Koi’s plan to overtake the Epirus Defense Industry through a new joint funding tool may violate its conditions European Union (EU), according to a legal analysis of the German Parliament (Βundestag) that came under the possession of Politico.
The confidential report, dated April 30, of Bundestag legal analysts adds that the EU Regulation on loans against weapons of 150 billion euros of security for Europe can also bring a limited economic value.
“As part of the establishment of SAFE, there are also questions about the compatibility of this means with the prohibition of EU law on the use of EU funds for operational measures with military or defense implications,” the analysis said, referring to Article 41 (2) of the European Union Treaty.
Safe will offer long -term EU guarantees – up to 45 years, with a 10 -year grace period – to Member States for defense supplies and industrial projects. It is promoted under Article 122 of the EU Treaties, which is commonly used for economic statements.
However, the Bundestag report notes that this legal detour “is not universally accepted” and warns that “even the financing of defense -related goods and services” could fall under the prohibition of the treaty – especially when “intended for Ukraine and not for EU Member States”.
Safe was approved last month by member states, including Germany. The parliamentary report is unlikely to have an impact on the policy of the German government.
The criticism of the report goes beyond legal concerns. Authors, consisting of policy -based and policy experts, express doubts about the financial impact of SAFE, noting “estimated spending multipliers between 0.4 and 1.0” – lower than for other public investment such as infrastructure or education.
They warn that “a significant part of the positive effects of increased defense spending can occur abroad, especially in the US”, depending on the position of the supplier.
The design of Safe includes a “Buy European” clause, which allows only 35% of the value of weapons to come from manufacturers outside the EU, Ukraine or European Free Transactions. Although aiming to strengthen the European defense base, the report highlights the EU’s internal divisions and the dangers to defense partners.
“Member States have expressed different views on whether countries such as Canada or the United Kingdom … should be allowed to participate on equal terms,” it is noted. “Turkey and Serbia … are not mentioned at all.”
Safe is open to EU countries etc and Ukraine. EU candidates and countries, such as the United Kingdom, who have signed a security pact with the block, can participate in common supplies. Canada Prime Minister Mark Carney is in Brussels on Monday, June 23, 2025 to sign a similar agreement. However, as the United Kingdom now finds, it is not clear what level of access to third countries will have.
The German Legal Service does not call for the abolition of the initiative, but its tone suggests that Safe is far from being a constant policy. Its conclusion: “The effectiveness of the macroeconomic and industrial policy of these investments therefore depends largely on their localization.”