Fighter jets off the list of European SAFE loans. Where will Portugal invest in defence?

Frigates, drones, satellites and medium combat vehicles are some of the equipment with which Portugal wants to strengthen its Armed Forces through the €5.8 billion European SAFE programme. However, the list sent to Brussels does not include fighter jets to renew the F-16 fleet. The European programme will be monitored by a ‘mission structure’ that will report to the Portuguese Government and the European Commission, according to an announcement made by Defence Minister Nuno Melo at a press conference on Wednesday.

After the Government announced its formal accession to SAFE at the end of last week, Minister Nuno Melo has now outlined the proposal sent to Brussels. A technical choice, the minister stressed, based on the needs of the Portuguese Armed Forces and the country’s commitments to its partners, including NATO, on which the political decision was based.

Where will Portugal invest?

“As a minister, I do not choose equipment, I am not and do not claim to be an expert, but I have an obligation to listen to them and, based on objective data, make political decisions. I make political decisions based on the assessments and technical advice of experts in each case”, he said.

And where will the government invest through the SAFE programme? “We are going to invest in frigates, field artillery, satellites, medium combat vehicles, static vehicles, ammunition, anti-aircraft systems and drones”, listed Nuno Melo, revealing that, in the case of drones, the SAFE project is led by Portugal, “as it is an area in which it is a global leader”. “And the countries with which we will develop partnerships are Italy, France, Finland, Germany, Spain, Belgium, along with Portugal”, he added.

However, fighter jets are not part of the SAFE ‘shopping list’. “The process of replacing the F-16s has not yet begun, [but] it will. It is not a process that would fit within the short timeframe of SAFE”, the minister explained.

Saab, Eurofighter and Lockheed Martin are some of the manufacturers that have already positioned themselves as potential suppliers of new fighter jets for the Portuguese Air Force.

The 27 Member States of the European Union (EU) had until the end of November to submit their proposals. “A contracting process will now begin until the end of February, after which the European Commission will confirm everything that will happen in concrete terms”, he said.

But there are investments that the Government wants to guarantee. “We have defined what we want to ensure so that the investments ultimately materialise”, said the Minister of Defence. The “production and maintenance of armoured vehicles in Portugal — not only national vehicles, but vehicles from several other countries. We want to set up a small-calibre ammunition factory and we will also have satellite production in Portugal, reinforcing Portugal’s role in space”, he said, adding that there would be greater investment in the Alfeite Arsenal.

The benefits for the national economy are, moreover, “a key requirement in the selection” of the proposed projects, he stressed.

A “mission structure” to monitor SAFE

With a €5.8 billion package coming from Brussels, Nuno Melo stressed the need for transparency and monitoring of the process. “We are going to create the equivalent of a mission structure — although it may not have that name, it is inspired by a mission structure — to implement SAFE and ensure transparency and report to the supervisory authority and other public oversight bodies on the execution of all these contracts”, he announced.

The Defence Minister did not give details about the future structure, but pointed out that the aim is to ensure that “the execution of all these contracts — which are large contracts — will be completely transparent and visible, from the outset, to all these public supervisory bodies of different kinds”.

This structure will be “endowed with sufficient autonomy, powers and resources to enable it to implement the investment plan and other contractual obligations and/or report to the Government and the European Union”.

“This structure will be the subject of a resolution, which I will also submit for deliberation by the Council of Ministers”, he added.

What are the conditions of SAFE?

At this stage, the Minister of Defence preferred not to disclose which companies and how much equipment will be purchased, stating only that the largest investment programme is for the Navy. However, he did not say whether the purchase of one or three frigates is on the table, at a time when Italy and France, through the Fincantieri and Naval Group shipyards, are positioning themselves as suppliers. He was also sparse on details of the loan conditions.

SAFE is a programme with a “10-year grace period” that “involves negotiations between states and the use of the European Union budget, without the need for additional payments to the additional repayments of the Member States”. “There is no VAT to be paid”, he added, without giving details on interest rates, for example, associated with the loans.