German report warns flagship EU defense plan may be illegal

The confidential report, dated April 30, by the Bundestag’s legal analysts adds that the EU's €150 billion Security Action For Europe loans-for-weapons regulation may also deliver limited economic value, News.Az reports citing Politico.

“In the context of the establishment of SAFE, questions also arise concerning the compatibility of this instrument with the Union law prohibition on the use of EU funds for operational measures with military or defense implications,” the analysis states, referencing Article 41(2) of the Treaty on European Union.

SAFE would offer long-term EU-backed loans — up to 45 years, with a 10-year grace period — to member states for defense procurement and industrial projects. It is being advanced under Article 122 of the EU treaties, typically used for economic emergencies.

But the Bundestag report notes this legal workaround “is not universally accepted,” and warns that “even the financing of defense-related goods and services” could fall under the treaty ban — especially when “intended for Ukraine and not for EU member states.”

SAFE was approved last month by member countries, including Germany. The parliamentary report is unlikely to have an impact on German government policy.

The German defense ministry did not immediately reply to a request for comment.

The report's criticism goes beyond legal concerns. The authors, made up of legal and policy experts, raise doubts about SAFE’s economic impact, pointing to “estimated expenditure multipliers between 0.4 and 1.0” — lower than for other public investments like infrastructure or education.

They caution that “a significant portion of the positive effects of increased defense spending may occur abroad, particularly in the USA,” depending on supplier location.