Finland has decided to utilize the EU’s new loan instrument with a billion euros to strengthen the defense industry. Prime Minister Petteri Orpo tells Yle about the matter.
The decision was made in the government’s Economic Policy Committee on Tuesday. According to Orpo, the funding can be used, for example, for procurements that strengthen the Finnish land forces and for the development of drone performance capabilities in cooperation, especially with Ukraine.
“The decision strengthens the prerequisites of the Finnish defense industry as well as European defense cooperation and joint procurement,” Orpo says.
This is the EU’s 150 billion euro loan instrument called SAFE, through which member states are intended to be granted loans for defense procurement. The EU approved the loan instrument in the spring. According to Orpo, the most important benefit of the instrument is to increase orders for Finnish defense industry products.
Finland has already expressed its interest in the loan instrument. In total, 19 member states have expressed their interest in using the instrument.
Member states must confirm their decision to apply by the end of November and present their plans to the Commission on how they intend to use the money.
Häkkänen: The Aim Is To Get Others Involved In The Projects
Defense Minister Antti Häkkänen told Yle that the decision to raise the SAFE loan is an important addition to Finland’s range of means as we invest more heavily in defense.
“This is an addition to our own defense projects, which we were already taking forward anyway. Now we are taking a loan from the SAFE instrument and are also establishing larger industrial projects around these products, in which we hope other countries will also join.”
Häkkänen states that Finland does not benefit much from the more favorable terms of the SAFE loans, but can benefit from joint projects if the goods are obtained together more cheaply.
“The other side is that if the product is Finnish, it will probably also get other countries as customers. So, it also has an effect on promoting the defense industry,” Häkkänen says.
According to Häkkänen, actual procurement decisions will be made in the winter. According to Häkkänen, the use of the SAFE instrument has recently been discussed with the Nordic and Baltic countries.
“We hope that Poland, the Baltic countries, the Nordic countries, and why not the Central European countries, would be involved in this.”
Joint Debt Strengthens The Union’s Defense
According to many expert assessments, SAFE is technically joint debt, even though it differs from the recovery instrument established in 2020.
The loans granted have a ten-year grace period and competitive interest rates. Finland has considered whether it would be more advantageous for Finland to make purchases itself outside the loan instrument.
The money received from the loan can be used, for example, for ammunition and missile purchases, air defense systems, cybersecurity, and improving military mobility.
The SAFE loan instrument is part of the Commission’s broader plan, which aims to strengthen the defense of the entire Union by 800 billion euros.
Source: Yle (in Finnish)