Vilnius: Lithuania’s capital sits less than thirty kilometres from the border with Belarus and barely a hundred from Russia’s Kaliningrad enclave, a geography that has made the country one of the loudest voices in Brussels for faster, larger defence spending. This spring, that advocacy translated into money. Between February and April, the Council signed off on SAFE-backed defence funding for eighteen member states, part of a €150 billion loan instrument that sits at the centre of the EU’s Readiness 2030 plan.
The Security Action for Europe instrument, established by a regulation the Council adopted in May 2025, offers member states long-term loans on terms few could secure on their own: low interest rates, a ten-year grace period before repayment begins, and the option to bring in non-EU partners through bilateral arrangements to widen the pool of eligible suppliers. The pitch to capitals is straightforward. Governments that have spent three decades running down stockpiles and production lines can now borrow, collectively and cheaply, to rebuild them, with the EU’s own credit standing doing the work that individual treasuries could not.
For a country like Lithuania, the calculus is immediate. Vilnius has committed to defence spending levels that would have been unthinkable a decade ago, and SAFE loans offer a way to fund priorities such as air-defence systems, ammunition stockpiles and the kind of border-surveillance infrastructure that frontline states argue protects the whole Union, not just themselves. The instrument’s joint-procurement design is meant to ensure that this spending also builds European industrial capacity, rather than simply flowing to whichever supplier can deliver fastest, which in practice has often meant manufacturers outside the bloc.
That last point is where the politics get harder. The SAFE regulation leans toward EU and Norwegian, Ukrainian and other associated suppliers, but European defence manufacturers, still scaling up production lines for artillery shells, armoured vehicles and air-defence interceptors, cannot always match the delivery timelines that governments facing an acute threat perception say they need. The result is a recurring tension between the strategic goal of building a European defence-industrial base and the operational reality that some capability gaps are most quickly closed by buying from the United States or South Korea. SAFE’s bilateral-agreement provisions are partly an acknowledgment that a purely European sourcing rule would be unworkable in the short term, even as officials argue it should remain the medium-term destination.
There is also a fiscal dimension that extends well beyond defence ministries. Alongside the SAFE loans, the Council has activated the national escape clause under the EU’s fiscal rules for seventeen member states, giving them room to increase defence spending without triggering the deficit procedures that would normally apply. Critics of that move warn it sets a precedent for treating other spending pressures, from climate adaptation to ageing populations, as similarly exceptional, while supporters argue that a continent facing a sustained security threat cannot be bound by fiscal arithmetic designed for peacetime.
For Vilnius, none of this is abstract. The loans, the escape clause and the joint-procurement framework are the mechanisms through which a small state with an outsized strategic exposure gets access to financing and equipment it could not otherwise afford at the speed it says it needs. Whether Readiness 2030 delivers a genuinely European defence-industrial base, or simply a faster route for frontline states to buy what is available on the open market, is a question the next rounds of SAFE-backed contracts will start to answer.
