BRUSSELS — The European Commission opened a second round of its flagship defence loan programme on October 29, 2026, inviting all European Union member states to bid for a share of €21.3 billion in long-term loans. The money is part of Security Action for Europe, known as SAFE, a €150 billion loan facility adopted in May 2025 to help EU governments buy military equipment faster, strengthen their armed forces and deepen cooperation with Ukraine. The Commission’s message to capitals was direct: use this round to buy together, and where possible, buy together with Ukraine.
The announcement matters because it is not a grant, a donation to Kyiv, or a new EU army budget. SAFE loans are taken out by member states themselves, backed by joint EU borrowing, and must eventually be repaid by the governments that borrow. Whether capitals follow the Commission’s encouragement, and how much of the €21.3 billion they actually request, will test how far Europe’s defence ambitions have moved from declarations to signed contracts.
For Ukraine, the stakes are practical. The Commission said member states should prioritise the urgent needs of Ukrainian and member-state armed forces in air and missile defence systems, drones and counter-drone systems, and ammunition and missiles. Those are the categories that dominate the current war: protecting cities and troops from missiles and drones, sustaining artillery fire, and countering the uncrewed systems that now shape almost every front-line operation.
What the EU €21.3 billion SAFE defence fund will pay for
SAFE, in full Security Action for Europe, is a joint borrowing scheme backed by the EU budget. It was created to accelerate defence investment, strengthen readiness and resilience, and reinforce Europe’s defence industrial base through greater cooperation and joint procurement. It is described by the Commission as a key component of Readiness 2030, the EU’s broader plan to be ready for large-scale defence challenges by the end of the decade.
The second call, announced on October 29, is open to all member states. Once the Commission receives the target amounts governments wish to seek, it will inform them about tentative allocations within two weeks after the submission deadline. Governments will then be able to submit updated defence investment plans for reassessment.
What the Commission has fixed is the direction of travel. Alongside their own national defence priorities, member states are encouraged to use the funds from this second call to strengthen cooperation with Ukraine, including by including common procurement with Ukraine in their investment plans. The Commission’s press release uses the word encouraged rather than required, and reporting has noted that Ukraine’s participation is not a mandatory condition for receiving funds.
The priority list is deliberately narrow. Air and missile defence, drones and counter-drone systems, ammunition and missiles are the systems where European stocks have been strained, where production lines need long-term orders to expand, and where Ukraine’s battlefield experience is most directly relevant.
Why €21.3 billion was left over from the first round
The second round exists because the first round did not use the full €150 billion. Nineteen countries submitted proposals in the first round, requesting more than €130 billion in total, and the Commission approved loan agreements for all 19. Sixteen of those agreements have been signed, and almost €13.5 billion had been disbursed by late October to 11 member states that requested prefinancing.
The main reason, according to reporting on the Commission’s announcement, was that Italy and Hungary scaled down their borrowing plans from the amounts initially agreed. The unallocated balance then became available for a second call. The day before the second call was announced, Hungary’s €5.4 billion plan under SAFE was approved.
The undersubscription is itself informative. It shows that SAFE is not a pot of free money that every government rushes to claim in full. Borrowing, even on favourable long-term terms, adds to national debt and must fit within each country’s budget plans, procurement timetable and political debate. Some governments may have preferred to wait, refine their plans, or see what joint projects emerged before committing.
How joint procurement with Ukraine would work
Joint procurement, in the SAFE context, means two or more buyers — a member state and Ukraine, or several member states including Ukraine as a partner — agreeing to buy the same system, or to co-produce it, under a shared plan. In practice, that could mean ordering drones from a joint venture with a Ukrainian manufacturer, pooling an ammunition order, or buying air-defence components also used by Ukrainian forces.
Examples already foreseen in first-round plans illustrate the model. Bulgaria has a plan to co-produce drones with Ukraine, even though Bulgaria is often described as less enthusiastic about Ukraine support than some other EU members. The EU has also launched an EU-Ukraine drone alliance, and has moved forward on five pan-continental defence projects in which Ukraine is deeply embedded, according to the Kyiv Independent’s reporting.
