What can help EU boost its defence industry and what Ukraine may gain

In 2025, the European Union has come under growing pressure to revise its defence policy.

Recognising the strategic need to strengthen European defence capabilities and ensure sustained support for Ukraine, the EU in March 2025 created the SAFE instrument. It will operate under ReArm Europe Plan/Readiness 2030.

Read more about how member states will use this tool, what benefits Ukraine might receive and whether it will have the desired impact on Europe’s defence industry in the article by Marianna Fakhurdinova, Anna-Maria Mandziy and Sofia Oliinyk: €150 billion for rearmament: what is SAFE and what can Ukraine gain from it. 

Security Action for Europe (SAFE) is one of several financial instruments designed to strengthen Europe’s defence capabilities and industrial base under ReArm Europe Plan/Readiness 2030.

The SAFE mechanism pools up to €150 billion in loans for joint military procurement among EU member states.

Its goal is to reduce production costs, limit fragmentation, and improve interoperability in EU security and defence.

Countries of the European Free Trade Association (EFTA) and Ukraine may also benefit from SAFE under certain conditions.

Projects under SAFE must involve at least two participants (though individual applications are also possible), and at least 65% of the project’s value must come from companies established in the EU, EEA/EFTA states, or Ukraine.

Loans can only be granted to EU member states. If a third country, such as Ukraine, takes part in joint procurement, funds will be disbursed to the EU member state partnering with Ukraine.

Despite the EU’s ambitious goals, SAFE’s overall scale remains modest and the loans are not particularly attractive for non-member states.

Member states, however, may primarily use the instrument to strengthen their own industries by submitting individual applications. This trend is already visible in the submitted requests.

As of 1 September, 19 EU member states had expressed interest in using the new instrument: Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovakia, Finland and Denmark.

If most of these 19 applicants, requesting €150 billion in total, submit individual proposals, they will fully exhaust SAFE, turning it from an instrument intended for joint procurement into one of individual financing.

The SAFE instrument was also meant to encourage greater military support for Ukraine.

However, much will depend on political decisions and national priorities in each member state, as well as on the speed of SAFE’s implementation.

Ukraine can benefit from this instrument as its defence manufacturers and tech companies may participate in joint procurement as (sub)contractors alongside EU-based firms, receiving funding from loans taken out by EU member states.

Moreover, Ukrainian territory could also be used for production purposes.