Polish president hunts for alternatives to EU defense loans

WARSAW — Polish President Karol Nawrocki proposed Wednesday that the country’s military build-up be financed with the help of the National Bank of Poland instead of tapping the EU’s €150 billion Security Action for Europe loans-for-weapons program.

The move comes amid a standoff with Prime Minister Donald Tusk’s pro-EU government over nearly €44 billion in SAFE loans earmarked for modernizing Poland’s armed forces, repayable by 2070. 

“We have a concrete, Polish, safe and sovereign alternative to the SAFE program that will not involve any financial interest,” Nawrocki said, speaking alongside NBP President Adam Glapiński.

The idea would be to work with the central bank to secure 185 billion złoty — equivalent to the amount Poland plans to borrow under SAFE.

The president, and the opposition nationalist Law and Justice party which backs him, have both criticized SAFE, arguing it saddles Poland with decades of debt, creates an exchange rate risk because the loan is denominated in euros and not Polish złoty, and could see Brussels imposing political conditions.

They also warn that contracts funded by SAFE could disproportionately benefit Western European defense firms rather than domestic producers — something the government rejects, insisting 80 percent of the cash will stay in Poland.

There is also concern over angering the United States, Poland’s main ally and arms supplier, which has expressed displeasure at SAFE’s provisions limiting participation of non-EU countries.

“The war in Iran and recent U.S. operations also show … above all, the effectiveness of American equipment,” Nawrocki said.

Nawrocki’s announcement follows parliamentary approval of a law detailing how SAFE funds would be spent. If president vetoes the legislation, Tusk’s coalition doesn’t have enough votes in parliament to override him.

However, the government insists that even with a Nawrocki veto, it would still be able to access the EU cash.

But Nawrocki stressed that the SAFE money comes with strings attached. His idea, he says would mean “a concrete and secure alternative for SAFE that will not involve any interest … without credit, without changing Poland’s situation in the EU, and with the flexibility our armed forces need in selecting equipment.”

Glapiński hinted that the central bank would step in with its annual profit for the purpose. Any central bank profits are channeled to state coffers, although that hasn’t happened in recent years. The NBP has also amassed 550 tons of gold, with plans to boost that to 700 tons.

However, Polish law limits the ability of the central bank to finance budget expenditures.

Adam Glapiński hinted that the central bank would step in with its annual profit for the purpose. | Mateusz Wlodarczyk/NurPhoto via Getty Images

“We cannot use any part of the reserves in the sense that a portion would be transferred, because that would be against the law,” Glapiński said.

Nawrocki said he would present further details, which would include new legislation for the parliament to work on, to Tusk and Defense Minister Władysław Kosiniak-Kamysz as soon as Wednesday.

Kosiniak-Kamysz pushed back, saying on X: “The SAFE program provides the fastest and most concrete funding for modernizing the Polish army, which is why the military, the defense industry, and all those committed to strengthening our armed forces are calling for the president to sign the [SAFE] law.”

“If additional financing instruments for the army appear, the Polish Armed Forces will only benefit — not as an alternative to SAFE, but as extra resources enhancing security,” Kosiniak-Kamysz added.