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Canada Joins EU’s €150B SAFE Defense Loan Program, Shifting Military Procurement Away from the U.S.

04:39 AM, 12/02/2025
Canada Joins EU’s €150B SAFE Defense Loan Program, Shifting Military Procurement Away from the U.S.

Canada has joined the EU’s €150 billion SAFE defense loan program, becoming the first non‑EU participant and gaining access to low‑cost, EU‑backed financing for military procurement. Prime Minister Mark Carney says the move will close capability gaps, expand markets for Canadian suppliers and attract European defense investment. Ottawa is reassessing an F‑35 purchase and considering offers such as Saab’s proposal to assemble Gripen fighters in Canada. Talks for U.K. participation in SAFE recently collapsed over financial terms.

Canada has become the first non‑European Union country to join the EU’s Security Action for Europe (SAFE) program, Prime Minister Mark Carney’s office announced Monday. The move is part of an effort to diversify the country’s military procurement and strengthen ties with European defense suppliers.

SAFE is a €150 billion (about $170 billion) EU loan facility that provides low‑cost, EU‑backed financing for the purchase and development of defense equipment. Participation gives Canadian defense firms access to those loans, potentially lowering financing costs for procurement and encouraging European investment and partnerships in Canada.

“Canada’s participation in SAFE will fill key capability gaps, expand markets for Canadian suppliers, and attract European defense investment into Canada,” Carney said in a statement.

Ottawa’s entry marks the first time a non‑EU nation has been granted participation in the program. The government says the decision will help close capability shortfalls, open new markets for Canadian suppliers and boost domestic industrial participation in defense projects.

As part of the broader procurement review, the government is reassessing its planned purchase of U.S. F‑35 fighter jets and exploring alternatives that could increase production and jobs in Canada. Sweden’s Saab has proposed assembling and maintaining Gripen fighters in Canada as part of an industrial package.

The move comes amid political tensions with the United States under President Donald Trump, including trade disputes and public comments that strained bilateral relations. Those tensions helped create political momentum for Ottawa to seek closer defense collaboration with Europe.

Canada says it will meet NATO’s military spending guideline by early next year.

Separate talks over U.K. participation in the SAFE fund ended last week without an agreement. Negotiations stalled over the size of Britain’s financial contribution, with the EU seeking larger payments than the U.K. was prepared to offer.

Implications: Joining SAFE could broaden Canada’s supplier base, attract European defense investment, and increase opportunities for domestic production and maintenance of military equipment. The long‑term impact will depend on specific procurement decisions, industrial offsets and complementary defense partnerships.

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Canada Joins EU’s €150B SAFE Defense Loan Program, Shifting Military Procurement Away from the U.S. - CRBC News