Cabinet to review EU defence loan option as Ireland faces new funding round

The Irish government is preparing to reconsider its position on borrowing up to €100 million from a European Union defence facility. Officials in the Department of Finance are planning a new assessment of whether Ireland should apply for part of the remaining €21 billion in EU-backed loans designed to increase national defence spending.

The current opportunity follows a specific timeline of recent decisions. In 2025, the Department of Finance blocked a proposal by the Department of Defence to borrow €100 million under the initial round of the Security Action for Europe, or Safe, programme. At that time, Finance Minister Paschal Donohoe vetoed the plan, which had been drafted by then-Defence Minister Simon Harris. Defence officials had proposed using the funds to replace part of the Air Corps fleet or purchase new armoured vehicles for the Army, with repayment scheduled over 45 years.

This year, the European Commission launched a broader initiative to raise €150 billion in loans against the EU common budget to address security concerns, particularly regarding threats from Russia. Nineteen of the EU's 27 member states accepted loans in the first phase. After evaluating the approved defence spending plans over the past year, the Commission determined that approximately €21 billion in funds remained unspent. This week, the Commission issued a new call for a second round of bids to allocate that residual cash.

Defence Minister Helen McEntee stated earlier this year that she was open to using the loans in any second round. A Department of Defence spokesman confirmed that any decision to seek the funds would be part of a wider assessment of the state's defence priorities. The spokesman noted that while Ireland declined the loan in the first instance, the department continues to monitor EU defence and funding initiatives.

The business case for using the Safe facility is complex for Ireland. The government can currently borrow on financial markets at rates lower than those available in most other European countries. However, taking the loan would signal that Dublin is aligning its defence efforts with other EU states. The government has already committed to participating in joint procurement elements of EU defence plans, where multiple countries combine to purchase weapons or hardware.

Final approval for any new borrowing would require sign-off from both the Departments of Finance and Public Expenditure. The state has increased its defence budget in recent years and is currently planning to acquire hundreds of armoured vehicles and long-range radar systems through a supply arrangement with the French defence industry.

The Department of Finance will now review the terms of the remaining Safe programme funds before the government makes a final determination on whether to submit a bid.