Ukraine war fatigue fuels defense-spending downgrade plan in Italy

ROME — Italian military planners risk losing out on €8 billion ($9 billion) in funding as government and opposition parties seek to cut both defense spending and support for Ukraine.

The plans to limit spending emerged this week as Italian Prime Minister Giorgia Meloni continues to be squeezed between NATO spending targets and voter opposition to spending tax payers’ cash on arms not hospitals.

The possible €8 billion shortfall is tied up with Italy’s hot-and-cold approach to a European Union scheme to allow states to exempt a quantity of defense spending from their calculations of annual deficit spending over a number of years.

The so-called National Escape Clause would allow EU states to rearm while not breaking EU deficit rules.

After Meloni’s government promoted the scheme, it then appeared less enthusiastic when the EU finally approved it before Meloni announced this year she would use the extra cash not only for defense but also to cover Italy’s soaring fuel costs.

That was due to generate a defense windfall of between €21 billion and €22 billion thanks to NEC. But the calculation changed on Thursday at a Cabinet meeting when deputy prime minister Matteo Salvini succeeded in pushing the amount down to around €14 billion, a drop of up to €8 billion.

“It’s yet to be made definite but the reduction was agreed,” a government source told Defense News.

Salvini leads the League party which is part of Meloni’s governing coalition and is battling defense spending hikes, opposing sending military support to Ukraine and wants a deal with Moscow to end the conflict in the country.

That contrasts with Meloni’s firm backing for Kyiv and support for Europe’s hardline opposition to Moscow, but she is in a minority in Italian politics. To her right, a new challenger Roberto Vannacci is calling for an end to sanctions on Russia, while among Italy’s left-wing opposition parties, the Five Star party has blamed the Ukraine conflict on a “war mongering Europe.”

A poll of Five Star’s members this month found over 90% opposed European rearmament and believed sending arms to Ukraine was to blame for prolonging the war.

Despite a groundswell of opposition to defense spending in Italy, Meloni has meanwhile committed to NATO’s spending target of 5% of GDP, and she has claimed Italy has reached 2.8% this year, including spending on domestic security.

But details are scant: this year’s budget breakdown has yet to be published.

Meanwhile, Rome said in August it would request €8 billion euros in cheap loans from the European Union’s SAFE defense funding program, down from its original intention to ask for €14.9 billion euros in loans.

In a parliamentary hearing on Sept. 23, the CEO of Italian defense giant Leonardo said he was a big fan of SAFE loans, since they guaranteed cash for defense programs with few complications.

“I believe SAFE is the first, real useful measure that Europe has come up with,” said Lorenzo Mariani.

“The money has never been much and it’s been complicated. Now SAFE is moving a lot of money and using a system which we believe is not complex like other European schemes have been,” he added.

“Portugal is buying FREMM frigates built by Leonardo and Fincantieri thanks to SAFE funds,” he said.

Mariani said he had talked up the virtues of SAFE loans to the Meloni government.

“SAFE is very positive. The use of it does not depend on me. I have made proposals which I hope are accepted by the government,” he said.

One analyst said Rome needed to make up its mind about spending.

“The government needs to take important decisions about NEC and SAFE loans which were granted to all member states after years of requests by Italian governments,” said Alessandro Marrone, who heads the Defence Security and Space Programme at Rome think tank IAI.

“The government should have implemented its decision by now to enable better planning by the Italian defense ministry. It’s urgent. This is not just about NATO targets but about filling gaps left in Europe next year by U.S. pull-outs and now following through on Italy’s desire to send naval vessels to defend the Red Sea.”