ROME — Italy is considering backing out of a second EU-supported boost to defense spending, taking to about €27 billion ($31 billion) the amount of rearmament cash it could forego as it focuses on tackling soaring energy costs.
Italian prime minister Giorgia Meloni has told EU Commission chief Ursula von der Leyen that Italy may pass on the offer of €14.9 billion in cheap, so-called SAFE loans from Brussels which could prove essential to pushing Italian defense spending towards NATO’s five percent of GDP target.
Italy’s defense minister Guido Crosetto said the final decision to use or not use SAFE loan needed to be taken by the end of May, and the last word needed to come from Italy’s finance ministry.
He said he had written twice to finance minister Giancarlo Giorgetti asking what Giorgetti planned to do, but had yet to receive a response.
The suggestion by Meloni is the second time in two months she has publicly mulled passing on an EU-driven way to push up spending.
In April she suggested Italy will not take advantage of an EU scheme allowing Rome to exempt a quantity of defense spending from calculations of annual deficit spending in order to allow extra arms purchases without breaking EU deficit rules.
The so-called National Escape Clause (NEC) would have boosted Italian defense spending by about €12 billion over three years if used.
Meloni’s government is now pushing the EU to allow it to use the NEC scheme for a different reason: to park extra spending on soaring energy costs outside the deficit calculation.
In a letter to Von der Leyen on Sunday, Meloni said it was imperative to use state cash to soften the blow of rising energy costs — and the consequent hike in the cost of living — caused by the current slowdown of oil supplies to Italy due to the blockage of the Strait of Hormuz.
“If we rightly consider defense a strategic priority that justifies the activation of the National Escape Clause, we must have the political courage to recognize that today energy security is also a European strategic priority,” Meloni wrote in the letter, which has been seen by Defense News.
Meloni argued that “helping companies and families confront energy costs will make the economy stronger and therefore better able to reinforce its defensive capacities.”
The prime minister said that was why she wanted the EU to allow the use of the NEC scheme for energy spending, and she added that if permission was not forthcoming, she would consider scrapping Italy’s application to obtain the SAFE loan.
She explained: Without the permission to alter the NEC scheme, “it would be very difficult for the Italian government to explain to the public any use of the SAFE program in the way it is currently set up.”
Last year Italy applied for SAFE loans from a €150 billion EU warchest and planned to spend the €14.9 billion it was allocated on programs including new armored fighting vehicles and tanks.
Meloni’s threat to do without defense spending which would flow from the use of the NEC scheme and the SAFE loans — totalling about €27 billion — comes as polling in Italy shows arms purchases are unpopular with voters, one year ahead of a national election.
Meloni has previously battled to beef up defense spending from the current two percent to hit five percent of GDP requested by NATO following pressure on European low spenders from President Trump.
But if Meloni originally sought to raise spending to avoid criticism from Trump, that motivation arguably no longer counts since Trump has already turned on the Italian leader over her decision not to assist the U.S. in its Iran campaign.
“I thought she had courage, but I was wrong,” Trump said of Meloni last month.
Meloni will nevertheless need to explain to NATO partners why she is considering passing on EU plans to boost defense spending at the next alliance summit in Turkey on July 7-8.
Tom Kington is the Italy correspondent for Defense News.