European countries to borrow billions from EU to rearm Ukraine

Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, Spain, Finland, Hungary, and Lithuania have formally expressed an interest in requesting the loans, the EU’s defense spokesperson Thomas Regnier told reporters on Tuesday.

Others including Czech Republic, Latvia, Bulgaria and Greece indicated they will do so before the deadline on Tuesday at midnight.

By jointly buying weapons through the scheme, countries can secure a lower price than they would obtain by going it alone and then deliver the armaments to Ukraine.

France is also likely to apply for the loans, while Germany, Sweden and the Netherlands are expected to decline, according to people familiar with those governments’ plans.

However, even countries not taking loans are still able to cut the cost of arms deliveries by taking part in joint procurements.

European countries are facing growing pressure to increase their own weapons stocks and to boost military aid to Ukraine after U.S. President Donald Trump signaled unwillingness to continue funding Kyiv’s war effort.

Countries are also exploring directly buying weapons from Ukrainian companies, which is encouraged under SAFE. This would allow Kyiv to “increase the scale of defense production and technological integration with the EU,” a Ukrainian diplomat told POLITICO.

EU Defense Commissioner Andrius Kubilius wrote on Thursday that at least 20 countries will demand up to €100 billion under the scheme. The final figure will be clearer on Tuesday, the deadline to apply for loans, although Brussels has indicated that even latecomers won’t be turned away.

SAFE bet

Brussels has offered a 45-year timeframe to pay back the loans and advance payments of up to 15 percent. The cheap, long-term loans would be funded by EU-level debt, taking advantage of the bloc’s triple-A credit rating.

The program initially appealed to 20-odd countries for whom the EU loans came at a more favorable interest rate than the market would offer if they borrowed in their own names.

However, the offer initially seemed unpalatable to affluent Nordic countries leery of common borrowing schemes and with strong credit ratings, such as Sweden, Denmark and Finland.

In an effort to lure those Ukraine allies into the scheme, Kubilius and Economy Commissioner Valdis Dombrovskis urged EU countries to use SAFE to buy arms for Ukraine.