Politico: Bulgaria among countries to borrow from EU to rearm Ukraine

Ukraine's biggest allies in Europe are ready to ask for tens of billions of euros in loans from the European Union to jointly buy weapons for the war-torn country, as well as to strengthen their own defenses. Bulgaria is among the countries in the bloc requesting a loan, writes Politico's European editorial office.

Ahead of the deadline on Tuesday for applications for the new loan scheme. for weapons "Security Assistance Facility for Europe" worth 150 billion euros, several EU countries have told Brussels media that they are considering using the funds to help Ukraine defend itself against a full-scale invasion by Russia.

The loan scheme was proposed by the Commission in March as part of the broader ReArm Europe program and aims to strengthen Europe's defense industry and reduce the bloc's decades-long military dependence on the United States.

Belgium, Bulgaria, Cyprus, the Czech Republic, Estonia, Spain, Finland, Hungary and Lithuania have formally expressed interest in applying for the loans, EU defense spokesman Thomas Rainier told reporters on Tuesday.

Other countries, including the Czech Republic, Latvia, Bulgaria and Greece, have indicated they will do so before the midnight deadline on Tuesday.

By jointly purchasing weapons under the scheme, countries can secure a lower price than they would get if they acted alone and then deliver the weapons to Ukraine.

France is also likely to apply for the loans, while Germany, Sweden and the Netherlands are expected to decline, according to people familiar with those governments’ plans.

However, even countries that do not borrow can still reduce the cost of arms supplies by participating in joint procurement.

European countries are under increasing pressure to increase their own arms stocks and increase military aid to Ukraine after US President Donald Trump signaled that he does not want to continue funding Kiev’s military actions.

The countries are also exploring the possibility of buying weapons directly from Ukrainian companies, which is being encouraged under SAFE. This would allow Kiev to "increase the scale of defense production and technological integration with the EU", a Ukrainian diplomat said.

European Defense Commissioner Andrius Kubilius wrote on Thursday that at least 20 countries would request up to 100 billion euros under the scheme. The final figure will be clear on Tuesday, the deadline for applying for loans, although Brussels has indicated that even late applicants will not be rejected.

SAFE pledge

Brussels has proposed a 45-year repayment period for the loans and down payments of up to 15%. The cheap long-term loans would be financed by EU-level debt, taking advantage of the bloc's A-rated credit rating.

The program initially attracted about 20 countries, for whom EU loans were more favorable than the market rate if they borrowed on their own.

However, the proposal initially seemed unacceptable to wealthy Nordic countries that are wary of common borrowing schemes and have strong credit ratings, such as Sweden, Denmark and Finland.

In an attempt to attract Ukraine's allies to the scheme, Kubilius and Economy Commissioner Valdes Dombrowski urged EU countries to use SAFE to buy arms for Ukraine.

"We strongly urge you to consider how to include Ukraine in your plans. "Buying for Ukraine, with Ukraine, in Ukraine, can make a difference to our collective security," they said in a letter to member states earlier this month.

Countries with high debt and deficits, such as Austria and Italy, are less likely to take up the loans because of concerns that it would increase their existing debt, which could delay their exit from the EU's excessive spending procedure, officials told the newspaper.

France, which has long supported increasing EU defense spending, is likely to accept the loans despite its domestic budget constraints. Belgium, also burdened with high debt, will seek 7 billion to 11 billion euros under the scheme, according to an official familiar with the matter.

Greek Prime Minister Kyriakos Mitsotakis said on Monday that his country would seek 1.2 billion euros under the scheme.