Europe acknowledges the necessity to purchase extra navy gear collectively. Collective procurement shouldn’t be solely a query of scale and effectivity, but additionally of interoperability, fiscal prudence and strengthening the continent’s protection industrial base. But, in accordance with the EU’s personal metrics, solely 18 p.c of protection acquisitions are presently made collectively — far beneath the benchmark of 35 p.c. The issue shouldn’t be solely political will. Protection procurement requires a monetary spine: establishments able to arranging contracts, securing loans, mitigating danger and guaranteeing supply.
The talk across the European Parliament’s European Defence Readiness 2030 report highlights exactly this hole — between the battlefield urgency on Europe’s japanese flank and the institutional capability to mobilize capital at pace.
The EU acknowledges the position of entry to capital. By the SAFE Regulation, member states obtain the means to quickly scale up their funding by way of frequent procurement. The European Fee has just lately tentatively allotted €43.7 billion in loans to Poland, as a part of over €150 billion in requests submitted by 19 member states.
Nationwide sovereignty and allied cooperation
Protection spending stays, by EU Treaties and by follow, a core competence of member states. Ministries of protection and finance retain management of procurement, deciding when and tips on how to purchase tanks, missiles or aircrafts. But nationwide sovereignty doesn’t preclude European solidarity.
Current violation of Polish airspace by Russian drones underscores the immediacy of the specter of Russian aggression. A number of intelligence assessments pointing to a window of 2028 as a possible milestone for Moscow’s capabilities threatening a full-scale assault on the EU leaves little doubt: Europe should be able to defend itself.
A number of intelligence assessments pointing to a window of 2028 as a possible milestone for Moscow’s capabilities threatening a full-scale assault on the EU leaves little doubt: Europe should be able to defend itself.
This urgency is compounded by the restricted availability of off-the-shelf navy gear in Europe. Home producers, already stretched by help for Ukraine and long-term procurement cycles, can not merely ship total brigades of tanks or missile programs inside months. For rapid wants, allied suppliers — notably the USA and South Korea — stay indispensable. Their industrial scale supplies Europe with the respiratory area to construct capability whereas guaranteeing that gear is deployed at once.
In opposition to this backdrop, cooperation with allied third-country protection suppliers shouldn’t be a deviation from European autonomy, however a crucial pillar of strategic resilience. By leveraging trusted companions’ industrial capacities whereas localizing elements of the manufacturing and provide chains, EU members can each speed up readiness and anchor new protection ecosystems inside Europe.
Poland’s monetary innovation in protection procurement
Poland presents a placing case examine. Confronted with the rapid menace posed by Russia after the invasion into Ukraine, Warsaw confronted the necessity to rearm at unprecedented pace and scale. Conventional finances channels have been inadequate. To bridge the hole, the federal government established the Armed Forces Assist Fund, operated by Financial institution Gospodarstwa Krajowego (BGK), Poland’s nationwide improvement financial institution.
BGK created an modern financing mechanism, combining state ensures with worldwide debt devices, to safe cost-effective, large-volume funding for protection contracts. By mid-2025 BGK had raised the equal of over 172 billion złoty (roughly €40 billion) to finance contracts with suppliers from the USA, South Korea, the UK, Sweden and Norway.
BGK created an modern financing mechanism, combining state ensures with worldwide debt devices, to safe cost-effective, large-volume funding for protection contracts.
Incorporating market-based financing into protection expenditure necessitates shut coordination with the State Treasury and a proactive investor relations technique. BGK has developed vital experience on this space, working intently with the Ministry of Finance to align bond issuance methods and investor communications. This consists of joint non-deal roadshows and common engagement with main traders. By establishing yield curves in złoty, euros and the U.S. greenback by the issuance of extremely liquid benchmark securities, BGK enhances its capability to flexibly complement financing protection expenditure with bond market devices.
