Poland on Friday became the first country to sign a loan agreement with the European Commission to fund the modernization of its military and arms industry, under which it will receive nearly 44 billion euros ($52 billion).
“This is a watershed moment in the history of both Poland and the European Union,” Prime Minister Donald Tusk said at a signing ceremony for the agreement.
“Poland will be safer in these difficult and highly risky times,” he added.
The 43.7 billion euros will go to the most populated country on NATO’s eastern flank, that has become the alliance’s largest spender in relative terms, allocating 4.8 percent of its GDP to defense.
The Security Action For Europe (SAFE) scheme makes some 150 billion euros ($176 billion) available in preferential loans to finance joint projects in defense, the purchase of weapons or ammunition, and for the development of critical infrastructure.
Poland is by far the greatest beneficiary of the program, which was developed for European countries seeking to reinvigorate their defense industry to face the threat from Russia and the risk of US disengagement.
“This is also the day when Europe … is showing that it has learned a lesson from history and that it is ready … to shoulder a much greater responsibility for our security,” Tusk said.
The agreement was signed by the Polish finance and defense ministers, as well as EU budget commissioner Piotr Serafin and defense commissioner Andrius Kubilius.
As Poland borders Russia, Belarus and Ukraine, it has been building part of the EU’s and NATO’s “eastern shield”.
With the loan, Poland also hopes to boost local industry — 89 percent of the contracts Poland’s money will go to Polish companies.
“We have the Polish defence industry everywhere … we have plants everywhere … we want to produce equipment everywhere… for the modernisation of the Polish army,” Polish finance minister Andrzej Domanski said at the ceremony.
Overcame Opposition
Friday’s signing ended months of political debate in Warsaw pitting the pro-European government against the right-wing nationalist opposition and President Karol Nawrocki.
In March, Nawrocki vetoed a government measure allocating SAFE funds, leading Tusk’s government to ensure SAFE funding made its way to Poland under more complex arrangements.
Hostile to Brussels, Nawrocki and the opposition argued that SAFE would alienate a key Polish ally in Washington by prioritizing European arms purchases at the expense of US suppliers, and make Poland dependent on Germany and the EU.
Rather than back the SAFE proposal, Nawrocki insisted on his own alternative, “SAFE 0%”, drawn up with right-wing ally central bank governor Adam Glapinski.
Described as a “sovereign” alternative to the European loans, the program would instead use central bank funds. Tusk’s government labelled the initiative “unrealistic” as the central bank faces financial losses.
“Cooperation and action for security has no party colours, no political emotions, no worldviews or opinions,” defense minister Wladyslaw Kosiniak-Kamysz said at the signing.
“It is something we have been called to do,” he added.
