WARSAW, Feb 27 (Reuters) - Poland's parliament on Friday passed a law creating a mechanism to spend 43.7 billion euros ($51.6 billion) in European Union loans to boost the military, setting up a
Poland parliament approves €43.7bn EU SAFE defence loan law; veto risk
Poland passes SAFE defence loan mechanism amid nationalist veto pressure
Parliament vote and funding mechanism
WARSAW, Feb 27 (Reuters) - Poland's parliament on Friday passed a law creating a mechanism to spend 43.7 billion euros ($51.6 billion) in European Union loans to boost the military, setting up a dilemma for the nationalist president, whose backers want him to veto it.
Warsaw was the biggest beneficiary of the EU's 150-billion-euro Security Action for Europe (SAFE) initiative to boost the continent's armed forces, but the programme has been hotly debated in Poland as nationalists oppose Brussels getting involved in defence.
Political opposition and concerns over EU involvement
PiS position and U.S. procurement argument
The nationalist opposition party Law and Justice (PiS), which backs President Karol Nawrocki, says SAFE would limit arms purchases from Warsaw's most important ally, the U.S., and that it will come with conditions purportedly intended to allow German meddling in Polish affairs.
Government response and security rationale
Prime Minister Donald Tusk's pro-European coalition government says the funds have no such strings attached and that the cheap financing provided by SAFE is essential to Poland's security in the face of what it says is a rising threat from Russia.
"Without the SAFE programme, we have no other option to build an even stronger army and have better-equipped and safer soldiers in such a short time," Defence Minister Wladyslaw Kosiniak-Kamysz told a press conference.
Veto risk and potential workarounds
BGK fund operations and impact of a veto
The bill will enable the state development bank BGK to operate a fund that disburses the cash. The government says if Nawrocki vetoes the law, some workarounds are available, but it will not be able to use SAFE to its full potential.
"The losses will be very significant," Tusk said on Thursday.
Nawrocki has declined to say what he will do.
"This issue is so important to the Polish state and evokes so many emotions that I won't say what decision I'll make," he said on Thursday. "We'll make a decision when the time is right."
($1 = 0.8470 euros)
(Reporting by Alan Charlish, Pawel Florkiewicz; Editing by Kevin Liffey)