The fund’s design presents essential classes for Europe. It blends flexibility, sovereign backing, and transparency whereas drawing on international monetary markets. BGK has relied extensively on export credit score businesses in provider nations, guaranteeing financing situations aligned with the fee buildings of Poland’s contracts. This has enabled Warsaw not solely to safe fast supply of apparatus but additionally to barter vital offsets — embedding elements of manufacturing and know-how switch inside Poland. This deal with cost-effectiveness led to financing organized at charges akin to — and even beneath — State Treasury bonds, a outcome beforehand thought unattainable by any financial institution, together with state improvement establishments.
Two current agreements illustrate the mannequin’s significance
In July 2025 BGK signed a brand new framework with the Export-Import Financial institution of Korea and Korea Commerce Insurance coverage Company, extending its capability to finance Poland’s acquisition of Korean heavy gear. These contracts have gone past easy buy orders. They mix direct financing, credit score ensures and know-how switch, guaranteeing that segments of the provision chain — from parts to upkeep hubs — are localized in Poland. This strengthens each Poland’s and the EU’s protection autonomy, whereas anchoring South Korea as a trusted industrial associate.
In parallel, BGK has grow to be an energetic borrower underneath Washington’s International Army Financing (FMF) program, a uncommon privilege often reserved for shut allies. So far, Poland has secured greater than $15 billion in loans and ensures underneath FMF, with the newest $4 billion tranche signed in July 2025. These funds are channeled straight into purchases underneath the US International Army Gross sales framework, protecting superior programs from air protection to artillery. Crucially, offsets negotiated underneath these contracts guarantee partial manufacturing and servicing in Poland, successfully localizing elements of the provision chain inside the EU.
Collectively, these examples illustrate how alliance-based procurement can serve a triple perform: accelerating entry to crucial capabilities whereas embedding industrial advantages in Europe and anchoring protection by commerce partnerships.
In direction of a European protection financing structure
The Polish case underscores a broader reality: protection procurement requires devoted monetary autos, not advert hoc finances reallocations. Right here, Nationwide Promotional Banks and Establishments (NPBIs) — state-owned banks already energetic in infrastructure and industrial financing — can play a transformative position throughout the EU.
NPBIs are uniquely positioned to ship what Europe now wants most: pace, belief and cost-effective financing. Backed by sovereign mandates, they function with the complete confidence of nationwide governments, which permits them to channel cash into protection budgets with out the political friction that accompanies personal lenders. As a result of they mix sovereign ensures with market devices, they’re additionally capable of safe capital extra cheaply than ministries or businesses performing alone — a crucial benefit, as member states face each increased rates of interest and tighter fiscal area.
NPBIs are uniquely positioned to ship what Europe now wants most: pace, belief and cost-effective financing.
Equally essential is their agility. In contrast to supranational establishments, which regularly function with lengthy lead occasions, NPBIs can construction loans, ensures and even bond issuances in keeping with the fee calendars of procurement contracts. This flexibility ensures that funds stream exactly when wanted, securing supply schedules for complicated, multi-year protection tasks.
NPBIs additionally carry the capability to soak up and distribute danger. By providing ensures to protection producers, they provide trade the arrogance to scale up manufacturing, develop provide chains and put money into new amenities. This risk-sharing perform is particularly helpful for Europe’s fragmented protection trade, the place smaller corporations usually hesitate to commit capital with out visibility on future orders.
Their cross-border potential shouldn’t be neglected. Whereas firmly anchored in nationwide sovereignty, NPBIs can cooperate underneath EU frameworks to finance pooled orders — whether or not for air protection programs, ammunition or mobility belongings. Regional clusters of member states may depend on their nationwide establishments to co-finance joint purchases, balancing respect for nationwide management with the advantages of collective scale.
In impact, NPBIs signify the lacking hyperlink between European-level political commitments and the monetary realities of procurement. They don’t seem to be summary devices, however sensible engines able to turning collective ambitions into bankable contracts.