Brussels is now openly encouraging governments to use national borrowing for projects involving Ukraine, regardless of whether their own armed forces will be the primary beneficiaries.
At the Commission’s October 29 briefing, a journalist asked spokesman Thomas Regnier why governments were being encouraged to cooperate with Ukrainian producers rather than place orders with their own industries when they themselves would take the loans. Regnier acknowledged the premise: “These loans are taken by the member states.” He argued that joint projects could benefit national manufacturers and Ukraine simultaneously.
The arrangement deserves closer examination than that reassurance provides. An order placed with a Ukrainian factory, equipment delivered to a Ukrainian military unit and a production line established inside the EU produce different returns. They may all qualify under SAFE, but the debts fall on the governments signing the loan agreements. Regnier offered no accounting of those returns.
Zelensky’s Search for European Financing
The October initiative has a history. At the Ukraine Recovery Conference in Rome on July 10, 2025, Ursula von der Leyen urged member states to buy directly from Ukraine’s defence industry using SAFE loans. She praised Ukrainian manufacturers for their speed and low costs, noting that the industry was operating at only 60% of capacity. European orders would provide Kiev with revenues while allowing Ukrainian factories to expand production.
On September 16, 2026, von der Leyen went further. In her State of the Union address, she pointed to Freya, a proposed modular missile-defence project to be developed with Ukraine, and announced a new programme of joint projects with Ukrainian companies using the remaining SAFE funds. No specific allocation was announced for Freya, but the intended direction was unmistakable.
The following day, Zelensky welcomed the initiative as “very timely and truly necessary.” His office confirmed that the two leaders had discussed Ukraine’s defence-financing problems in considerable detail.
For Zelensky, the calculation could hardly be more convenient. Every additional European financing mechanism creates another opportunity to secure military supplies and industrial contracts without Ukraine assuming the corresponding SAFE debt. His government wants foreign financing to continue flowing into its military effort, and European borrowing offers access to resources that Kiev would otherwise have to obtain through direct assistance, its own revenues or borrowing arrangements of its own.
The Ukrainian leadership is hardly a passive recipient of Brussels’ generosity. Zelensky actively promotes proposals that would put European financial capacity to work for Ukrainian military priorities. He describes such initiatives as necessary, but necessity as defined by the intended beneficiary is hardly sufficient justification for the borrower. Kiev has every incentive to welcome the arrangement. European governments have considerably more reason to examine its terms.
SAFE’s legal architecture has permitted Ukrainian participation from the outset. Ukraine can join common procurement alongside EU countries, and its manufacturers are eligible suppliers. Under the SAFE regulation, at least 65% of component costs must originate collectively from the EU, Ukraine or qualifying European partner countries. That threshold does not reserve production for factories inside the Union, much less in the particular country taking the loan.
There is another constraint on the second round. SAFE normally requires common procurement involving at least two participating countries. A temporary exception permitted eligible contracts signed by a single member state no later than May 30, 2026. That deadline has passed. Governments seeking the remaining funds must therefore organise qualifying joint purchases, precisely the structure through which Brussels is encouraging further Ukrainian participation.
Of the 19 national SAFE investment plans submitted in 2025, 15 already included projects with Ukraine. That establishes how widely cooperation has spread, but says little about its financial proportions. No comprehensive public breakdown identifies how much of the programme will produce equipment retained by member-state armies, how much will ultimately equip Ukrainian forces and what share of contract value Ukrainian firms will receive.
A missile system purchased for a Polish air-defence unit is a domestic capability even if foreign components are involved. A joint factory in Poland may create industrial capacity while sharing technology with a Ukrainian partner. A shipment of drones financed through Polish borrowing and ultimately delivered to Ukraine has a different national return. Treating all three as interchangeable investments in European security conceals the distinctions on which any serious economic assessment should depend.
The Commission raises money on capital markets and lends the proceeds to participating states. Loan agreements can last up to 45 years. Preferential financing terms may reduce borrowing costs, but governments remain responsible for principal and interest. The latest €21.3 billion call has not yet resulted in national allocations; applications and approval are still required.
