Council Regulation (EU) 2025/1106 of 27 May 2025 establishing the Security Action for Europe (SAFE) through the Reinforcement of the European Defence Industry Instrument (Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 122 thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) Russia’s war of aggression against Ukraine and its repercussions for European and global security constitute an existential challenge for the European Union.

(2) In response to that challenge, in its conclusions of 6 March 2025, the European Council, recalling the Versailles Declaration of 11 March 2022 and the Strategic Compass for Security and Defence approved on 21 March 2022, stressed that Europe must become more sovereign, more responsible for its own defence and better equipped to act and deal autonomously to cope with immediate and future challenges and threats. At that European Council, all Member States committed to reinforcing their overall defence readiness, reducing strategic dependencies, addressing critical capability gaps and strengthening the European defence technological and industrial base (EDTIB) accordingly across the Union so that the Union is in a position to better supply equipment in the quantities and at the accelerated pace needed.

(3) On 18 May 2022, the Commission and the High Representative of the Union for Foreign Affairs and Security Policy presented a Joint Communication on the Defence Investment Gaps Analysis and Way Forward, highlighting the existence, within the Union, of defence financial, industrial and capability gaps.

(4) On 20 July 2023, the European Parliament and the Council adopted Regulation (EU) 2023/1525 (1), supporting ammunition production (ASAP), with the aim of urgently supporting the ramp-up of manufacturing capacities of the European defence industry, securing supply chains, facilitating efficient procurement procedures, addressing shortfalls in production capacities and promoting investments.

(5) On 18 October 2023, the European Parliament and the Council adopted Regulation (EU) 2023/2418 (2), establishing an instrument for the reinforcement of the European defence industry through common Procurement (EDIRPA), with the aim of increasing collaboration among Member States in the defence procurement phase to fill the most urgent and critical gaps in the stocks of Member States, in particular those created by the response to Russia’s war of aggression against Ukraine, in a collaborative manner.

(6) In its conclusions of 14 and 15 December 2023, the European Council, having considered the work carried out to implement the Versailles Declaration and the Strategic Compass for Security and Defence, underlined that more needs to be done to fulfil the Union’s objectives of increasing defence readiness. In order to achieve such readiness and defend the Union, a strong defence industry was considered to be a prerequisite, requiring the European defence industry to become more resilient, innovative and competitive.

(7) On 5 March 2024, the Commission adopted a proposal for a Regulation of the European Parliament and of the Council establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (‘EDIP’) in order to build on the experience acquired in the context of Regulations (EU) 2023/2418 and (EU) 2023/1525 and extend their logic in a more long-term and structured perspective.

(8) However, since the beginning of 2025, there has been a stark deterioration in the Union’s security context, linked not only to Russia’s persistent threat and its intensified shift to a war-time economy and to the evolution of the war in Ukraine, but also to uncertainties stemming from the advent of a geopolitical situation in which the Union has to markedly step up its efforts to ensure its defence autonomously. That recent deterioration has increased the level of threat to the Union and requires that Member States launch, as a matter of emergency, massive public expenditures to scale up the EDTIB. As a consequence, there is a growing need to accelerate, in a spirit of solidarity, the provision of Union support to those Member States that are likely to be threatened by serious difficulties due to the massive public investments needed, which may have an impact on their economic situation. Considering the threats to the Union’s land, air and maritime borders and, as a consequence, the need to engage in massive public investments, such solidarity is especially essential for those Member States which are most exposed to military threats. In this respect, the threats posed by Russia and Belarus are of particular urgency and relevance. Due to the time needed to develop products and ensure the ramp-up of the corresponding industrial production capacity throughout the Union, it becomes vital for the Union to start supporting those Member States as soon as possible so that they can place orders very rapidly, increasing predictability for the defence industrial sector and incentivising it to invest, in the very short term, in the strengthening of production capacities.

(9) The magnitude and speed with which Member States are required to increase their investments in defence industrial manufacturing capacities is likely to have a major impact on Member States’ public finances, at a time when the budgets of several Member States remain under strain.

(10) This exceptional situation, which has not been caused by the Member States and which is beyond their control, justifies that the Union take urgent measures to establish a temporary instrument aimed at providing financial assistance in the form of a Security Action For Europe Instrument (the ‘SAFE instrument’) to those Member States that want to invest in defence industrial production.

