Poland’s defence expansion: Opportunity and execution risk

How SAFE funding is being deployed

On 12 March 2026, Prime Minister Donald Tusk’s government moved to unlock SAFE funds despite opposition from President Karol Nawrocki. A presidential veto had blocked legislation governing how EU defence funding could be deployed domestically, highlighting an ongoing institutional divide. By adopting the resolution, the government was able to move forward despite the impasse and access the funds.

The new funding builds on an already significant increase in Polish military investment. Polish government defence spending accounted for 4.3 percent of GDP in 2025. This investment is backed by a strong public mandate, with roughly two-thirds of the population backing further increases.

The funds will be deployed through Poland’s Armed Forces Support Fund (FWSZ), a state vehicle used to finance military procurement. Using the FWSZ narrows how the money can be spent, limiting it to core military capabilities rather than adjacent sectors such as infrastructure. For investors and contractors, this reduces opportunities outside defence while increasing competition within it.

SAFE regulations also shape allocation. To qualify, 65 percent of a weapons system’s value must originate from the EU, Ukraine, or the European Economic Area. Certain partner countries — including the UK, South Korea and Japan — can also participate through bilateral agreements. 

A constrained domestic industry

Poland’s defence ambitions are running ahead of domestic industrial capacity. Despite significant increases in spending, the local defence sector remains heavily reliant on imports from South Korea, the US, and Sweden. This reliance has become increasingly politicised in 2026, reflecting broader European concerns around strategic autonomy, supply chain resilience, and dependence on foreign defence suppliers. While international partnerships remain necessary, SAFE funding is expected to accelerate efforts to localise the supply chain.

In February 2026, Prime Minister Tusk committed to allocating over 80 percent of SAFE-related spending to Polish companies, making Poland’s push for defence sovereignty more concrete than in many other European markets. Likely beneficiaries include state-owned Polska Grupa Zbrojeniowa (PGZ SA), private firms such as WB Group, and a broader network of small and medium enterprises operating across the sector.

What does this mean for investors?

For investors and contractors entering the Polish defence market, the challenge is unlikely to be demand. The greater difficulty will be executing at speed within a politically sensitive and operationally constrained environment. 

The pace and scale of this expansion introduce three key areas of risk:

• Government procurement risks: Defence procurement in Poland is subject to specific public procurement rules, including restrictions on who can bid for defence and security contracts. However, the scale and speed of SAFE-funded spending will place pressure on procurement processes and supply chains. For investors and contractors, the key risks include partner selection, subcontracting, beneficial ownership, sanctions exposure and the ability of suppliers to meet regulatory and security requirements.
• Capability risks: Despite efforts to localise the defence supply chain, many SMEs lack the infrastructure to scale at pace. Decades of underinvestment have left production facilities outdated, creating a gap between funding availability and delivery capability. This may push larger defence companies to acquire or absorb smaller suppliers in order to bring specialist capabilities in-house and meet the technical, regulatory and security requirements of modern defence systems.
• Regulatory and political risk: Engagement in the defence sector requires navigating ongoing political tensions between Prime Minister Tusk and President Nawrocki. While defence spending is broadly supported, disagreements over its implementation introduce uncertainty, increasing the risk of delays or policy shifts.

As Poland’s defence sector expands, investors and contractors will face increasing scrutiny around counterparties, industrial capability, ownership structures and procurement integrity. The speed of market growth will only intensify these pressures.

At The Risk Advisory Group, we support clients operating in complex defence and industrial environments through market-entry support, stakeholder mapping and bid intelligence.