The European Commission is weighing the creation of a second round of its multi-billion-euro SAFE loans programme, as member states push for more low-cost financing for defence projects amid intensifying concerns about Russia and uncertainty over long-term U.S. security commitments.
Commission President Ursula von der Leyen signalled the momentum on Thursday evening, saying the original €150 billion scheme had been “heavily oversubscribed”, prompting several countries to request an additional edition. Two EU officials, speaking anonymously due to the sensitivity of internal discussions, confirmed that the Commission is actively exploring the proposal.
Background: A Highly Sought-After Defence Fund
The SAFE initiative allows the EU to borrow jointly on the markets and pass that money to member states at cost. Because the EU holds a higher credit rating than most national governments, the loans drastically reduce borrowing costs for states attempting to modernise their defence sectors.
Demand has outpaced expectations. The Commission received roughly €190 billion in loan applications far above the scheme’s €150 billion envelope signalling strong appetite from governments scrambling to close capability gaps exposed by Russia’s war in Ukraine.
Why It Matters
The push for a second SAFE edition reflects Europe’s deepening shift toward strategic autonomy. Member states are increasingly seeking collective financing tools as they reassess their reliance on U.S. defence guarantees, especially with American politics in flux.
Long-duration loans up to 45 years with a 10-year grace period offer governments breathing room at a time when national budgets are under strain from inflation, energy shocks, and expanded security commitments.
Current Status Inside the Commission
Officials say internal debate is already underway, though discussions remain at an early stage and no funding envelope has been determined. One senior official indicated that 2026 may be the optimal moment to formally develop the new instrument, noting that multiple arguments exist in favour of moving quickly.
Von der Leyen’s public remarks mark one of the clearest signals yet that the Commission sees the SAFE model as a core pillar of Europe’s defence financing strategy.
What’s Next
A formal proposal could emerge next year, depending on budget negotiations and member state consensus. The scale of the second scheme will likely hinge on how far governments are prepared to expand joint borrowing a politically charged issue within the EU. If approved, a follow-up SAFE programme could become a key tool in Europe’s long-term defence build-up.
With information from Reuters.