(11) The SAFE instrument should enable urgent and major public investments in the European defence industry, with the aim of rapidly increasing its production capacity, improving the timely availability of defence products, and speeding-up its adjustment to structural changes. As this Regulation is an exceptional and temporary response to an urgent and existential challenge, the financial assistance provided under it should only be made available for the purpose of addressing the adverse economic consequences of the deteriorating security situation and the immediate procurement needs of Member States contributing to increased defence industrial readiness of the EDTIB. The SAFE instrument should be part of an overall effort, at Union and national level, to devote more resources to defence industrial investments to respond to the crisis situation arising from the current security threats. Additional measures should be pursued in parallel, at Union and national level, to support that effort, including the activation of the existing flexibility within the framework of the Stability and Growth Pact.

(12) The financial assistance under the SAFE instrument should be implemented by Member States in a manner that is consistent with the defence capability priorities commonly agreed to by the Member States within the framework of the Common Foreign and Security Policy (CFSP), the Member States’ cooperation within the framework of the Permanent Structured Cooperation established by Council Decision (CFSP) 2017/2315 (3), the European Defence Agency’s (EDA) initiatives and projects, and the Union’s civil and military assistance to Ukraine. When implementing this Regulation, the Member States should duly take into account the relevant activities carried out by the North Atlantic Treaty Organisation (NATO), in particular the NATO capability objectives, and by other partners where such activities serve the Union’s security and defence interests.

(13) Member States should be able to use the financial assistance under the SAFE instrument in synergy with other existing and future Union programmes, in particular to co-finance specific actions. In parallel, Union programmes that support cooperation in the field of defence procurement or that more generally aim to support the competitiveness of the EDTIB may specifically provide for additional Union support. Such additional support could apply to common procurement benefitting from the financial assistance under the SAFE instrument or to economic operators involved in such procurements in order to stimulate corresponding industrial ramp-up and further reinforce the SAFE instrument’s effects on the EDTIB.

(14) In order to reduce the administrative burden on Member States, the Commission should be able to take into account the information provided under this Regulation, particularly for reporting on the implementation of the financial assistance, within the framework of relevant programmes, and notably those supporting cooperation in the field of common procurement. This would help simplify the conditions for applying for financial support.

(15) Lack of cooperation between Member States has led to inefficiencies and a multiplication of defence systems of the same kind within the Union, undermining the objective of protection of the Union territory pursued by the corresponding national investments while also resulting in fragmentation and sub-scale operations of significant parts of the EDTIB. To address that situation, beneficiary Member States should use the financial assistance provided under this Regulation to carry out common procurements. The eligible activities, expenditures and measures financed through defence common procurement should relate to the first list of priority areas identified by the European Council, taking into account the lessons learned from the war in Ukraine, in accordance with the work already done in the framework of the EDA and in full coherence with NATO: ammunition and missiles; artillery systems, including deep precision strike capabilities; ground combat capabilities and their support systems, including soldier equipment and infantry weapons; critical infrastructure protection; cyber; military mobility including counter-mobility; air and missile defence systems; maritime surface and underwater capabilities; drones and anti-drone systems; strategic enablers, such as, but not limited to, strategic airlift, air-to-air refuelling and C4ISTAR systems as well as space assets and services; space assets protection; artificial intelligence and electronic warfare. Those common procurements should aim at speeding up the adjustment to structural changes of the production capacity of defence products, ensuring interoperability and interchangeability across the Union, incentivising cooperation in the procurement phase, supporting the increase of production capacity, as well as the development and acquisition of the related infrastructure, equipment and logistic services.

(16) In order to urgently reinforce the Union industrial base in an efficient and autonomous manner, in the light of the recent evolution of the geopolitical situation and the exceptional threat to the security of the Union and its Member States, and thus to increase the efficiency and added value of the financial assistance granted under the SAFE instrument, this Regulation should establish eligibility conditions for the use of the financial assistance by Member States. Contractors and subcontractors involved in the common procurement under the SAFE instrument should therefore be established and have their executive management structures in the Union, in members of the European Free Trade Association which are members of the European Economic Area (‘EEA EFTA States’) or in Ukraine, and use for the purposes of the common procurement infrastructure, facilities, assets or resources located in the territory of a Member State, an EEA EFTA State or Ukraine. In order to ensure that contractors and subcontractors involved in the common procurement do not contravene the security and defence interests of the Union and its Member States, they should not be controlled by third countries or third-country entities. In that context, control should be understood as the ability to exercise a decisive influence over a legal entity, directly or indirectly, through one or more intermediate legal entities. The Member States participating in the procurement supported by the SAFE instrument are responsible for ensuring that the eligibility conditions are fulfilled.

