Europe’s security initiative needs multilateral financial support

With the launch of the security work initiative for Europe (Seif), which is the new European Union program “for loans for weapons” at a value of 150 billion euros, Brussels presented what was impossible only five years ago, and issued joint bonds to finance weapons purchases, with effective financial flexibility for member states.

This is a milestone, but if I want the “Seif” program to fulfill a sustainable security, then a second “financial engine” must be accompanied by it, not only supporting purchases, but also industrial capabilities, which is a multilateral bank to finance defense and security.

The “Saif” program was praised, as a historical achievement, and for the first time the European Union institutions will collectively bring together on behalf of the 27 member states to finance joint purchases of advanced defense capabilities, from artillery shells and air defense systems to cyber tools.

Radical transformation

Most contracts must be concluded within the European Union or with its close partners, such as Ukraine and Switzerland.

The United Kingdom, the United States and Turkey will be eligible to obtain the remaining session, pending the fact that security agreements with Brussels become official.

As for a bloc that was unable to agree on a modest box worth five billion euros in 2019, this represents a fundamental shift in the way of thinking and methodology.

There is also a short -term financial motivation, as the European Union will allow governments to violate the stability and growth charter, up to 1.5% of the gross domestic product until 2028 in order to absorb the spending related to the “Seif” program, a step that will reduce the pressure on European capitals, where the borrowing in the era of the “Corona” pandemic and energy -related support has already led to straining public financial.

Money flow

Despite its size and symbolism, “Saif” is basically a demand -based mechanism, since the program was prepared as a sovereign religion, so the new obligations must be closed by 2030, and it cannot recycle payments.

Likewise, funds flow to governments only, instead of companies directly, making the second and third levels (companies that produce equipment already) depend on cautious commercial banks, to provide them with cash liquidity.

Europe already knows how this situation ends. In 2023, the increasing demand for ammunition collided with a frozen credit environment, which caused a severe shortage of financing the European security program. Despite all the strengths of the “Seif” program, it is not an industrial strategy, but the bank is multilateral – to finance defense and security – it will provide the lost episode.

Political momentum

With the support of the growing political momentum in Brussels and London, this institution will follow the model of multilateral development banks, but with an exclusive mandate for defense, security and flexibility, and it will be funded through paid capital and refundable from its shareholders (sovereign countries), and will be enabled to issue bonds with the highest credit rating.

These funds will then support direct lending to governments and companies, and provide guarantees for commercial banks to ensure suppliers financing, infrastructure investment, and export deals.

More importantly, these assets can be included in the national budgets, or remain in the bank’s public budget, and it is important financial flexibility in light of the states seeking to expand defense spending without exaggerating the official deficit.

Moreover, given that multilateral banks usually raise their capital by two or three times, a first capital of 25 billion euros can open the way for up to 75 or 100 billion euros of lending resources, and this is only the beginning.

With the expansion of participation and expansion over time, the bank can grow dramatically, leading to the construction of a solid capital base that the European defense sector lacked for decades.

Permanent preparation

Instead of competition, the “Seif” and the multilateral bank will work alongside, as they support each other, to enhance the defensive industrial base in Europe. “Seif” will create a common demand and shared financial risks, while the bank will ensure multilaterals to keep pace with developments, especially in future stagnation periods, when public requests decrease, but defensive preparation must remain high.

In short, one of them executes orders, and the other provides the ability to meet them, and if Europe wants to translate this urgent moment into permanent preparation, both are necessary. To achieve this possibility, policy makers will need to move quickly. For example, a joint advertisement at the NATO summit (NATO) next June can formally create a multilateral bank for those wishing, with an initial capital that is sufficient to start the bank’s operations in 2026, just as the “Seif” program reached its climax.

It can then be allocated part of each contract in the “Seif” program to finance the suppliers supported by the bank, while linking the credit directly to the purchasing courses, and granting small and medium -sized companies confidence to expand their business.

More importantly, the bank exceeds the European Union, to include partners such as the United Kingdom, Canada, Japan and Australia, which are liberal democracies with advanced defensive sectors and a common share in the European security structure.

“Seif” has proven that Europe is able to work with harmony and speed. The bank will prove its ability to invest together in the long run. Without this banking institution, the European Union risks increasing inflation and depleting its financial resources, while the strategic conflict with the competing forces is exacerbated. The defense of the old continent cannot go on only one engine, it’s time to run the second engine. About «Politico»

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Strategic independence

Europe’s security work initiative aims to enable the Union to rely on itself defensively, especially in light of the Russian -Ukrainian war, and the fragility it highlighted in the European defense structure, as well as repeated threats from the American President, Donald Trump, to withdraw support or reduce American forces in Europe, which re -raised the necessity of European strategic independence.

The “Saif” initiative is one of the basic pillars of the “2030 Recoueping” plan developed by the European Commission, which aims to unify defense requests, secure supply chains, and stimulate industrial production. Priorities include ammunition, morsen planes, air defense systems, electronic warfare, and military transport.

European Union member states must provide qualified projects to obtain financing, provided that at least two countries participate in each project.

For its part, the European Commission analyzes projects, and upon approval, countries can request 15% as a first batch of the cost of the project, followed by semi -annual reviews that may lead to the disbursement of additional payments, with the possibility of financing until December 31, 2030.

. A joint advertisement during the upcoming “NATO” summit can formally create a multilateral bank with an initial capital that is sufficient to start financing in 2026.

. The “Seif” initiative is the new European Union program for “loans for weapons”, at a value of 150 billion euros.