The Polish Presidency of the Council of the European Union is maintaining its objective of reaching a political agreement “by the end of May” by a qualified majority of Member States on the ‘SAFE’ budget instrument, which will provide up to €150 billion in loans to countries which want to increase their military spending (see EUROPE 13631/3).
There are “very few outstanding issues”, said a senior diplomat on Thursday 8 May, confident that a political agreement could be reached before the end of the month because of the “determination” shown by the Member States. The diplomat mentioned the question of third countries participating in the future instrument.
On this point, a failure of the EU/UK summit on Monday 19 May in London (see EUROPE 13635/10), which would prevent the signature of a bilateral partnership on defence, and therefore rapid British participation in the ‘SAFE’ instrument, would complicate the hoped-for timetable. In addition, at the request of the Netherlands, a specific recital on the situation of the United States, with which the signing of a defence partnership does not appear to be in the cards, has been included in the legislative text.
This source also indicated that the latest compromise proposal from the Polish Presidency maintains the initial proposal to set to at least “65%” the share of the cost of components from the EU, EEA/EFTA countries or Ukraine in the total cost of military equipment acquired via the ‘SAFE’ instrument. The issue now seems to be how to achieve this minimum threshold, including the question of subcontracting.
Discussions are continuing on the possibility of SMEs in the defence sector benefiting from the future mechanism. “The European Commission’s proposal was already more flexible than the one establishing the ‘EDIP’ programme. The aim without any doubt is for the entire industry to benefit from the ‘SAFE’ instrument”, according to this diplomat.
Finally, the loan instrument will also be subject to EU requirements making the granting of European funds conditional on respect for the Rule of law.
On Tuesday 13 May, the European finance ministers will hold an exchange of views focusing on the financial aspects of this dossier, with the Polish Presidency hoping to draw political guidelines from this debate for further work.
As for the question of the legal basis (Article 122 TFEU) of the ‘SAFE’ instrument, which the European Parliament strongly challenges (see EUROPE 13635/31), the Polish Presidency has not heard “any challenge” from any Member State on this issue. (Original version in French by Mathieu Bion)