively raise capital on behalf of all 27 member countries in order to finance the joint procurement of high-end defense capabilities — from artillery shells and air defense systems to cyber tools. Contracts must source at least 65 percent of their value within the EU or its close partners, such as Ukraine and Switzerland. The U.K., U.S. and Turkey will be eligible for the remaining share, pending the formalization of security compacts with Brussels.
For a bloc that couldn’t agree on a modest €5 billion fund in 2019, this represents a dramatic shift in both mindset and method.
There’s a short-term fiscal bonus too. Brussels will allow governments to breach the Stability and Growth Pact by up to 1.5 percent of GDP through 2028 in order to accommodate SAFE-linked spending — a move that will ease pressure on capitals where pandemic-era borrowing and energy-related subsidies have already strained public finances.
Yet, for all its scale and symbolism, SAFE is fundamentally a demand-side mechanism: Because the program is structured as sovereign debt, it must close new commitments by 2030 and cannot recycle repayments. Also, its funds flow only to governments rather than directly to firms, which leaves Tier-2 and Tier-3 suppliers — the companies that actually produce the kit — dependent on cautious commercial banks to provide them access to cash.
Europe already knows how this ends: In 2023, surging demand for ammunition collided with a frozen credit environment, and triggered critical supply shortfalls. SAFE, for all its strengths, is not an industrial strategy.