Billions from SAFE will stay in Poland, but will we be able to produce it in time? 2030 is the limit
The greatest threat in the context of SAFE is the completion of deliveries ordered under the program by the Polish arms industry by the end of 2030, said the government's plenipotentiary for SAFE, Magdalena Sobkowiak, during a panel at EEC Trends. In turn, a representative of the banking sector expressed concerns about bank financing being replaced by SAFE loans.
“The SAFE mechanism is partly additional money, partly – no, (…) because we negotiated with the European Commission that we can refinance some of the contracts already concluded between May last year and May this year from the SAFE mechanism, and some of them are actually new projects,” said Sobkowiak.
As she pointed out, the armed forces had the decisive say when creating the shopping list for the SAFE mechanism.
“The Commission really wanted to focus on joint purchases, and in our plan, joint purchases are a minority. I think that the EC's idea that member states should have joint investments in the armaments area, joint projects – this is something that will actually have a chance to function in a few years,” she added.
She emphasized that Poland would like to increase the export of its arms products as part of joint orders.
“If we are to have joint orders with other member states, I do not want (…) as it has always been – to go and see what a French or German will put on my table, but we are going on a tour around Europe to advertise our arms products, because I would like us to have our products in these joint purchases, which we are starting to offer to other member states,” said Sobkowiak.
She admitted that the greatest threat in the context of SAFE is meeting the program requirement related to 2030. According to the program, equipment purchased under SAFE funds should be delivered by the end of 2030.
On the other hand, Sobkowiak noted that this deadline mobilizes suppliers because the money will be settled based on milestones.
The Deputy Minister of State Assets, Konrad Gołota, also emphasized that most of the funds from SAFE are allocated “to single procurement” and over 80 percent. in your own industry.
The director of the strategic client department in the area of heavy and mining industry at PKO BP, Artur Kucia, expressed fear that SAFE, like KPO, would displace it instead of supporting bank financing.
“I am afraid that it will actually be similar in SAFE (…), because 2030 will mean that we will quickly look for how to use these funds so as not to lose financing. I am afraid that bank financing, instead of supporting development programs, will be replaced by this fund, at least the experience so far indicates this,” Kuć said.
He added that in his opinion, without exports, the needs of the Polish army are not sufficient to generate an adequate return for such huge investments.
Sobkowiak did not agree with his concerns about the displacement of the banking sector by SAFE; emphasized that the arms industry still needs money for investments to fulfill orders.
“The SAFE program is a product program, we do not allocate any money from this program for investments, we make specific orders and to fulfill them, and with the year 2030 hanging over our heads, with such large orders, these companies need investments and development of their production capabilities, and where will they come to get this money?” – said the government representative for SAFE.
“I don't agree that we are flooding with cheap money,” she added.
The deputy head of the Ministry of State Assets, Konrad Gołota, pointed out that the defense industry had been underinvested for years and there would still be areas in need of funds, including: research and development.
“At a time when there is not enough money for everything, especially for research and development, leave your comfort zone as a banking sector and start investing in research and development,” said Gołota.
The president of the Łukasiewicz Research Network, Hubert Cichocki, also pointed out that defense products need a technological component that affects margins.
At the end of January, Prime Minister Donald Tusk announced that over 80 percent funds from the SAFE program will be spent in the Polish arms industry. He noted that almost 30 of over 100 Polish projects under SAFE are directly related to the Eastern Shield and the eastern border.
In January, the European Commission approved Poland's national plan for spending loan money on defense from the EU's SAFE program. Poland applied for funding for 139 projects worth EUR 43.7 billion. The EC also gave the green light to seven other EU countries to implement SAFE.
SAFE is intended to finance urgent large-scale investments in the European technological and industrial base of the defense sector.
Disbursements will take the form of competitively priced long-term loans that Member States will have to repay.
The Council of the EU website states that to qualify for funding, a contract should cover at least two participating countries, but that the SAFE Facility is also intended to finance procurement by individual Member States for a period of time. (PAP Business)
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