Background and allocation process

The EU’s recent drive to strengthen its defense technological and industrial base (ETDIB) has been shaped by a series of initiatives under the ReArm Europe—Defence Readiness 2030 Plan. Besides the Defence Readiness Omnibus unveiled earlier in June, SAFE notoriously stands out as the bloc’s new defense financial instrument.

Unlike other instruments, SAFE does not establish an ex-ante distribution key; instead, MS must apply voluntarily for financial assistance. Following its entry into force, the EC set an initial deadline of July 29, 2025—later extended to mid-August—for member states to express interest, ultimately receiving a total 19 requests. Notably, Austria, Germany, Ireland, Luxembourg, Malta, Netherlands, Slovenia, and Sweden did not submit proposals; though the EC confirms their intention to participate in joint procurement processes financed under SAFE.

Allocation principles and distribution

The SAFE Regulation includes two caveats for the attribution of financial assistance:

• No more than 60% of the total envelope (EUR90bn) may be allocated to the three largest recipient MSs (Article 13).
• The EC must apply principles of equal treatment, solidarity, proportionality, and transparency in its proposals for Council Implementing Decisions on loan distribution per Member Sate (Article 8.7).

Since the aggregate requests exceed the instrument’s budget, the EC proposes a methodology ensuring all applicants receive at least their minimum requested amount, with additional consideration for those with a significant spread between minimum and maximum requests. Hence, the EC has proposed the following indicative distribution of loan amounts:

Strategic context

At European Council level, negotiations are ongoing regarding the operationalization of Articles 17 and 18 of the Regulation, which set out the participation framework for third countries with a security and defense partnership with the EU—with particular attention to the UK and Canada. As such, these countries could bypass the 35% limit set for non EU-EEA (plus Ukraine) participants. Yet, certain capitals remain cautious about eligibility criteria, a persistent issue that has delayed other defense initiatives like the European Defence Industry Programme (EDIP).

These debates also intersect with recent EU-U.S. trade developments. The latest EU-U.S. Joint Statement commits to substantially increasing procurement of military and defense equipment from U.S. suppliers; and the market is also witnessing a rise in partnerships between American and European defense firms. Recent examples include collaborations between Lockheed Martin and Germany’s Rheinmetall, Northrop and Poland’s WZL-2, and Thales with Huntington Ingalls Industries (HII). Particularly, as several member states continue to emphasize the need to prioritize European industry—Spain’s decision last August to reject participation in the F-35 program being a notable example.

Furthermore, this development coincides with broader regulatory updates, including the recent update to the EU’s dual-use export control list in Annex I of Regulation (EU) 2021/821, providing for the inclusion of new items such as quantum technology, advanced computing and semiconductor manufacturing and testing equipment. The Regulation will now be subject to a two-month scrutiny period by the European Council and the European Parliament; after which it will enter into force provided no objections are made.

Next steps

The College of Commissioners is expected to endorse the proposed loan distribution. MS must submit formal requests by November 30, 2025, including a detailed investment plan outlining intended defense procurements and compliance with SAFE eligibility rules. If the EC validates the request, it will propose a council implementing decision, which must be adopted within four weeks.

Once adopted, the EC will negotiate loan agreements and operational arrangements with each MS. These will define the terms of the loan, disbursement schedule, and implementation framework. If requested, pre-financing of up to 15% may be disbursed after signature.

Quick links

SAFE | Security Action for Europe - European Commission

2025 Update of the EU Control List of Dual-Use Items - European Commission