Ireland not using soft EU defence loan fund as markets 'cheaper'

The Oireachtas committee was told Ireland would consider joining other member states in a joint procurement of military equipment, such as body armour.

Ireland is not availing of a low-interest, long-term EU defence loan facility because the country can get lower interest rates on the financial markets, the Department of Defence has said.

The Oireachtas committee on defence and national security was told that while Ireland was not availing of the loan part of the Security Action for Europe (Safe), that it would consider joining other member states in a joint procurement of military equipment, such as body armour.

Some members of the committee questioned the assessment that the costs of Safe loans would be more expensive than commercial markets, while one member, Independent senator Gerard Craughwell, said it was “outrageous” Ireland was not availing of the scheme.

He claimed that both the Department of Defence and the Defence Forces wanted to use the loan facility but that the Department of Public Expenditure vetoed it.

Adopted last May, Safe provides a fund of €150bn, which the European Commission says provides “competitively priced, long-maturity loans” to member states requesting financial assistance for “urgent and large-scale” defence procurement — with the low cost based on the EU’s “strong credit rating”.

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Some 20 EU member states have so far availed of Safe loans, including countries of similar size to Ireland, such as Portugal (€5.8bn), Slovakia (€2.3bn), Cyprus (€1.2bn), Czechia (€2bn), and Croatia (€1.7bn).

Brian O’Meara, head of international security and defence policy in the Department of Defence, said a decision was made not to apply as the loan rate in Safe was “more than Ireland could get on the open market” and was therefore not efficient for the exchequer.

Fine Gael TD for Carlow-Kilkenny Catherine Callaghan questioned this assessment, but Mr O’Meara reiterated that the market rate “would be lower”.

Mr Craughwell, a former member of the Defence Forces, claimed he had heard that both the Defence Forces and the Department of Defence wanted to avail of the scheme but that the Department of Public Expenditure had “killed” it.

He said it was “outrageous” than Ireland didn’t avail of it.

Mr O’Meara said Ireland was open to common procurement under the scheme, where the other member states could draw down money from Safe.

Brendan Fitzgerald, assistant principal officer in the Department of Defence, said Ireland would consider joint procurement for body armour, which he said could “speed up” the process.