Panayiotis Rougalas
EU Defense Commissioner Andrius Kubilius announced on Monday that the European Commission and Cyprus have completed the signing of a €1.18 billion loan agreement under the SAFE program, a key component of the EU's broader effort to strengthen its defense capabilities.
Kubilius said Cyprus is moving forward consistently in supporting Europe's defense readiness and noted that the country is the sixth EU member state to join the SAFE initiative. He added that European financial support is expected to begin flowing soon to Cyprus' armed forces and defense industry.
The agreement gives Cyprus access to nearly €1.2 billion in defense financing through loans, although the initial funding allocation is estimated at €177.2 million.
According to information released by the European Council, funding under the SAFE program will focus on priority areas identified by EU leaders in March 2025 and will be divided into two categories of defense products.
The first category includes ammunition and missiles, artillery systems, long-range precision strike capabilities, land combat systems, and their support equipment, including soldier gear and infantry weapons. It also covers the protection of critical infrastructure, cybersecurity, and military mobility.
The second category covers more advanced defense capabilities, including air and missile defense systems, naval and submarine capabilities, drones and anti-drone technologies; as well as strategic enablers such as military air transport, aerial refueling, command-and-control systems, space-based services, artificial intelligence, and electronic warfare.
Defense products in the second category will be subject to stricter eligibility requirements. Contractors will need to demonstrate the ability to control and develop the design and evolution of the products being procured.
For both categories, procurement contracts must ensure that components originating from outside the EU, the European Economic Area, the European Free Trade Association countries, and Ukraine account for no more than 35% of the estimated value of the final product.
The EU has stressed that the initiative is intended not only to strengthen Europe's defense industry but also to deepen cooperation with trusted partners, enhance interoperability between armed forces, and maintain close coordination with NATO.
Part of the ReArm Europe plan
SAFE is the first pillar of the European Commission's "ReArm Europe / Readiness 2030" strategy, an ambitious plan aimed at mobilizing more than €800 billion in defense spending across the bloc.
The strategy emerged from a March 2025 European Council summit, where EU leaders agreed that Europe must become more self-reliant in defense, reduce strategic dependencies, and address critical capability gaps amid a rapidly changing security environment.
Other elements of the ReArm Europe plan include greater flexibility in EU funding mechanisms, increased national defense spending, support from the European Investment Bank, and efforts to attract private-sector investment into defense-related projects.
A €150 billion EU defense funding pool
Through SAFE, the EU will make up to €150 billion available to participating member states through long-term loans offered on favorable terms.
In most cases, countries seeking funding will be required to participate in joint procurement projects with at least one other participating country. The aim is to reduce duplication, improve interoperability, and achieve economies of scale across Europe's defense sector.
However, given current geopolitical pressures and the urgent need to strengthen military capabilities, the program will temporarily allow single-country procurement projects in certain cases.
The SAFE instrument is designed to support member states that want to invest in defense manufacturing and procurement while strengthening Europe's industrial base and ensuring that critical defense equipment can be produced more quickly and in larger quantities.
