EU armament program bypasses European Parliament in approval process

A historic EU armament loan program, designed to finance joint procurement agreements, was finally approved by ministers on Wednesday, bypassing the European Parliament (EP).

The approval from the General Affairs Council marked the final stage in the controversial approval process for the €150 billion joint credit program “Security Action for Europe” (SAFE).

In April, the European Commission activated an emergency clause to bypass the Parliament, meaning negotiations on the final text of SAFE were moved directly to the Council.

Hungary abstained from the program vote in the Council on Wednesday.

The SAFE program was proposed by the Commission in March as the financing arm of a broader plan to revitalize the European defense industry and increase the production of military equipment and ammunition.

According to the text, at least three countries must come together to request funds from the SAFE program for defense projects. Projects can include anything from orders for ammunition and missiles to military drones or electronic warfare equipment.

Ukraine and Norway have also been included in the SAFE program, and the final text establishes a mechanism for other countries, such as the United Kingdom, to join the program by making agreements with the Commission.

The Commission aims to address military capability gaps with these projects and reduce Europe’s dependence on military equipment produced in other parts of the world, particularly the US.

€800 billion rearmament plan

The SAFE regulation provides low-interest loans until 2030 to strengthen Europe’s defense capacity as part of an €800 billion rearmament plan by 2030.

EU companies must maintain at least a 65% participation rate in each financed project, and the role of external contractors has been limited to 15-35%.

On the other hand, the Commission’s decision to bypass Parliament sparked outrage, and Parliament President Roberta Metsola threatened to sue the Council in a letter sent to the Commission and Council presidencies earlier this month.

MEPs unanimously supported a legal opinion in a secret ballot in April that rejected the Commission’s decision to bypass Parliament.

EP may take legal action against Brussels within 2 months

According to the legal opinion obtained by Euractiv, the Parliament proposed splitting the SAFE plan into two. The first part, covering borrowing and lending, would proceed under an emergency procedure, while the industrial elements of the plan would proceed under the ordinary procedure.

Euractiv learned that Metsola has not yet received a response to her letter.

Now that the Council has adopted the SAFE proposal, Parliament has approximately two months to file a legal challenge, and the EU’s highest court will have two years to make its decision.

According to the final text of the SAFE program, countries will have six months to prepare joint procurement proposals, identify defense industry partners, and request loans from the European Commission.

Defense Commissioner Andrius Kubilius said last week that final requests should be submitted in November.

Third countries will need to sign an agreement with the EU

Third countries wishing to participate in the SAFE program and be involved in joint projects will also need to sign a bilateral agreement with the Commission within this period.

United Kingdom Prime Minister Keir Starmer recently signed a Security and Defense Partnership agreement with the EU. This agreement was the first necessary step to ensure British defense companies access to the €150 billion SAFE program. British officials said they hope to sign a second bilateral agreement with the EU “in a few weeks.”

Funds provided by the SAFE program will be transferred by the Commission to participating countries in the form of 45-year loans.

According to the text, after the countries’ proposals are reviewed by the Commission, the Council will have until June 30, 2027, to approve them.

Once they receive Council approval, countries can begin submitting payment requests to the Commission, which will then turn to capital markets to borrow the €150 billion. Loan payments from the Commission to participating countries will be made by December 30, 2030.

Germany’s intervention paves the way for Türkiye’s participation in the fund

The prospect of Türkiye’s participation in SAFE was met with skepticism, particularly by the Greek government.

Türkiye’s participation requires a separate EU-Türkiye bilateral agreement under Article 17 of the regulation.

Greece invoked Articles 212 and 218 of the EU Treaty, arguing that such agreements should be decided unanimously, but these articles were not explicitly mentioned in the regulation due to opposition from the Council’s Legal Service and Germany.

According to Kathimerini, the European Commission assured Greece that Article 212 would serve as the legal basis for candidate country agreements. Greece submitted an additional national declaration to the Permanent Representatives Committee to prevent misinterpretations.

The Turkish defense industry aims to market its drones, armored vehicles, and ammunition to its European partners. Key EU countries such as Germany, Italy, Spain, and Poland support Türkiye’s participation in European defense initiatives.

Türkiye has already initiated bilateral defense cooperation outside the SAFE framework, including Baykar’s acquisition of Italy’s Piaggio Aerospace and Hürjet trainer aircraft agreements with Spain.