Italy is considering using the European Union’s (EU) low-cost “SAFE” loan mechanism for the new generation Lynx armoured vehicles and Panther main battle tanks to be procured from German giant Rheinmetall in order to strengthen its defence capacity. This financing programme, launched by the EU with the aim of increasing the military power of member states against the Russian threat, has raised the potential use of the €14.9 billion loan tranche allocated to Italy.
SAFE loans aim to create cost savings and military synergies across Europe by encouraging member states to make joint military purchases. For this reason, beneficiary countries are required to make joint purchases in cooperation with at least one other EU country in order to use the funds. Countries are required to submit details of the use of the funds, which are expected to be released in 2026, to the EU by 30 November.
Joint Synergy Opportunity with Hungary
The issue was further concretised by the visit of Hungarian Prime Minister Viktor Orban to Italian Prime Minister Giorgia Meloni in Rome on Monday. The leaders discussed “the opportunities offered by the European SAFE programme” and considered “possible synergies between Italy and Hungary to support their respective industrial and technological capacities”, Meloni’s office said in a statement.
The two countries already have a joint programme for the supply of Lynx tracked armoured vehicles developed by Rheinmetall. Italy plans to purchase 1,050 Lynx variants with turret attachments from its domestic supplier Leonardo, while Hungary has signed a deal for 218 units in 2020, most of which will be produced in Hungary.
The second potential joint programme is the purchase of Panther main battle tanks. It is known that Italy plans to purchase 272 Panther tanks. Hungary signed a partnership agreement with Rheinmetall for the development and production of the tank in 2023. An unnamed Italian defence source confirmed that Italy’s acquisition of these two key platforms is a strong candidate to be supported by SAFE loan funds.
Hungary’s Contradictory Position
It is noteworthy that Hungary has decided to invest 16.2 billion euros in SAFE loans in the same tranche as Italy. Hungarian Prime Minister Orban is known for his frequent criticism of the EU. Even on the day he discussed the SAFE organisation with Italian Prime Minister Meloni, Orban told journalists that “the European Union is of no importance”.
This shows that the EU’s financial incentives in the field of defence can encourage even members critical of the bloc to act jointly and strengthen their budgets. This potential partnership between Italy and Hungary could serve as an important example of how the SAFE mechanism can achieve its objective of promoting joint defence procurement in Europe.
