European countries to borrow billions from EU to rearm Ukraine
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European countries to borrow billions from EU to rearm Ukraine
The loan scheme was proposed by the Commission in March as part of its broader ReArm Europe program. Several EU countries told POLITICO they are considering using that money to help Ukraine defend itself against Russia’s full-scale invasion.
Governments can decide to ask for cheap loans from the EU before Tuesday’s deadline.
BRUSSELS — Ukraine’s top allies in Europe are set to ask for tens of billions of euros in European Union loans to jointly buy weapons for the war-battered country, as well as to boost their own defenses.
Ahead of Tuesday’s deadline to apply for the new €150 billion Security Assistance Facility for Europe loans-for-weapons scheme, several EU countries told POLITICO they are considering using that money to help Ukraine defend itself against Russia’s full-scale invasion.
The loan scheme was proposed by the Commission in March as part of its broader ReArm Europe program and aims to boost Europe’s defense industry and reduce the bloc’s decades-old military dependence on the United States.
European countries are set to borrow billions from the EU for weapons for Ukraine – Politico
Ukraine’s leading allies in Europe intend to approach the European Union regarding loans worth tens of billions of euros for the joint procurement of weapons for Ukraine. Several EU countries told the publication that they are “considering using these funds to help Ukraine in its defense against a full-scale Russian invasion” Belgium, also burdened by high debt, will request between 7 and 11 billion euros under this scheme, a source familiar with the situation said. France is also likely to apply for loans, while Germany, Sweden, and the Netherlands are expected to decline, according to sources familiar with these governments’ plans. The final amount will be known on Tuesday, when the deadline for loan applications expires, although Brussels has made it clear that even latecomers will not be rejected. The low-cost long-term loans will be financed by EU debt using its AAA credit rating.
Details
Ahead of the deadline for submitting applications for the new €150 billion program (SAFE), which provides for weapon loans, several EU countries told the publication that they are “considering using these funds to help Ukraine in its defense against a full-scale Russian invasion.”
This lending program was proposed by the European Commission in March as part of its broader ReArm Europe program and aims to strengthen Europe’s defense industry and reduce the bloc’s long-standing military dependence on the US.
EU has approved the White Paper on Defence and details of the ReArm Europe plan: what is envisaged for Ukraine
Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, Spain, Finland, Hungary, and Lithuania have officially expressed interest in receiving loans, EU defense official Thomas Regnier told reporters on Tuesday.
Other countries, including the Czech Republic, Latvia, Bulgaria, and Greece, said they would do so by the deadline set for Tuesday midnight.
By jointly procuring weapons under this program, countries, as the publication notes, can obtain a lower price than if they acted separately and then supplied weapons to Ukraine.
France is also likely to apply for loans, while Germany, Sweden, and the Netherlands are expected to decline, according to sources familiar with these governments’ plans.
However, even countries that do not take out loans can reduce the cost of supplying weapons by participating in joint procurements, the publication writes.
“Countries are also exploring the possibility of direct procurement of weapons from Ukrainian companies, which is encouraged within SAFE,” the publication writes. This would allow Kyiv to “scale up defense production and technological integration with the EU,” a Ukrainian diplomat told the publication.
EU Defense Commissioner Andrius Kubilius wrote on Thursday that at least 20 countries would request up to 100 billion euros under this program. The final amount will be known on Tuesday, when the deadline for loan applications expires, although Brussels has made it clear that even latecomers will not be rejected.
Nine EU countries joined the SAFE military lending program: who is hesitant
Brussels proposed a 45-year repayment period for loans and advance payments of up to 15%. These low-cost long-term loans will be financed by EU debt, using its AAA credit rating.
Seeking to attract Ukraine’s allies to participate in this program, Kubilius and EU Economy Commissioner Valdis Dombrovskis urged EU countries to use SAFE to purchase weapons for Ukraine.
“We strongly recommend that you consider how to involve Ukraine in your plans. Procurements for Ukraine, with Ukraine’s participation and in Ukraine, can be crucial for our collective security,” they said in a letter to EU member states earlier this month.
EU considers using SAFE credits for Ukraine’s defense
Countries with high debt and budget deficits, such as Austria and Italy, are less willing to take out loans, fearing an increase in existing debt, as this could delay their exit from the EU’s punitive procedure for countries that have overspent, officials told the publication.
France, a long-time advocate of increased EU defense spending, is likely to take out loans despite internal budget constraints. Belgium, also burdened by high debt, will request between 7 and 11 billion euros under this scheme, a source familiar with the situation said.