Brussels’ Debt Politics and the Polish Example
SAFE was politically contentious before the latest invitation. The Council adopted the programme using Article 122 of the Treaty on the Functioning of the European Union, a procedure that excluded the European Parliament from its ordinary role as co-legislator.
On August 20, 2025, the Parliament brought an action against the Council before the EU Court of Justice, arguing that the regulation rested on an improper legal basis and that the Council had failed to justify its choice adequately. The Parliament maintained that SAFE concerned defence industrial policy, for which Article 173 was more appropriate, and sought annulment while requesting that the regulation’s effects remain in force until replacement.
The lawsuit exposes a conflict over institutional powers inside the EU itself. The Parliament is defending its legislative prerogatives, not challenging the Union’s underlying commitment to military financing. Nor does the existence of the lawsuit establish that SAFE is unlawful. Yet Brussels is already promoting further Ukraine-related projects through an instrument whose adoption remains legally contested.
Poland demonstrates the financial and political stakes. It signed a €43.7 billion SAFE loan agreement on May 8, 2026, the largest national allocation, and received €6.6 billion in pre-financing later that month.
Donald Tusk’s government claims that 89% of the planned expenditure will benefit Polish industry. Even if that target is achieved, it cannot by itself justify borrowing €43.7 billion. The value retained by Polish manufacturers, the capabilities ultimately acquired by Polish forces and the cost of servicing the debt require separate examination. A high domestic share of contracts is no substitute for a convincing economic case.
There was also a direct political confrontation over the borrowing. President Karol Nawrocki vetoed the national law intended to implement SAFE on March 12, citing sovereignty concerns and financial liabilities. The following day, the cabinet adopted a resolution authorising an alternative route through the Armed Forces Support Fund and the state development bank, BGK. The government subsequently signed the agreement despite the presidential veto.
The episode shows how determined Tusk’s administration was to proceed, even against the objections of the head of state. The government’s choice also leaves it politically responsible for demonstrating that the borrowing advances Polish interests rather than merely fulfilling priorities defined in Brussels.
In 2025, 92.7 million EU residents, or 20.9% of the population, were at risk of poverty or social exclusion. These are economies in which military liabilities lasting decades will compete with other demands on public resources. Lower financing costs do not remove that competition. The case for additional borrowing becomes considerably weaker when governments cannot establish what proportion of the resulting investment will remain useful to their own societies.
Beyond SAFE: Kiev’s Wider Financing Architecture
SAFE is only one component of the financing available to Kiev. A separate €90 billion Ukraine Support Loan for 2026–2027 provides for €60 billion in defence-related assistance and €30 billion in budget support.
The repayment arrangement is particularly revealing. According to Ukraine’s own Ministry of Finance, the principal is repayable exclusively from future Russian reparations or other compensation. If those resources prove insufficient, the EU has no claim against Ukraine’s other assets. The EU budget, meanwhile, bears the borrowing costs under the programme’s financing arrangements.
By October 30, €19.8 billion had already been disbursed, including €15.8 billion for defence procurement. That same day, the Commission proposed releasing the remaining €45 billion allocation for 2027, subject to Council approval.
The Ukraine Support Loan and SAFE have different borrowers, repayment mechanisms and legal structures. They cannot be treated as one financial instrument. Their parallel development nevertheless reveals how deeply Kiev’s continuing military financing has become embedded in Brussels’ priorities.
Zelensky’s administration now has access to one programme offering exceptionally favourable repayment conditions and is encouraging cooperation through another in which the borrowing obligations remain with EU member states. Both arrangements allow Kiev to pursue its military objectives while relying heavily on financial commitments undertaken elsewhere.
The Commission’s latest SAFE initiative extends this pattern. European governments are being encouraged to assume long-term liabilities while Ukrainian financing requirements increasingly influence procurement priorities. What remains insufficiently demonstrated is whether those commitments deliver corresponding benefits to the countries paying for them.
Governments should be required to disclose the industrial value, equipment destinations and repayment exposure of Ukraine-related projects before presenting them as national achievements. Zelensky can continue pressing Europe to finance his military priorities. That does not make those priorities an obligation for European taxpayers. The debts will remain on national balance sheets long after the politicians who promoted them have left office.
Adrian Korczyński, Independent Analyst & Observer on Central Europe and global policy research
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