SAFE - EUROPE, TURKEY AND THE COST OF AUTONOMY - Filenews 25/6
By Güney Yıldız
Europe is preparing to spend more money on defence than at any time since the Cold War. But much of that money is at risk of buying less security than the numbers promise.
The problem is not waste in the usual sense. It is that Europe seeks to acquire a sovereign defense capability, while limiting access to two suppliers that could offer it directly: the United States, consciously, and Turkey, for political reasons.
The EU's €150 billion SAFE Loan Facility euros, comes in addition to the growing national defense budgets. The argument to markets and voters is European strategic autonomy: to keep money in Europe, to create a strong European defense industrial base, and to limit dependence on Washington.
However, the problem is primarily a matter of capabilities. Sufficient production capacity in ammunition, air defense and drones cannot be created within three years, when factories, specialized personnel and production lines have been neglected for three decades.
Europe has capital and orders, but not the necessary production capacity to execute them quickly. Turkey, on the other hand, has the possibility of direct production. It is the world's 11th largest arms exporter, while five Turkish companies are included in Defense News' list of the top 100 defense operations for 2025. Its defense exports reached a record level in 2024, at 7.1 billion. dollars.
Turkish companies manufacture 155mm missiles in large quantities and at competitive costs, as well as drones that cost a few million dollars, in contrast to the more expensive unmanned systems in which large American and European companies specialize.
Nevertheless, defence procurement is rarely decided in terms of efficiency alone. France has pushed for SAFE to remain within the European market and to exclude its use for Turkish weapons systems, including those destined for Ukraine. Germany has taken a different approach.
The mechanism is crucial. SAFE provides loans to Member States, while non-EU States can take part in joint procurement only if they have concluded a Security and Defence Partnership with the Union. Britain has such an agreement. Turkey does not.
As a result, Ankara is left out of the mechanism, while the 35% limit for equipment from non-EU countries limits Turkish subsystems to a secondary position. The French logic is not unusual: just as the United States has "Buy American" policies, European governments want jobs and an industrial base at home.
This is not unreasonable. But it can prove costly and, if implemented under time pressure, self-destructive. The orders required to address the threat may not be able to be executed in the required timeline.
Where does the money end up?
Two main flows are already visible.
The first is heading to the other side of the Atlantic. Despite the rhetoric of strategic autonomy, European governments continue to turn to American platforms when they need greater capabilities quickly. Thus, a significant part of European defense spending is expected to end up in transatlantic procurement.
The second flow bypasses the EU institutions and passes through the "back door" of bilateral agreements with Turkey.
Germany had suspended the sale of Eurofighters to Turkey after the arrest of the mayor of Istanbul in early 2025, but a change of attitude followed at the initiative of Chancellor Friedrich Merz. In October 2025, a contract was signed, under British leadership, for 20 Typhoon aircraft, worth up to €10.7 billion. In March 2026, an agreement on training and support followed.
Turkey also joined the German-led European Sky Shield initiative. Repkon is building a 155mm projectile production plant in Germany, while Baykar acquired Piaggio Aerospace in Italy and partnered with Leonardo. The Turkish industry has also secured Leonardo's offer of 30 training aircraft in Spain, while Poland and Romania are already using Turkish drones.
None of these moves go through SAFE. They bypass it.
When faster and cheaper production capacity is formally excluded from European funds, but is informally ensured through bilateral agreements, autonomy is not created. A more complex dependency is created, which is baptized independence.
Turkish subsystems will likely continue to be integrated into European systems. The real question is whether Europe will pay more and wait longer, just to maintain the image that it is not dependent on them.
Where Tech Collaboration Ends
Berlin followed a stricter line towards Turkey than against several non-NATO states until the end of 2024. But then it made a sharp turn, with export licenses, the Eurofighter and public support for Turkey's access to SAFE.
Günther Seifert, an analyst and former head of the Center for Applied Studies on Turkey at the German Institute for International Affairs and Security in Berlin, describes the development as "a very important turnaround, which happened in a very short period of time." As he points out, this change "is not fully accepted by large parts of German society".
A policy that changes at such a speed can change again.
There is, moreover, one factor that often remains out of the discussion: Israel. Germany is Israel's second-largest arms supplier, accounting for about a third of its imports. Israel, for its part, is Germany's second-largest supplier, with a share of about 13%, according to data for the period 2020-2024 cited by Seifert.
The delivery of the Israeli Arrow 3 system, worth $4.6 billion. to the German Air Force in December 2025 further strengthened Israel's position in German arms imports.
The two countries have established partnerships that, as Zeigeft notes, go beyond traditional exports and imports. They involve long-term production and technology exchange, particularly in submarines, air defense, and missile systems.
The open question is how this close cooperation with Israel will affect German-Turkish industrial cooperation, especially in sensitive technology sectors. For a fund manager, this is the essential issue: a German-Turkish deal may be delayed not only because of Ankara's policy, but also because of Berlin's other geopolitical commitments.
The real gains and risks
For those investing in European rearmament, three main conclusions emerge.
First, European companies that seem to be the sure winners of a closed market will be faced with the limitations of their production capacity. Orders that cannot be fulfilled in a timely manner will be redirected, given to subcontractors, or passed discreetly to external suppliers.
Secondly, the essential development story is not to be found in political declarations, but in the link between the major European contractors and the Turkish subcontractors. It is there that the volume of 155mm missiles and drones required by the new era is produced.
Third, the political risk remains a two-way street. The S-400, the retreat of the rule of law in Turkey and the constant changes around the Eurofighter can freeze a deal overnight. The same can happen because of Germany's defense ties with Israel.
Strengthening European defence is necessary and the threat it poses is real. But the distance between the dominance that is projected and the dependence that is created will determine which programs will work and which will be turned into expensive monuments of procurement policy.
Money is already moving. Defense power will only follow where politics allows supply chains to operate. These are the numbers worth watching, not just budgets.
Forbes
