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EU envoys reach deal on 150 billion euro arms fund
Published by Global Banking & Finance Review®
Posted on May 21, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on May 21, 2025
2 min readLast updated: January 23, 2026
EU envoys approve a 150 billion euro arms fund to enhance defense projects amid rising security concerns and Russia's threat.
BRUSSELS (Reuters) -European Union ambassadors signed off on Wednesday on a new flagship arms-buying fund, being set up quickly to provide 150 billion euros ($170 billion) in loans for defence projects, driven by fears of Russia and doubts about future U.S. protection of Europe.
The European Commission, the EU's executive body, proposed the fund in March as fears grew among European leaders that they could not be sure that U.S. President Donald Trump's administration would defend them from attack.
Alarmed by Russia's invasion of Ukraine and fearing they could be Moscow's next target, EU countries have already increased defence spending by more than 30% in the past three years. But EU leaders say that is not enough.
The EU initiative, known as Security Action for Europe (SAFE), seeks to break down national barriers by financing joint projects between EU countries and has a strong "buy European" element as it aims to boost the continent's defence industry.
For a project to qualify for SAFE funding, 65% of its value must come from companies based in the EU, the broader European Economic Area, or Ukraine.
However, companies from countries that have signed a Security and Defence Partnership with the EU can also be eligible, if they meet further conditions.
Britain signed such an agreement with the EU on Monday, bringing British companies such as BAE Systems a step closer to participation in SAFE projects.
The Commission used a fast-track procedure to launch the legislation, bypassing the European Parliament and only requiring the approval of all EU's 27 member countries.
Ambassadors representing those countries agreed on Wednesday on legislation negotiated over the past two months, which preserves much of the original proposal. Ministers are expected to approve it on May 27 - the final legal step in the process.
Antonio Costa, the president of the European Council of EU leaders, welcomed Wednesday's agreement as "an important step toward a stronger Europe".
"It delivers on the commitments made by EU leaders in March, helping member states invest jointly in European defence and strengthening our shared security," he said in a social media post.
($1 = 0.8828 euros)
(Reporting by Andrew Gray and Lili BayerEditing by Tomasz Janowski)
The EU's new arms fund, known as Security Action for Europe (SAFE), aims to finance joint defense projects among EU countries and enhance their collective security.
The arms-buying fund is set to provide 150 billion euros (approximately $170 billion) in loans for defense projects.
To qualify for SAFE funding, 65% of a project's value must come from companies based in the EU, the European Economic Area, or Ukraine.
Companies from countries with a Security and Defence Partnership with the EU can also be eligible for SAFE funding, provided they meet additional conditions.
Antonio Costa, the president of the European Council, welcomed the agreement as an important step toward a stronger Europe, emphasizing the commitment to joint investment in defense.
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