(17) In certain circumstances, it should be possible to derogate from the principle that contractors and subcontractors involved in a common procurement use infrastructure, facilities, assets or resources located in the territory of a Member State, an EEA EFTA State or Ukraine, and are not subject to control by third countries or third-country entities. In those circumstances, a legal entity established in the Union, in an EEA EFTA State or in Ukraine, using infrastructure, facilities, assets or resources located outside the territory of a Member State, EEA EFTA State or Ukraine, and/or controlled by a third country or a third-country entity, should be able to participate provided that strict conditions concerning the security and defence interests of the Union and its Member States are fulfilled, as established in the framework of the CFSP pursuant to Title V of the Treaty on European Union (TEU).

(18) Legal entities established in the Union, in an EEA EFTA State or in Ukraine, and controlled by a third country which is neither Ukraine nor an EEA EFTA State (‘other third country’) or another third-country entity, where allowed, should be eligible to participate in the common procurement if they have been subject to screening within the meaning of Regulation (EU) 2019/452 of the European Parliament and of the Council (4), and, where necessary, to appropriate mitigation measures, or if guarantees, as set out in this Regulation, approved in accordance with the national procedures of the Member State, EEA EFTA State or Ukraine in which they are established are made available to the Commission. In order to reduce the administrative burden, the Commission should propose a simple standardised template for the guarantees. Such guarantees should only be issued provided that strict conditions are fulfilled concerning the security and defence interests of the Union and its Member States, as established in the framework of the CFSP pursuant to Title V of the TEU.

(19) In order to ensure the timely availability and supply of defence products from the EDTIB, and to accelerate its adjustment to structural changes, thereby enhancing the efficiency of the financial assistance granted, it is important to establish minimum requirements concerning the value generated within the Union. Therefore, common procurement contracts should contain a requirement that the cost of the components originating outside the Union, EEA EFTA States and Ukraine is not higher than 35 % of the estimated cost of the components of the end-product. For the purpose of calculating that percentage, the Commission could establish guidance.

(20) Eligibility criteria should take into account existing supply chains and the industrial cooperation with non-EU partners as well as allow to meet the capability requirements. Therefore, common procurement involving subcontractors that are allocated between 15 % and 35 % of the value of the contract, and that are not established or don’t have their executive management structures in the Union, EEA EFTA State or Ukraine should be eligible.

(21) For certain defence products whose underlying technologies are not widely available in the Union and which may be difficult to substitute at a large scale, additional conditions should be required in order to ensure the Member States’ armed forces freedom related to those products without limitations imposed by third countries. Therefore, for such defence products, the contractor or the consortium of contractors should have the ability to decide, without any restriction being imposed by third countries or third-country entities, on the definition, adaptation or evolution of the design of the defence products procured, including the legal authority to substitute or remove those components that are subject to restrictions imposed by third countries or by third-country entities.

(22) The eligibility conditions of the SAFE instrument pursue the objective of immediately ramping up the manufacturing capacities of the Union defence industry, while allowing for the necessary flexibility taking into consideration the internationalisation of supply chains for relevant products and technologies. In addition to EEA EFTA States and Ukraine, the SAFE instrument should also provide for the possibility for acceding countries, candidate countries and potential candidates, as well as third countries with which the Union has entered into a Security and Defence Partnership (Non-Binding Instrument) (NBI), to participate in common procurements under its framework.

(23) Bilateral or multilateral agreements carrying out economic, financial or technical cooperation measures, including assistance, between the Union and one or more of those like-minded third countries other than Ukraine and EFTA EEA States should allow contractors and subcontractors established in those countries to participate in common procurements under the SAFE instrument, in accordance with the terms and conditions to be defined in those agreements. Such agreements should not call into question the eligibility of products which fulfil the requirement that the cost of the components originating outside the Union, EEA EFTA States and Ukraine is not higher than 35 % of the estimated cost of the components of the end-product.

(24) A stronger and more capable Union in the field of security and defence will contribute positively to global and transatlantic security and is complementary to NATO, which remains, for those States that are members of it, the foundation of their collective defence. The Union is committed to further strengthening and deepening transatlantic cooperation and engagement on security and defence, with a view to enhancing interoperability, continuing industrial cooperation, and ensuring reciprocal access to state-of-the-art technologies with trusted partners, also reinforcing the EDTIB. This Regulation should contribute to these aims.