On Wednesday 2 April, the ambassadors of the Member States to the European Union (Coreper) held an initial exchange of views on the proposal for a ‘SAFE’ regulation aimed at setting up a European financial instrument to grant loans to Member States wishing to invest more in military spending (see EUROPE 13603/8).
The discussion took place on the basis of a compromise proposal from the Polish Presidency of the EU Council. According to several sources, this text slightly modifies the European Commission’s initial proposal. The provisions setting out the categories of eligible expenditure and those requiring that the cost of components originating in the Union, in EEA/EFTA States or Ukraine shall not be lower than 65% of the estimated cost of the end product have been reworked.
Regarding the participation of third countries in the ‘SAFE’ mechanism, several national delegations have recommended the participation of at least Canada and the United Kingdom (‘non-EU like-minded countries’).
The Member States share the Polish Presidency’s desire to move quickly on this issue, with an agreement hoped for at Coreper level before the Ecofin Council on Tuesday 13 May. Other countries have stressed the importance of having an instrument that does not impose heavy administrative constraints on the industry.
The Polish Presidency will submit a revised compromise proposal for the Coreper meeting on Wednesday 9 April.
On Wednesday, the Member States were also asked to vote on a request from the European Parliament to set up a joint working group to discuss the impact of the proposed regulation on the EU budget.
In a letter from their President, Roberta Metsola, the MEPs were highly critical of the European Commission’s decision to base the legislative proposal on Article 122 of the TFEU, which makes it urgent and bypasses Parliament’s powers.
See the European Parliament letter: https://aeur.eu/f/g8e
Modelled on the ‘SURE’ instrument set up during the Covid-19 pandemic to support national unemployment insurance schemes, the ‘SAFE’ instrument will enable the Commission to borrow capital on the markets to grant EU countries preferential loans totalling €150 billion, the instalments of which cannot be paid out after the end of 2030.
If they wish to make use of the mechanism, Member States will have to respond to a call for expressions of interest from the Commission, in which they will state their financial requirements (in the form of high and low ranges). This request will be supported by national plans for the acquisition of military equipment in specific categories (air defence, munitions and missiles, UAVs, cyber warfare), in particular through joint procurement. These plans must be submitted to the Commission for assessment within six months of the regulation coming into force.
The three main beneficiary countries of the ‘SAFE’ instrument should receive no more than 60% of the total loans to be granted. (Original version in French by Mathieu Bion)