Defence Loans and New Trajectories of EU Economic Integration: Are we SAFE?

Abstract

This article examines the SAFE Regulation, a key component of the ‘White Paper for European Defence: Readiness 2030’, as a central innovation in EU defence financing and fiscal governance. Drawing on the pandemic-era experience of SURE and the Recovery and Resilience Facility, SAFE enables the EU to issue loans to support Member States’ defence investments through coordinated spending. The article advances three main arguments. First, it shows how the instrument operates outside the Common Foreign and Security Policy budgetary regime while nonetheless contributing to the Treaties’ objective of progressively framing a common defence policy. Second, it critically analyses the unprecedented reliance on Article 122 TFEU as the legal basis for defence-related financial assistance tool, highlighting the legal and institutional tensions this choice generates, including the marginalization of the European Parliament and the pending annulment action. Third, the article assesses SAFE's broader implications for EU economic governance, arguing that joint EU borrowing is no longer confined to crisis response or market access emergencies but is increasingly deployed as a proactive policy tool to expand national fiscal space and coordinate strategic investments. Overall, the article contends that SAFE reshapes the EU's understanding of financial solidarity, advancing a model of risk-sharing and preparedness that may inform future integration in other strategic policy areas.