EU Commission plan to redirect unused SAFE funds to Ukraine catches member states off guard
European Commission President Ursula von der Leyen announced plans to use the remaining funds of the SAFE defense loan program for a new programme of joint projects with Ukrainian companies. EU diplomats in Brussels told RMF FM that no such discussion took place with the Commission and that member states, who are legally responsible for repaying the SAFE loans, were not consulted. Poland, Italy and Hungary had their own plans for the unallocated funds, which are now in question.
Key points
- Ursula von der Leyen announced a plan to create a separate programme of joint projects with Ukrainian companies using remaining SAFE funds.
- An EU diplomat in Brussels told RMF FM no such discussion took place with the Commission and member states were not consulted.
- SAFE is a loan instrument: loans are taken by EU countries and must be repaid by them, not by the Commission.
- A Brussels source said the Commission wants to direct remaining funds to projects with Ukrainian firms, including the 'Freya' anti-ballistic coalition.
- Poland had declared it wanted to participate in a second SAFE round and redirect unused funds to its own defence projects.
- Member states have until the end of October to report on project implementation, after which the size of unused funds can be calculated.
- Italy (~15 bn euros) and Hungary (~16 bn euros) hold large SAFE allocations but have not yet signed their full agreements.
Why it matters
The proposal points to a new financing channel for Ukraine's defence industry at a time when Kyiv is reporting a defence budget shortfall. By announcing it before consulting capitals, the Commission has opened a political dispute with the member states who carry the legal obligation to repay the SAFE loans and who had their own plans for any unused money.
What happened
European Commission President Ursula von der Leyen announced that the Commission intends to use the remaining funds of the SAFE defence programme for a new instrument of joint projects with Ukrainian companies, including projects tied to the 'Freya' anti-ballistic coalition. According to a Brussels source cited by RMF FM, the Commission had previously only hinted at considering changes to the use of leftover funds at working meetings, and member states had responded that any change must first be agreed with them. After von der Leyen's public statement, an EU diplomat in Brussels told RMF FM that no such discussion had taken place with the Commission and that member states were caught off guard. The diplomat stressed that the loans are repaid by member states, not by the Commission, and that no consultations on redirecting remaining funds were held. Poland had earlier said it wanted to take part in a second SAFE application round and direct unused money from other countries to its own defence projects; whether those funds will now be available is unclear. EU countries participating in SAFE have so far used only a small share of the funds for programmes jointly with Ukraine.
Where reporting differs
The European Commission announced plans to use the remaining SAFE funds for joint projects with Ukrainian companies, but an EU diplomat in Brussels told RMF FM that no such discussion had taken place with the Commission and that member states were not consulted on the redirection. Some EU capitals believe member states themselves should have the decisive say over how leftover SAFE funds are used.
Background
SAFE is a loan instrument under which EU countries borrow money for defence projects and are themselves responsible for repayment; it is not a grant programme run by the Commission. Until recently, unofficial estimates put the remaining SAFE funds at around 10 billion euros, though the actual figure can only be determined after member states report on project implementation by the end of October. Italy has been allocated almost 15 billion euros under SAFE but has not yet signed for the full reserved amount, with Rome weighing the loan's impact on its budget deficit; Hungary has been allocated around 16 billion euros and it is uncertain whether it will sign its agreement in time. SAFE participants have so far used only a small share of the funds for joint programmes with Ukraine.