NATO’s 2025 defense spending framework, which mandates 5% of GDP be allocated to defense by 2035, has sparked a global debate over how infrastructure projects are classified as “defense-related.” This shift, split into 3.5% for core military needs and 1.5% for infrastructure, resilience, and innovation, aims to bolster collective security while addressing hybrid threats [1]. Italy’s €13.5 billion Sicily Bridge project, proposed as a dual-use infrastructure to meet the 1.5% target, exemplifies the tension between strategic ambition and fiscal accountability.

The NATO Framework: A Dual-Use Dilemma

NATO defines defense expenditure as spending on armed forces, operations, and infrastructure that directly supports military mobility and readiness [2]. The 1.5% allocation for “defense-related” projects includes upgrades to transportation networks and energy systems, but the criteria remain vague, allowing national governments to reinterpret eligibility [3]. Italy’s argument that the Sicily Bridge—a logistics corridor for rapid troop deployment—qualifies under this category is politically expedient but economically contentious. Critics argue the project’s primary purpose is economic development, not defense, and its environmental and legal challenges could undermine its viability [4].

Geopolitical Rewards and Economic Risks

The Sicily Bridge, if approved, would position Italy as a leader in leveraging infrastructure to meet NATO targets. Proponents highlight its potential to enhance southern Europe’s strategic connectivity, enabling faster NATO responses to Mediterranean threats [5]. However, the project’s €13.5 billion cost—equivalent to 0.3% of Italy’s GDP—raises questions about fiscal sustainability. Italy’s current defense spending at 1.49% of GDP [6] means the bridge alone would cover 86% of its 1.5% “defense-related” target, leaving little room for other resilience investments.

Comparative case studies reveal similar risks. Greece’s inclusion of intelligence-gathering expenditures in its defense budget and the UK’s reclassification of pensions as defense-related spending have drawn scrutiny for “creative accounting” [7]. Germany’s use of special funds to exceed the previous 2% target, while effective, has strained public budgets amid cost-of-living crises [8]. These examples underscore a broader trend: nations are prioritizing political signals over operational readiness, risking long-term fiscal and strategic imbalances.

The Accountability Gap

NATO’s lack of clear criteria for the 1.5% infrastructure allocation creates a governance vacuum. For instance, the European Commission’s Readiness 2030 package, which provides €150 billion in loans for defense spending, lacks mechanisms to verify whether projects like the Sicily Bridge genuinely enhance military capabilities [9]. This ambiguity could lead to misallocation of resources, as seen in Poland’s recent port upgrades, where critics argue the benefits for NATO logistics are overstated [10].

Balancing Strategy and Sustainability

The economic impact of increased defense spending is mixed. While infrastructure projects can stimulate GDP growth—particularly when directed toward R&D and critical networks [11]—Italy’s high public debt (140% of GDP) complicates long-term sustainability. The Sicily Bridge’s projected €13.5 billion cost could exacerbate fiscal pressures, especially if legal challenges delay completion or inflate expenses [12].

Geopolitically, the project aligns with NATO’s goal of strengthening southern flanks but risks alienating environmental groups and local communities. The expropriation of 440 properties and concerns over ecosystem damage highlight the social costs of militarizing infrastructure [13]. Such tensions could erode public support for NATO commitments, undermining the alliance’s cohesion.

Conclusion

The Sicily Bridge controversy encapsulates the broader challenges of NATO’s 5% spending target. While reclassifying infrastructure as defense expenditure offers a politically attractive path to meet targets, it risks prioritizing symbolism over substance. Investors and policymakers must weigh the geopolitical rewards of enhanced readiness against the economic and environmental costs of projects that may lack genuine strategic value. As NATO members navigate this balancing act, transparency and accountability will be critical to ensuring that defense spending translates into tangible security gains.

Source:
[1] Defence expenditures and NATO’s 5% commitment [https://www.nato.int/cps/en/natohq/topics_49198.htm]
[2] What counts as ‘defense’ in NATO’s potential 5 percent … [https://www.atlanticcouncil.org/blogs/new-atlanticist/what-counts-as-defense-in-natos-potential-5-percent-spending-goal/]
[3] NATO’s new spending target: challenges and risks … [https://www.sipri.org/commentary/essay/2025/natos-new-spending-target-challenges-and-risks-associated-political-signal]
[4] ‘They must not touch the Strait’: Sicily bridge opponents vow to put up fight [https://www.reuters.com/world/europe/they-must-not-touch-strait-sicily-bridge-opponents-vow-put-up-fight-2025-08-08/]
[5] In Italy, a bridge to Sicily may offer piece to NATO spending puzzle [https://www.defensenews.com/global/europe/2025/07/14/in-italy-a-bridge-to-sicily-may-offer-piece-to-nato-spending-puzzle/]
[6] NATO Defense Spending Tracker [https://www.atlanticcouncil.org/commentary/trackers-and-data-visualizations/nato-defense-spending-tracker/]
[7] How NATO Is Using Creative Accounting to Meet Trump’s Spending Demands [https://www.newsweek.com/how-nato-using-creative-accounting-meet-trumps-spending-demands-2110969]
[8] NATO countries’ budgets compared: Defence vs healthcare and education [https://www.aljazeera.com/news/2025/6/25/nato-countries-budgets-compared-defence-vs-healthcare-and-education]
[9] The economic impact of higher defence spending [https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/spring-2025-economic-forecast-moderate-growth-amid-global-economic-uncertainty/economic-impact-higher-defence-spending_en]
[10] Beware Europe’s Military Bridges to Nowhere [https://foreignpolicy.com/2025/08/13/nato-europe-spending-infrastructure-italy-bridge-sicily/]
[11] Europe in the new NATO era [https://www.suerf.org/publications/suerf-policy-notes-and-briefs/europe-in-the-new-nato-era/]
[12] Italy’s new military spending: Bombs, bullets, the world’s … [https://www.washingtonpost.com/world/2025/08/31/italy-sicily-bridge-nato-military/]
[13] Italy gets final approval for €13.5B Sicily bridge project [https://www.politico.eu/article/italy-gets-final-approval-for-e13-5b-sicily-bridge-project/]