Over the past 12 months, the German defense industry has carried out an unprecedented expansion across Central and Eastern Europe and Southern Europe. From the Baltic to the Black Sea, corporations such as Rheinmetall, KNDS and Hensoldt have signed more than a dozen agreements, memoranda and letters of intent. The timing of these moves, coinciding with the launch of the EU’s SAFE mechanism (Security Action for Europe), is no accident. Germany has created a system in which other countries – led by Poland – take out EU loans, but the money will largely flow to Düsseldorf and Munich.
The EU’s SAFE instrument, formally launched in 2025 under the “Readiness 2030” agenda, was meant to address gaps in European defense capabilities. The €150 billion loan fund, however, contains a “catch” that Berlin has skillfully exploited – the requirement for “European Content.” To qualify for financing under these preferential funds, a product must consist of at least 65 percent EU-origin components.
While this provision theoretically supports EU autonomy, in practice it undercuts competition from South Korea and the United States, while promoting ready-made German solutions.
Berlin knew this in advance – and prepared perfectly.
Poland in the Crosshairs: Big Money, German Technology
Poland, presented as the largest “beneficiary” of the SAFE program (with an approved application of approximately €43.7 billion – which, of course, will have to be repaid with interest), has already become one of the main targets of German efforts – both media-political and business.
A key element of this arrangement is the memorandum of understanding (MoU) signed in October 2025 between the Polish Armaments Group (Polska Grupa Zbrojeniowa, PGZ) and Rheinmetall.
The document concerns the creation of a “European Support Vehicle Center.” Plans include the production of recovery vehicles, bridge-laying systems and engineering vehicles (including the Keiler NG). Although production is to be located in Poland – specifically at Military Automotive Works (Wojskowe Zakłady Motoryzacyjne) and at H. Cegielski’s facilities in Poznań – the business model is clear. Rheinmetall is expected to profit from licensing fees, the supply of key components (engines, electronics) and long-term servicing, which generates revenue for decades.
The German offer is tailored to Brussels’ requirements. Equipment based on Rheinmetall technology automatically meets the “European” criteria, enabling Poland to finance purchases with SAFE loans.
Arkadiusz Bąk, Deputy Head of PGZ, quoted by German media, stated that “cooperation between PGZ and Rheinmetall can indeed strengthen Europe’s defense.” Meanwhile, Die Welt wrote bluntly a few days ago: “For Rheinmetall, this would mean a genuine entry into the lucrative Polish market, which would likely lead to further orders or investments in its facilities.”
The German daily also mentioned Andrzej Raszewski, who has served as President of Rheinmetall Polska since 2017. As reported:
“Previously, Raszewski worked, among others, for the Polish oil company Orlen. This manager is considered to have exceptionally broad contacts in Warsaw. His office is located in a prestigious old building in the city center, near Three Crosses Square. One of several discreet plaques bears the name Rheinmetall.”
Rheinmetall is not the only company seeking access to the Polish market under the SAFE umbrella. In September 2025, on the eve of the MSPO defense trade fair in Kielce, KNDS – a German-French holding – submitted an offer. It proposed launching 155 mm ammunition production in Poland in cooperation with Mesko and Dezamet.
The goal is the same: to create local capabilities financed by the European Union, but technologically – and financially – binding Poland to its western neighbor.
German Deployment
A review of transactions from late 2025 and early 2026 illustrates the scale of Berlin’s offensive:
Romania: In November 2025, Rheinmetall announced plans to build a powder plant in Victoria. The facility is to produce around 300,000 modular charges annually. The investment is worth over €500 million, with Rheinmetall holding 51 percent in the joint venture and the remaining 49 percent owned by Pirochim Victoria.
Bulgaria: An agreement dated October 28, 2025, between Rheinmetall and VMZ (Vazovski Mashinostroitelni Zavodi) established a joint venture (Rheinmetall 51%, VMZ 49%). The roughly €1 billion investment concerns a plant for powder, modular charges and 155 mm ammunition in Sopot, Bulgaria. Here, Germany is attempting to resolve a major problem – the lack of raw materials. Bulgaria possesses what Germany lacks: access to and processing capacity for nitrocellulose. In February 2026, Hensoldt also entered into a partnership with the Bulgarian company Dronamics to build heavy drones.
Lithuania: In autumn 2025, the Lithuanian government and Rheinmetall finalized an agreement to build a 155 mm ammunition factory (an investment worth up to €300 million).
Latvia: A similar move took place in September 2025, creating a joint venture (Rheinmetall Waffe Munition 51 percent, Latvia’s state-owned “Valsts aizsardzības korporācija” 49 percent). Rheinmetall’s activities in the Baltic states are textbook examples of projects aligned with SAFE objectives.
Hungary: In December 2025, Rheinmetall opened a hybrid (civil-military) factory in Szeged. It will produce components for the automotive, energy and defense sectors (e.g., mobility, control and digital systems). The investment is valued at €70 million. The ceremony was attended by Foreign Affairs and Trade Minister Péter Szijjártó. On October 9, 2025, Rheinmetall Hungary Zrt. also announced the expansion of its engineering and development center in Zalaegerszeg. The facility will focus on developing Rheinmetall’s most advanced vehicle systems, especially the Lynx KF41 infantry fighting vehicle and the Panther KF51 main battle tank.
Italy: Rheinmetall formed a strategic alliance with the Italian defense company Leonardo – in January 2025, Germany’s antitrust authority approved the creation of a new joint venture. The goal is to develop and produce a new main battle tank (the successor to the Ariete) and an infantry fighting vehicle (A2CS) for the Italian army. Purchases of this equipment may be financed through SAFE funds.
Testing the Mechanism in Portugal
That the SAFE mechanism is beginning to function exactly as Germany intended is demonstrated by an example from the opposite end of Europe. In January 2026, Portugal announced the purchase of Boxer armored personnel carriers (produced by the German consortium Rheinmetall and KNDS). The transaction was officially financed under the SAFE program.
As the Austrian military industry portal “Militaer Aktuell” wrote:
“The purchase is financed under the European Union’s SAFE program, which provides member states with low-interest loans with long repayment periods to accelerate urgently needed defense investments while easing national budgets. This instrument was crucial for Portugal, as the Boxer is one of the more expensive 8×8 platforms available on the market, but offers high ballistic protection, excellent mine resistance, modular deployment options and significant modernization and development potential, according to the armed forces.”