On Wednesday 21 May, the Member States’ ambassadors to the European Union (Coreper) reached a political agreement in principle, by a qualified majority, on the proposal for a regulation establishing the ‘SAFE’ instrument, which will provide loans of up to €150 billion to help EU countries increase their military spending.
The funds will be raised by the European Commission on the capital markets and transferred to the Member States that so wish in the form of advantageous loans (45-year maturity, 10-year moratorium on repayment). The ‘SAFE’ instrument thus draws on the experience of the ‘SURE’ instrument, which supported national short-time working schemes during the Covid-19 pandemic to the tune of €100 billion.
Compared to the fourth compromise proposal from the Polish Presidency of the Council (see EUROPE 13642/3), the fifth version, on which agreement has been reached, specifies the conditional participation of subcontractors from third countries in joint procurement of military equipment.
Thus, common procurements that involve a subcontractor which is allocated between 15 % and 35 % of the value of the contract, and that is not established or does not have its executive management structures in the EU, an EEA/EFTA State or Ukraine will be eligible for support under the ‘SAFE’ instrument if at least one of the following conditions is met: (a) a direct contractual relationship related to the defence product has been established between the contractor and that subcontractor prior to the date of entry into force of this Regulation; (b) the contractor commits to studying, within two years, the feasibility of replacing the input provided by that subcontractor with an alternative, restriction-free input originating in the Union, EEA EFTA States or Ukraine, and meeting technical and time requirements.
“The more we invest in equipping our armies, the better we will deter those who wish us harm”, declared the Polish Presidency of the Council via social networks. For António Costa, the Member States’ agreement on ‘SAFE’ is “an important step towards a stronger Europe”.
As some Member States still have to lift their scrutiny reservations in accordance with national procedures, the legislative text will be formally adopted at the General Affairs Council on Tuesday 27 May.
See the legislative text approved by the Member States: https://aeur.eu/f/gy9 (Original version in French by Mathieu Bion)