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  • CEDIEconomic Security

    The SAFE Regulation and the Defense Trap: Why Europe's Localization Strategy Pushes Middle Powers Closer to Beijing

    As Europe accelerates its rearmament agenda, the Security Action for Europe (SAFE) Regulation has emerged as the continent's most ambitious defence financing instrument — mobilising up to €150 billion in subsidized loans for joint military procurement. Designed to insulate European defence supply chains and build strategic autonomy, SAFE imposes strict localization requirements: no more than 35 percent of component costs may originate from outside the EU, the EEA/EFTA countries, and Ukraine. While analytically sound as an industrial policy, this threshold inadvertently functions as a geopolitical exclusion mechanism. This post argues that by locking out rising Middle Powers — particularly NATO ally Turkey and emerging defence producer Pakistan — from Europe's lucrative procurement market, SAFE risks accelerating the very strategic hedging it seeks to prevent. Rather than drawing these nations closer to Western institutional frameworks, the regulation's "Buy European" logic may instead deepen their dependence on Chinese technology, capital, and supply chains. In a world of poly-aligned Middle Powers that respond to material incentives rather than normative appeals, Brussels' fortress mentality may prove its own undoing.

    Murtaza Mustansir