EU Commission considers second SAFE loans scheme for defence projects, sources say

By Andrew ‌Gray

BRUSSELS, Dec 11 (Reuters) - The European Commission is considering launching a ‍second ‌edition of its multi-billion-euro SAFE loans scheme for defence projects as Europe ⁠seeks to bolster its defences ‌due to growing fears of Russia and doubts about U.S. security commitments, according to two EU officials.

European Commission President Ursula von der Leyen said on ⁠Thursday evening at an event hosted by Politico in Brussels that the original 150 billion ​euro ($176 billion) scheme had been so over-subscribed that ‌some EU members were now ⁠calling for a second one.

The two EU officials, speaking on condition of anonymity to discuss internal deliberations, said the Commission was actively ​looking into the idea.

Under the SAFE scheme, the EU jointly borrowed money on the market to lend it on at cost to EU governments for their defence projects. For most countries that do ​not ‍have a AAA credit ​rating like the EU does this means major savings.

In addition, the loans can be for up to 45 years and have a 10-year grace period for principal repayments.

The Commission received applications for loans worth some 190 billion euros under the existing SAFE scheme, suggesting there was strong ⁠demand for a second version, one of the officials said. But the official said it was ​too early to say how much money might be available under a second scheme.

"I think we will need to develop that instrument. The question is when," said the official, suggesting ‌next year might be the ideal time. "There are legitimate arguments as to why it is important to have it."

($1 = 0.8519 euros)

(Reporting by Andrew Gray)