EU to tap entire €150bn loans-for-arms programme
France, Italy, Spain and Poland among countries requesting support from project designed to spur defence spending
The EU’s €150bn loans-for-arms programme is set to be spent in full after 19 member states, including France and Poland, requested funding, as Brussels seeks to spur a surge in defence spending.
The project loans cash borrowed against the EU budget to member state governments to jointly spend on critical military purchases such as air and missile defence systems.
It was proposed earlier this year as part of a Europe-wide effort to dramatically increase defence spending in response to Russia’s war against Ukraine and US President Donald Trump’s demand for the continent to spend more on arms.
‘‘We have reached full subscription,” European Commission president Ursula von der Leyen said on Friday. “We are delivering the capabilities that Europe needs most.”
The funds must be spent on joint purchases by EU governments of defence products in areas identified as gaps by the commission, such as air and missile defence products, cyber systems and drones.
The commission will now assess the individual bids for the so-called SAFE project from capitals, and take decisions on how best to divide the €150bn. Initial disbursements could begin this year, officials said.
Italy and Spain are also among the countries that have applied for funding under the instrument.
“There is a lot of work ahead of us, but we are on the right track,” von der Leyen said during a visit to Riga in a press conference with Evika Siliņa, Latvia’s prime minister. “We have European common defence necessities.”
“Many member states have indicated that they will also use it [to purchase arms] to support Ukraine . . . That is a true European success,” she added.
The initiative comes alongside a pledge by European members of Nato to increase their defence spending to 5 per cent of GDP over the next decade — a promise demanded by Trump as the price of continued US engagement in the continent’s security.
It is designed to promote the purchase of EU-manufactured products, with clauses that limit the amount of third-country components, amid concerns among some European capitals about the continent’s heavy reliance on US-made weapons.
The project was proposed by von der Leyen earlier this year alongside another policy that exempts defence spending from the EU’s rules governing the level of deficit spending by its members.
Riga is the first stop on a four-day trip by von der Leyen to seven of the EU’s easternmost states close to Russia.