The same day the Commission issued the new call, EU-Ukraine defence cooperation was a key topic at Brussels’ annual defence and security conference. Panu Routila, chief executive of Finnish defence manufacturer Patria, told the Kyiv Independent about a new joint venture between his company and Ukrainian drone producer General Cherry, focused on first-person-view drones and interceptor technology. Former Ukrainian prime minister Arseniy Yatsenyuk characterised the arrangement as a win-win: if countries support Ukraine financially, Ukraine can continue to procure from European manufacturers.
There are limits to what joint procurement can promise. It does not remove export controls, certification hurdles, or the time needed to scale up a production line. And because SAFE loans go to member states, not directly to the Ukrainian government, the benefit to Kyiv depends on whether European governments actually choose Ukrainian partners when they spend.
Loans, not grants: what member states are actually signing up for
The most common misunderstanding about SAFE is also the most consequential. The €21.3 billion is not a grant pot to be divided among capitals, and it is not money that the EU will hand to Ukraine. It is a loan facility. Member states borrow, on long maturities and, the Commission argues, on favourable terms because the borrowing is backed by the EU budget. They repay from national budgets.
That structure explains both the enthusiasm and the caution around SAFE. For governments facing pressure to raise defence spending quickly, a long-term EU-backed loan can smooth the cost of a major purchase over many years. For finance ministries, it still counts as borrowing. For industry, the value lies in the signal: a government with an approved SAFE plan is a customer with funding behind its order.
It also explains why the Commission stresses cooperation. If 19 countries each borrow separately to buy slightly different systems, Europe ends up with a fragmented arsenal that is expensive to maintain and hard to operate together. If several countries buy the same system, unit costs fall and forces can operate more easily alongside each other. In the wider debate, critics have raised questions about national control and debt, while supporters answer that the loans are voluntary and that 27 separate procurement systems would be more expensive and less effective.
What industry and Kyiv hope to gain
For European defence companies, SAFE’s second round is an order-book story. A manufacturer deciding whether to expand a drone factory, restart an ammunition line, or invest in counter-drone technology needs to know that orders will follow. A government investment plan approved under SAFE, with tentative allocations promised within two weeks of the submission deadline, is a step toward that certainty, even if it is not yet a signed contract. The emphasis on drones, air defence and ammunition tells industry where demand is expected to concentrate, which helps firms prioritise investment.
For Ukraine, the gain is twofold. Joint projects bring revenue and technology partnerships to Ukrainian manufacturers that have proved their products in war but need scale, certification and access to European supply chains to grow. Common procurement with European partners also helps Ukrainian forces operate equipment that allies also use, easing maintenance, training and future resupply. For member states, the gain is supposed to be readiness itself: air-defence interceptors, drone fleets and ammunition stockpiles cannot be improvised in weeks, and SAFE’s long maturities are designed to match the years needed to build that capacity.
What happens next
The immediate next step is for member states to tell the Commission how much they want to seek in the second round. The Commission will then inform them about tentative allocations within two weeks after the submission deadline, after which governments can submit updated investment plans for reassessment. No final allocation, contract or delivery date has been announced for the second round.
Three things are worth watching. The first is total demand: whether requests exceed €21.3 billion, forcing the Commission to prioritise, or fall short again. The second is the share of plans that actually include joint procurement with Ukraine, as opposed to national purchases that merely note Ukraine as a priority. The third is delivery: whether drone co-production plans, air-defence orders and ammunition contracts translate into systems in service, on a timescale that matters for Ukraine’s war and for Europe’s own readiness.
Sources
USN reviewed reporting from multiple outlets for this story. Read more from European Commission, Reuters and Kyiv Independent.
[…] in both money and security. The debate sits alongside wider European rearmament, including the EU defence fund effort to pool procurement. The draft also provides record investment of about 117.5 billion euros, […]