In order to maximize Greece’s benefit from Europe’s new rearmament program and its implementation tools, increased defense spending should be directed toward well-designed investments with a high developmental impact—such as infrastructure, energy, and research and innovation projects—so as to support other sectors of the economy and create a stronger and more resilient productive base overall, the Bank of Greece emphasized in its Monetary Policy Report 2024–2025.
The Bank of Greece considers the European rearmament plan ReArmEurope/Readiness 2030 an opportunity for Greece. In particular, it pointed out that the SAFE (Security Action For Europe) financial instrument can offer support to countries facing debt sustainability challenges or already having high defense expenditures, by providing favorable financing terms for armament programs. Countries that already channel a significant percentage of their budget to defense, such as Greece, Poland, Finland, may benefit more from this mechanism, which functions as a form of debt refinancing under more favorable terms.
What SAFE offers
The SAFE instrument allows the use of resources raised through joint European borrowing to support defence spending, reducing pressure on national budgets and strengthening defence capacity and participation in joint European defence programs without additional pressure on borrowing costs.
However, a prerequisite for the budgetary benefits of this mechanism is that the cost of financing through SAFE is lower than the national cost of borrowing.
As the Bank of Greece noted, Europe plans to mobilize up to 800 billion euros, of which 150 billion euros will come from the new SAFE (Security Action For Europe) financial instrument, which will provide long-term loans on favorable terms to support common defense procurement. The loans will have a maximum duration of 45 years and a 10-year grace period for the repayment of the capital. As a condition for their access to the new loans, EU member states will have to purchase at least 65% of their weapons systems from suppliers in the EU, Norway or Ukraine.
The allocation of funds to member states will be determined based on demand, without a predetermined allocation criterion.
