Warsaw – A dispute over repayment terms is escalating in Poland as the government moves forward with plans to modernize its armed forces using EU funds from the Security Action for Europe (SAFE) program. The cabinet in Warsaw approved the conditions of the program, which provides €150 billion in low-interest loans for defense investments, with Poland slated to receive €43.7 billion – approximately 29 percent of the total credit volume.
Following the cabinet meeting, Defense Minister Władysław Kosiniak-Kamysz indicated that initial funds could be available as early as March, pending parliamentary approval and the signature of President Karol Nawrocki, according to the Polish Press Agency (PAP). However, the government’s endorsement of the legislation has triggered a conflict between the Finance Ministry and the Defense Ministry regarding how the loans will be repaid.
The Polish Defense Ministry has reportedly submitted 139 classified projects to benefit from the SAFE funds, including investments in air defense systems (Piorun), armored personnel carriers (Borsuk) and Krab self-propelled howitzers. The purchase of Airbus tanker aircraft is also planned. More than 80 percent of the funds are intended to bolster the Polish defense industry, furthering the country’s efforts to build a “super army.” Some projects are being developed in cooperation with European partners and Ukraine.
The state-owned development bank, BGK, will act as the borrower for the loans, with the Finance Ministry providing the guarantee. A central point of contention remains: who will be responsible for repaying the credit? The Finance Ministry insists that repayment should come from the defense budget, arguing that the Defense Ministry will directly benefit from the funds. The military leadership counters that the defense budget is not designed to accommodate additional debt obligations, potentially jeopardizing ongoing modernization efforts.
Warsaw has already committed to over €55 billion in arms contracts over the past four years, largely financed through loans. Deliveries of tanks, howitzers, and rocket systems from South Korea, as well as HIMARS systems and Apache helicopters from the United States, have been credit-financed. Repayments on these loans are scheduled to begin in 2027. Even as the first SAFE loan repayment is not due for ten years, with a total loan term of 45 years, annual interest payments are estimated to exceed €1.3 billion.
Defense Minister Kosiniak-Kamysz has expressed hope that a portion of the loans could be forgiven during the repayment period – a stated strategic objective of the government. The SAFE program, launched in May 2025, aims to provide EU member states with access to affordable financing for joint arms procurement projects, such as additional air defense systems or ammunition, in response to perceived threats from Russia.
The situation is further complicated by a growing disagreement between the government and President Nawrocki. During a National Security Council meeting, Nawrocki voiced opposition to the SAFE program, warning that it could turn into “support for the crisis-ridden economy of our western neighbor,” a reference to Germany. He argued that the program primarily benefits the German and French arms industries, disadvantaging Polish industry and suppliers like Turkey and South Korea.
Prime Minister Donald Tusk sharply criticized the President’s stance, stating, “This represents an attempt to destabilize all of Europe,” and warning of a potential risk that “Poland will leave the European Union,” according to PAP. This dispute underscores the deep divisions within Warsaw since Nawrocki’s election in 2025, resulting in a lack of unified strategic messaging.
Poland, feeling particularly vulnerable to Russian aggression, has been significantly increasing its military spending in recent years. The SAFE program is intended to provide additional resources for purchasing defensive weapons against drones and missiles, helicopters, and boats. Germany, unlike other major EU countries such as France, Italy, and Spain, has chosen not to utilize the EU loans, relying instead on its own financial resources.
