ECB’s Lagarde Views SAFE as a New Recovery Fund for European Defense

The head of the European Central Bank (ECB), Christine Lagarde, envisions the so-called SAFE (Security Action for Europe) as a new recovery fund aimed at bolstering European defense. According to ECB sources contacted by newsit.gr, Lagarde recently stated during an event organized by the Hertie School in Berlin that European defense should be considered a ‘public good’ and thus requires joint funding. This initiative would function similarly to the Recovery and Resilience Facility (RRF) established in 2021 due to the pandemic. Lagarde emphasized that while each country must ensure its national policies support growth, there is also a need to recognize the dangers of fragmentation. She highlighted that having 27 different industrial strategies would hinder progress, especially in developing strategic industries. Moreover, she argued that pooling resources for equipment supply and technology development could lead to greater operational efficiency than if all member states acted independently. The economic logic suggests that public goods should be funded collectively, potentially increasing Europe’s provision of safe financial assets over time. However, ECB insiders express concerns about financing significant increases in defense spending through the escape clause or even more so if NATO decides next month to raise its minimum defense spending threshold to 5% (or even 3.5%).