Battle between Polish president and prime minister deepens over EU defense loans

WARSAW — The EU’s €150 billion SAFE loans-for-weapons program was supposed to boost Poland’s rearmament, but instead it’s fueling a political war between the president and the prime minister.

While the pro-EU government of Prime Minister Donald Tusk wants a €44 billion SAFE loan, aiming to continue the country’s rapid military buildup in a way that doesn’t worsen already strained public finances, nationalist President Karol Nawrocki is hunting for an alternative that involves financing armaments expenditures through the National Bank of Poland (NBP).

The two men are sparring ahead of a crucial parliamentary election next year, where the right-wing Law and Justice (PiS) party aligned with Nawrocki hopes to unseat Tusk’s liberal coalition. The president and prime minster are battling over everything from ambassadorial nominations to undoing PiS’s judicial reforms, economic policy, foreign affairs, Ukraine, the EU and how to approach Nawrocki’s ally Donald Trump.

Now the Polish president is turning on SAFE.

Nawrocki this week met with central bank chief Adam Glapiński — who is sympathetic to PiS — to put forward a “concrete Polish alternative that will not involve interest payments or loans lasting until 2070,” to create a program worth around 185 billion złoty — equivalent to the SAFE cash the government is aiming for.

Nawrocki faces a political decision over the next two weeks on whether to sign off on government legislation laying out rules for spending the Security Action For Europe money or to veto it.

The spat in Poland is dismaying the European Commission, which wants member countries to rapidly boost defense spending to fend off the threat from Russia and to continue supporting Ukraine.

“Who will lose if Poland doesn’t approve SAFE? Saying no to SAFE is saying no to jobs for Polish people,” Defense Commissioner Andrius Kubilius said in Warsaw on Friday. “If Poland decided to use taxpayers’ money to buy weapons from somewhere else, that will mean Polish taxpayers money will create jobs elsewhere.”

Nawrocki and PiS claim that euro-denominated SAFE loans will saddle Poland with decades of debt, create an exchange rate risk and could see Brussels imposing political conditions on the money’s availability.

They also warn that contracts funded by SAFE could benefit Western European defense firms — especially those from Germany — rather than domestic producers, despite the government insisting 80 percent of the cash will stay in Poland.

Embracing SAFE could also anger the U.S., Poland’s main ally and arms supplier, which has expressed displeasure at the program’s provisions limiting participation of non-EU countries. Nawrocki is allied with Donald Trump while Tusk has voiced doubts over Washington’s reliability and predictability.

“Part of it is about signaling to the U.S. that they still have allies in Poland, part about stirring tensions with Germany, and part about creating difficulties for Donald Tusk ahead of the election,” said Ben Stanley, a political scientist at the SWPS University in Warsaw.

PiS has been trending lower in POLITICO’s poll of polls since September, not long after Nawrocki won the presidential election, which was supposed to give the party a new powerful momentum.

Trailing by 9 percentage points to Tusk’s Civic Coalition, PiS also has to fight challenges from the far-right Confederation and the even more extreme antisemitic Confederation of the Polish Crown. However, polls do show that Tusk’s party and the other members of his coalition currently would fall short of winning another term in power.

“My suspicion is that President Nawrocki will eventually sign, but not before making a great deal of noise and trying to frame the government as having blocked a more pro-Polish solution,” Stanley said.

However, Nawrocki could also go for broke and try to block the SAFE loan by pushing his domestic alternative, wrote political scientist Marek Migalski.

“The president’s initiative on ‘Polish SAFE’ is politically astute. It justifies the veto and gives his supporters an argument against the government, which not only wants to burden us with debt, but also wants to do so through the evil and deceitful EU,” he wrote on social media.

Glapiński said Thursday he intends to propose “measures” that would not cut the country’s foreign currency reserves while securing “tens of billions of złoty” each year for the state-run Armed Forces Support Fund, a vehicle to finance military modernization.

Glapiński is hemmed in by legal restrictions limiting the central bank’s ability to finance the budget, but his messaging suggests the NBP is readying a large-scale gold selloff. With 550 tons of gold stored in domestic and foreign vaults, the NBP is one of Europe’s top gold hoarders.

“[The NBP] signals a sell–buyback operation involving the central bank’s gold reserves. Although it would formally comply with central bank accounting rules, it could in practice be viewed as risky from the perspective of Poland’s credibility in financial markets,” ING Bank wrote in an analysis of the proposal.

“There’s nothing else [the NBP] can do,” a high-ranking government official told POLITICO, speaking on condition of anonymity, when asked if the plan involves selling gold. 

Tusk on Thursday called on Nawrocki to sign the SAFE law without delay. “Poland, Polish companies, the employees of those companies and Poland’s security are waiting for money from the SAFE program … There is no room for any political games,” the PM said in a video on X.