Hungary’s €5.4bn defence loan approved as EU wraps first SAFE round

The European Commission approved Hungary’s application for a €5.4 billion loan under the Security Action For Europe programme. This is an important step because it completes the first round of SAFE allocations and gives Hungary access to financing for strategic defence investments. Approval by the Commission does not itself release the money.

Before funds can be dispersed, EU governments must approve the application. After that, representatives from Brussels and Budapest must sign a formal loan agreement. Those are the two remaining steps identified in the article. The approved amount is far below Hungary’s original request of €16.4 billion, which was revised after Péter Magyar became prime minister.

The decision also affects the wider programme. Hungary’s approval completes the first round, in which 19 member states applied for loans. More than €21 billion remains in the €150 billion SAFE funding envelope, and countries may express interest in another round by December.

Security Action For Europe, or SAFE, is a European Commission programme offering loans for strategic defence investments. It is a key pillar of the ReArm Europe 2030 plan. The programme matters because it is intended to accelerate military orders, secure supply chains and expand defence manufacturing across Europe.

SAFE supports countries that pool procurement in priority capabilities. These include ammunition, drones, anti-drone systems, air defence, military mobility and electronic warfare. The programme also encourages joint procurement, stronger industrial cooperation and greater interoperability. This approach can help countries buy compatible equipment and work more effectively together.

The programme has a €150 billion funding envelope. In the first round, 19 member states applied for loans totalling €129 billion. The Commission said more than €21 billion remains available. Member states can express interest in additional or entirely new loans by December, creating a possible second round of investment.

SAFE is built around a €150 billion funding envelope for defence loans to European Union member states. Its scale makes it a central financing tool in the ReArm Europe 2030 plan. The programme is intended to help countries strengthen military readiness while developing shared procurement and industrial capacity.

Nineteen member states submitted applications in the first round. Together, their requests amounted to €129 billion. The applications targeted strategic defence investments, including capabilities such as ammunition, drones, air defence and electronic warfare. Poland sought the largest loan, at €43 billion, while Denmark requested the smallest, at €46.8 million.

The European Commission said more than €21 billion remains in the overall pool. Member states will be invited to express interest in additional loans or completely new loans by December. The Commission will then assess possible fresh plans, allowing countries such as Ireland to seek funding in a later round.

Hungary originally applied for €16.4 billion in SAFE financing. After Péter Magyar took office in April, the application was reduced to €5.4 billion. The revised application was officially lodged in late September. The change significantly narrowed Hungary’s requested borrowing under the programme.

The article says Magyar is understood to have wanted to reassess the original proposal. The reason given was concern about alleged corruption risks linked to the previous government. The wording indicates that this was the reported motivation, rather than a formally established finding described in the article.

The European Commission has now approved the revised €5.4 billion request. However, Hungary still needs approval from EU governments before receiving the funds. A loan agreement must then be signed by representatives from Brussels and Budapest. Only after those steps can the approved financing be dispersed.

SAFE loans can support several capabilities that the programme identifies as priorities. They include ammunition, drone and anti-drone systems, air defence, military mobility and electronic warfare. These areas are presented as important to Europe’s effort to bolster military readiness through the ReArm Europe 2030 plan.

The programme can influence readiness by helping member states place orders and invest in manufacturing. It also supports countries pooling procurement, rather than acting entirely separately. Joint purchasing can support stronger industrial cooperation and greater interoperability, meaning forces have better chances of using equipment and systems together. SAFE also requires at least 65% of component costs to come from the EU, Ukraine or certain associated European countries.

The first round involved 19 member states and €129 billion in applications. More than €21 billion remains available. Further loans could bring more countries into the effort, including Ireland, and extend investment in the capabilities and supply chains that SAFE prioritises.

SAFE encourages joint procurement because the programme is designed to improve Europe’s military readiness through coordinated investment. Countries can pool purchases in capabilities seen as priorities, such as ammunition, air defence and drone systems. This supports the ReArm Europe 2030 goals of accelerating orders and strengthening supply chains.

In practice, interoperability means that equipment, communications and military units from different countries can work together more effectively. Joint procurement can make that easier by encouraging countries to acquire compatible systems. Stronger industrial cooperation means European defence companies and member states cooperate more closely on production, supply and investment instead of developing every capability separately.

The article presents these goals as part of a broader effort to improve European defence. Nineteen member states applied for SAFE loans in the first round, worth €129 billion in total. More than €21 billion remains, so another round could expand shared purchasing and cooperation, with Ireland among the countries interested.

Under the process described, a member state submits a SAFE application to the European Commission. Commission approval is only one stage. EU governments must approve the application, and representatives from Brussels and the member state must then sign a loan agreement before the money can be dispersed. The article does not specify repayment terms or interest rates.

A major condition is that at least 65% of component costs must originate from the EU, Ukraine or certain countries in the European Economic Area and European Free Trade Association. The remaining 35% may come from any third country. This structure links SAFE financing to eligible regional supply chains and production.

That requirement can strengthen the European defence industry by directing much of the spending toward companies and suppliers in Europe and associated countries. It may support manufacturing, supply security and industrial cooperation. The first round attracted €129 billion in applications, while more than €21 billion remains for possible additional or new loans.