EU reopens €21.3bn in unused SAFE defence loans and urges joint projects with Ukraine

The European Commission has reopened €21.3bn in unused defence loans under the Security Action for Europe programme and is pressing member states to consider joint projects with Ukrainian companies. The move comes as Ukraine faces a large budget shortfall and continues to deal with damaging airstrikes. The funding round is part of the EU's effort to strengthen defence production and capabilities while also supporting cooperation with Kyiv.

The new call for proposals runs until 13 November, after several member states borrowed less than expected in the first round. Italy, Hungary and France were among those that took up far less than anticipated, leaving a pool of unspent money available for a second call. European Commission President Ursula von der Leyen said last month that the remaining SAFE funds would be used to set up a new programme for joint projects with Ukrainian companies.

Defence Commissioner Andrius Kubilius has now written to European governments encouraging them to deepen that cooperation. The Commission says the most urgent areas include missile defence systems, drones and ammunition. A Commission defence spokesperson said the leftover funds could benefit both national defence industries and Ukraine, adding that the EU wants to align those interests.

At the same time, the executive cannot force member states to involve Ukrainian companies because the loans are taken out by national governments for their own defence spending. That leaves the decision to capitals, many of which are likely to prioritise domestic industry. The funding move matters because SAFE was created in response to Russia's war against Ukraine and wider doubts in Europe over future security guarantees from the United States.

It is intended to help EU countries rapidly expand defence output and modernise their armed forces. By reopening unspent loans, Brussels is trying to turn unused borrowing capacity into a tool that can support both European rearmament and Ukraine's wartime needs. The initiative also reflects the growing effort to link EU defence industrial policy more closely with Ukraine's own production base.

SAFE has already shown the limits of voluntary uptake, with some governments borrowing much less than expected in the first round. That has created an opening for the Commission to push for more cross-border and Ukraine-linked projects, even if the final choice remains with member states. The current approach also fits a broader pattern in which the EU is trying to use financial instruments to speed up defence procurement and industrial cooperation.

For Ukraine, any access to these projects could help in sectors where demand is immediate and sustained. What remains unclear is how much of the €21.3bn will actually be channelled into joint ventures with Ukrainian firms, and how many governments will choose that route. The Commission has set the second call to close on 13 November, after which the scale and direction of the spending should become clearer.

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