Greek Prime Minister Kyriakos Mitsotakis said on Monday that his country would request a 1.2 billion euro loan under this program.
It is necessary to ensure Ukraine’s inclusion in the EU’s SAFE defense program – Shmyhal
Germany’s Merz admits Europe has been a ‘free-rider’ on US defense
Berlin has pledged to reach that 3.5 percent spending target by 2029. It is the country’s most ambitious rearmament effort since the end of the Cold War. Merz has met Donald Trump three times since becoming chancellor in May. He said he had not changed his mind that Trump was “largely indifferent to the fate of Europe”
Berlin has pledged to reach that 3.5 percent spending target by 2029, marking the country’s most ambitious rearmament effort since the end of the Cold War. It means passing significant constitutional reforms allowing huge borrowing.
Merz has met Donald Trump three times since becoming chancellor in May and told the BBC he got on well with the U.S. president.
“I think President Trump is on the same page; we are trying to bring this war [in Ukraine] to an end,” said Merz. “We are on the phone once a week; we are co-ordinating our efforts.”
But the chancellor said he had not changed his mind that Trump was “largely indifferent to the fate of Europe,” a comment he made after his election victory in February.
Trump was, Merz argued, “not as clear and as committed as former U.S. presidents were, former U.S. administrations were.”
Merz said of the spending uplift: “We are not strong enough, our army is not strong enough, so that’s the reason why we are spending a lot of money.”
European countries push for EU loans to boost Ukraine’s military – Politico
The European Commission has proposed a new loan scheme for Ukraine. The money will be used to buy weapons and equipment for the country’s armed forces. Belgium, Bulgaria, Cyprus, Estonia, Finland, Hungary, and Greece are among the countries expected to apply for the loans. Austria and Italy are less likely to take part due to their high levels of debt. The loans will be paid back over a 45-year period with interest.
Ahead of the deadline for applications for a new €150 billion loan scheme for arms purchases under the European Security Assistance Mechanism, several EU countries have told the publication that they are considering using these funds to help Ukraine defend itself against a full-scale Russian invasion.
The loan scheme was proposed by the Commission in March as part of the broader ReArm Europe program and aims to stimulate Europe’s defense industry and reduce the EU’s long-standing military dependence on the United States.
Who will participate in loan program
According to EU defense spokesman Thomas Renier, Belgium, Bulgaria, Cyprus, Czechia, Estonia, Spain, Finland, Hungary, and Lithuania have officially expressed interest in requesting loans.
Other countries, including Czechia, Latvia, Bulgaria, and Greece, have said they will do so by the deadline of midnight on Tuesday.
France is also likely to apply for loans, while Germany, Sweden, and the Netherlands are expected to opt out of the program. However, even countries that do not take out loans can still reduce the cost of arms deliveries by participating in joint procurement.
How funds will be repaid
The European Commission has proposed a 45-year repayment period for loans and advance payments of up to 15 percent. Cheap long-term loans will be financed by EU-level debt.
Countries with high levels of debt and deficits, such as Austria and Italy, are less willing to borrow due to concerns about increasing existing debt
Europe strengthening its army
Earlier, Bundeswehr Inspector General Carsten Breuer stressed that Germany should increase its number of soldiers to 460,000. This includes both reservists and active military personnel.
According to him, this number of soldiers can be achieved through either voluntary or compulsory military service.
Poland is preparing for a large-scale military qualification in 2026 — more than 200,000 people will be called up for medical examination. The summons will not only be sent to men.
EU devises scheme to squeeze more profit from Russian frozen assets
G7 countries agreed to give Ukraine €45 billion generated by investing the immobilized sovereign assets. The EU’s €18 billion share of the G7 loan, however, will be entirely paid out by the end of the year.
By only spending the interest and leaving the underlying capital untouched, the EU hopes it can avoid accusations of breaching international law.
Members of the G7 group of industrialized countries last year agreed to give Ukraine €45 billion generated by investing the immobilized sovereign assets.
The EU’s €18 billion share of the G7 loan, however, will be entirely paid out by the end of the year ― raising questions on how Ukraine’s funding needs will continue being met in 2026.
Finance ministers from the EU’s 27 countries will kickstart these discussions on Thursday at an informal dinner in Luxembourg.
“It is important that we hear from the Commission on the available options, especially regarding the potential use of frozen Russian assets and further steps regarding the sanctions regime,” the rotating Polish Council presidency, which organized the dinner, wrote in the invitation letter to ministers seen by POLITICO.