Poland is set to sign a historic agreement with the European Union within hours, securing billions in funding through the SAFE program for its armed forces.
Funding Mechanism and Savings
The SAFE mechanism leverages the EU’s credit rating to secure loans for arms purchases, resulting in lower interest rates for Poland compared to independent financing. The European Commission borrows funds on global markets, which are then provided to Poland.
Government officials hailed the negotiations with the EU as a historic success, positioning Poland as the largest beneficiary of the program, with a significant portion of funds directed towards the Polish defense industry. Approximately 20 billion PLN is expected to be immediately available to BGK (Bank Gospodarstwa Krajowego) upon signing.
Agreement Details and Signatories
The agreement will be signed within the next few hours by four representatives from Poland – Deputy Prime Minister and Minister of National Defence Władysław Kosiniak-Kamysz, Minister of Finance Andrzej Domański, and two representatives from Bank Gospodarstwa Krajowego. From the European Commission, the signatories will be Commissioner for Defence Industry Andrius Kubilius and Commissioner for Budget Piotr Serafin.
Poland will receive an immediate advance of 15% of the total sum.
Presidential Veto and Support for Services
Decisions regarding the allocation of SAFE funds should be made by military personnel, not politicians, according to government officials. Due to President Karol Nawrocki’s veto of the SAFE Act, funds may not be available to support other services, but the government intends to find alternative funding.
It is anticipated that nearly all 44 billion euros will be allocated to the armed forces, while efforts will be made to continue supporting the Police and Border Guard.
SAFE Program Timeline and Procurement
According to EU regulations, member states can independently order military equipment under SAFE until the end of May; after that, they will need to find partner countries for each purchase. This deadline is crucial for Poland, as most planned acquisitions involve orders from the Polish defense industry.
SAFE Program Goals and the ‘Eastern Shield’
The EU’s SAFE program provides 150 billion euros in support, including low-interest loans, primarily for military equipment purchases, especially those manufactured in Europe. Poland has been allocated a total of 43.7 billion euros.
These funds will finance defense projects outlined in Poland’s investment plan, including the ‘Eastern Shield’ program, development of anti-drone systems, air defense, artillery, and modernization of military transport infrastructure. The government states that 89% of the funds will go to Polish industry and the economy.
Legislative Hurdles and Government Response
In mid-March, President Karol Nawrocki vetoed the act implementing SAFE, which proposed the creation of a special fund for EU funds. In response, the government adopted a resolution regarding the Polish Armed Forces Program, authorizing the Minister of National Defence, Minister of Finance, and Economy to sign the agreement and related documents for the SAFE loan.
The Bank Gospodarstwa Krajowego will take out the loan on behalf of the Armed Forces Support Fund (FWSZ), with repayment coming from funds not included in the minimum defense spending limit.
