State considering bid for part of €21bn EU ‘defence’ loans after previous plan was vetoed by minister

The Security Action for Europe, or SAFE, is an EU-backed loan programme for defence and security spending. The European Commission planned to raise €150 billion against the EU’s common budget, then lend the money to member states. The aim was to help governments strengthen their defence budgets together.

The programme was created because of concerns about the growing threat posed by Russia. Governments could use the loans for projects such as military equipment. The borrowing would support national defence plans while encouraging countries to spend more in step with other EU members.

Nineteen of the EU’s 27 states used the first round. After their plans were assessed and approved, about €21 billion remained. The Commission has now invited applications for that leftover money, creating a possible second opportunity for countries such as Ireland.

Ireland is reviewing the question because the first SAFE allocation did not use all the available money. About €21 billion remains after 19 of the EU’s 27 member states received approval for defence spending plans. The European Commission has now opened a second call for applications.

Ireland previously rejected a proposed loan, but Defence Minister Helen McEntee said earlier this year that she would be open to using the scheme in a second round. Defence officials had identified possible equipment needs, including Air Corps aircraft and Army armoured vehicles.

The financial case is not obvious. Ireland can already borrow on financial markets at cheaper rates than most European countries. However, using SAFE could show that Dublin is prepared to do more on defence alongside its EU partners. Any application would form part of a wider review of national defence priorities.

Ireland’s earlier plan sought permission to borrow up to €100 million from SAFE. That proposal was intended to upgrade Defence Forces equipment. The article does not state that Ireland has been offered or approved for the same amount in the new round.

The overall EU facility was designed to raise €150 billion, borrowed against the EU’s common budget. Nineteen member states used the first round. Once their defence spending plans were assessed and approved, approximately €21 billion was still unspent.

The Commission has invited member states to bid for that residual money. Ireland’s possible application would therefore be considered within the second round, rather than automatically receiving €100 million. The Department of Defence says any decision will depend on a broader assessment of defence priorities and would require approval from Finance and Public Expenditure.

Ireland rejected the earlier proposal mainly because SAFE did not offer an attractive financial bargain. The State can borrow on financial markets at rates cheaper than those available to most European countries. That reduced the practical value of taking an EU-backed loan.

The Department of Defence had wanted to draw down up to €100 million for Defence Forces equipment. Possible uses included replacing part of the Air Corps fleet or buying new armoured vehicles for the Army. The money would have been repaid over 45 years.

Then finance minister Paschal Donohoe blocked the plan. The decision did not end Ireland’s interest in European defence initiatives. The Department of Defence continues to review EU funding developments, while a new application would need sign-off from Finance and Public Expenditure as part of a broader assessment.

SAFE loans could help Ireland replace part of the Air Corps fleet or buy new armoured vehicles for the Army. They would provide a long repayment period, with the earlier proposal scheduled to be repaid over 45 years. The programme is designed to support national defence investment.

The main non-financial gain would be political and strategic. Taking the money could signal that Dublin wants to increase defence activity alongside other EU states. It could also fit with Ireland’s stated willingness to join European joint procurement projects, where countries buy equipment together.

The main risk is cost. Ireland can already borrow more cheaply on financial markets than most European countries, so SAFE may make less financial sense. Any new decision would also commit the State to a loan and require approval from the departments of Finance and Public Expenditure.

Joint procurement means several countries combine their purchasing plans to buy weapons or other defence hardware. Ireland may join this part of the EU’s defence plans even though borrowing through SAFE would be less financially useful. The reason is that cooperation and shared purchasing are separate from the loan decision.

The Government has said Ireland will participate in the EU’s joint procurement element. This could help Dublin act alongside other member states when acquiring military equipment. The article does not specify which items Ireland would buy through a joint project or what savings would result.

Ireland’s position reflects two different calculations. Market borrowing is cheaper for the State than SAFE borrowing, but European cooperation may still support defence planning. Ireland is also planning hundreds of armoured vehicles and long-range radar systems through a supply arrangement with French defence industry, showing that equipment acquisition is already moving ahead.

Public borrowing lets a government raise money for major spending and repay it over an agreed period. In this case, borrowing could fund defence equipment without requiring the entire cost to be paid immediately from the annual budget. The State would then repay the loan, including its financing cost.

SAFE uses the EU’s common budget to support a planned €150 billion pool of loans for member states. The EU-backed structure can offer more favourable borrowing than national financial markets for countries whose own rates are higher. The money is intended specifically for defence and security spending.

Ireland is different because it can already borrow at rates cheaper than most European countries. That weakens the financial argument for using SAFE, even if the programme offers political value through shared European action. Ireland must therefore weigh the cost of borrowing against defence priorities and cooperation with other EU states.