Europe faces a dual challenge: creating a common safe asset for the euro and funding its own defence capabilities, rather than relying on the US. Current proposals for joint debt often falter due to a lack of agreed-upon joint resources for repayment. Similarly, defence initiatives like the €150bn Safe programme lend money to member states to buy their own equipment, risking procurement fragmentation.

A single instrument could address both needs: the EU borrowing to build and directly own strategic assets, recovering costs through usage fees. The Union Space Programme already provides a model, with the EU owning Galileo and developing Iris². This can be expanded to integrated capabilities like communications and surveillance.

The EU could issue AAA bonds at its current low rates, with member states paying for guaranteed access and spare capacity sold commercially. A €20bn space programme could generate significant revenue, covering interest costs multiple times over and yielding an annual surplus. This revenue-backed asset offers a stronger financial proposition than generic Eurobonds, sidestepping the political hurdles of defence funding by being self-financing. A subset of willing states could anchor such a programme, making the political question less about funding others' defence and more about investing in a self-paying capability.