Poland is set to become the first country to sign an agreement under the European Union’s Security Action for Europe (SAFE) defence loan programme.
Defence minister Władysław Kosiniak-Kamysz revealed yesterday that the European Commission has approved Poland’s programme for allocating the money from the €43.7 billion loan and called that a “success”.
The agreement is to be signed in Warsaw on May 8 by EU commissioners Piotr Serafin and Andrius Kubilius, alongside Poland’s defence minister Władysław Kosiniak-Kamysz and finance minister Andrzej Domański.
Poland is the programme’s largest beneficiary from the relatively low interest rate (3-3,5 per cent) loans and is expecting an advance of €6.5 billion to be transferred from the EC by the end of May.
It plans to use the funds for projects including its Eastern Shield border defence programme, anti-drone and air defence systems, artillery and military transport infrastructure.
The centre-left government led by Prime Minister Donald Tusk claims that almost 90 per cent of the money will be spent within Poland, boosting the domestic economy and the Polish arms industry.
The planned signing of the SAFE agreement with the EU comes in the wake of the opposition Conservatives (PiS)-aligned President Karol Nawrocki’s veto in March of legislation that would have created a dedicated fund for the EU money.
The President justified his veto on the grounds that the loan money would still be subject to being blocked by the EC via the conditionality mechanism that has already been used against a previous PiS Polish government to block the county’s money from post-pandemic EU funds.
Nawrocki put forward using profits on Poland’s gold reserves as an alternative domestic way of raising the finance without having to pay interest and with greater flexibility in terms of which countries the weapons could be purchased from. His ideas were rejected by the government.
Poland has in the last few years been purchasing the bulk of its modern equipment from the US and South Korea.
The Tusk government rejected the President’s ideas and passed a resolution authorising the defence and finance ministers to sign the loan agreement on its behalf. Some legal experts believe that the government has violated the constitution which gives parliament and not the government the power to authorise large international loan agreements via legislation.
The opposition PiS slammed the government’s approach and the EC decision to grant the loan.
The PiS spokesman Rafal Bochenek said today that the move was a “terrible scandal”.
“This has been done without parliament’s agreement and with us being kept in the dark about exactly what the agreement will cost us”, he said.
Magdalena Sobkowiak-Czarnecka, the government official responsible for piloting the SAFE programme in the country, has admitted that the full details will only be revealed after the contracts have been signed for the military projects being funded.
The SAFE programme was established last year to help EU countries strengthen their defence capabilities and industries amid Russia’s war in Ukraine and reduce reliance on US weapons via the community raising funds on capital markets and lending them on to participating countries.
Nineteen EU member states are expected to receive the €150 billion’s worth of SAFE low-interest loans designated for military procurement from European sources. Ten, including Poland, have already approved and returned draft contracts.
Germany, the Netherlands and Sweden, though, have decided they can raise the finance for their military spending at a lower rate of interest elsewhere on the financial markets.
