{"id":392523,"date":"2025-09-02T18:14:10","date_gmt":"2025-09-02T18:14:10","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/392523\/"},"modified":"2025-09-02T18:14:10","modified_gmt":"2025-09-02T18:14:10","slug":"europes-difficult-trade-off-between-military-and-welfare-spending-the-italian-case","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/392523\/","title":{"rendered":"Europe\u2019s difficult trade-off between military and welfare spending: the Italian case"},"content":{"rendered":"

The idea of building a three-mile suspension bridge<\/a> between Sicily and Italy\u2019s mainland was notoriously a pet project of former Prime Minister Silvio Berlusconi, who was keen to leave a major landmark in Italy\u2019s poorest and most remote regions. When his court of advisers flattered him with the idea that the bridge might be named the \u201cBerlusconi Bridge\u201d after him, the controversial politician and shrewd entrepreneur used to wave them off, saying that there was no money for the bridge, and he could not even get his name on a new football stadium in Milan.<\/p>\n

Berlusconi, who died in 2023, would have been stunned to learn that his dream might soon become reality, since Italy\u2019s current prime minister, Giorgia Meloni, has decided to classify the proposed bridge over the Strait of Messina as an infrastructure project with military relevance. Funding might also not be a problem because\u2014as military infrastructure\u2014the bridge might be directly or indirectly financed by the European Union. An ironic aspect of this new development is that the bridge\u2014if it gets built, as the project is still likely to incur legal controversies\u2014will not be named after its first promoter, Berlusconi. Instead, it will be named after its least enthused supporters, as the \u201cPonte degli Italiani\u201d (Bridge of the Italians). According to a poll by Demos, more than two-thirds<\/a> of Italians are against the project<\/a>.\u00a0<\/p>\n

The fact that the bridge is being treated, improbably, as a military installation points to more than just Italy\u2019s uncertain defense strategy. The government faces a serious problem arising from the need to increase the country\u2019s military spending despite limited fiscal resources. for\u00a0their widespread and entrenched skepticism<\/a> about military engagement and defense spending. Moreover, Italy\u2019s real financial constraints limit its ability to undertake military commitments without sacrificing other public expenditures. Thus, the government faces a difficult trade-off between military and welfare spending. Not only is the former unpopular, but the latter may be important to keep the country together, consolidate a consensus of public support for the government, and ensure political stability during turbulent international crises.<\/p>\n

The Italian experience is relevant because the same trade-off exists in several other European countries. France is experiencing serious problems with its fiscal situation, causing political instability. In March 2025, President Emmanuel Macron announced<\/a> budget sacrifices after describing an increasingly \u201cbrutal\u201d world. The cost for the French Republic to borrow money is now on a par with the Italian equivalent. Also in March, the British government laid out plans<\/a> for military spending and, contextually, cuts to social benefits as it sought to keep the nation\u2019s finances on track in what it called a \u201cmore uncertain world\u201d. In the medium term, military spending may contribute<\/a>, in an optimistic scenario, to an increase in growth and productivity, repaying its cost, and thus preventing the need to cut social spending. In the short term, however, governments know only too well that the debt levels are bound to rise and that dwindling fiscal positions may need to be addressed through unpopular tax increases or cuts in social benefits. Similar problems are occurring in the United States as well as in many parts of the West, where public debts risk going off the rails and military readiness is challenged by global instability.<\/p>\n

The relevance of Italy\u2019s fiscal room for military expenses is displayed in Figure 1, which shows a negative correlation between Italy\u2019s level of public debt and military spending as a percentage of gross domestic product over the last six decades (1960-2020). One might have expected a positive correlation, as the necessities of spending to defend the country would have led over time to a higher debt. Instead, military spending has been steadily reduced, as if the importance of defense had declined. The military became one of the first items of public spending to be sacrificed in favor of other priorities\u2014and, over the last few decades, to meet the urgent need to reduce public spending in the face of a public debt that must be kept under control.<\/p>\n

In 2012, perhaps the most critical year for the country\u2019s finances, a special law was passed, for example, to reduce military personnel and save public money. Only two years later, Russia invaded Ukraine and annexed Crimea, and NATO members committed to spending 2% of GDP on defense.<\/p>\n

This simple observation is the background for the Italian government\u2019s promise to NATO to bring its military spending to the new required level of 5% of GDP. It seems to go against an established habit of Italian governments, perhaps even against the national political culture\u2014all the more considering that the level of Italy\u2019s public debt remains alarmingly high.<\/p>\n

The dilemma of squaring the commitment to increased military spending with the need to reduce other spending in order not to let the debt-to-GDP ratio run out of control will be further exacerbated by American tariffs on European exports to the United States. The Trump administration has applied the tariffs precisely to sanction the opportunistic behavior of some European economies that have benefited from the umbrella of Atlantic security without adequately contributing to it in the past.<\/p>\n

However, its consequences may be paradoxical: The United States demands more defense spending from allied countries while simultaneously making this more difficult as a result of the trade sanctions. And so, the tariffs risk becoming a further incentive for those European countries with weaker finances to empty the substance of their commitments made to NATO, by camouflaging other already planned expenditures, such as the Messina bridge, as military spending.<\/p>\n

Before the June NATO summit in The Hague, at which member states signed off on the revised defense spending targets, Italy had planned<\/a> to keep its military expenditures stable (Fig. 2).<\/p>\n

Government defense expenditure in Italy\u2019s national budget is financed<\/a> directly with the Ministry of Defense\u2019s resources, plus funds allocated to expenditure chapters in other ministries\u2019 budgets. In particular, the Ministry of Enterprise and Made in Italy budgets help to cover weapons programs, and the Ministry of Economy and Finance helps to fund international missions. With the Ministry of Defense spending about 31 billion euros ($36 billion), or about 1.6% of GDP, an increase to 5% by 2035 seems objectively unrealistic.<\/p>\n

That said, a careful analysis of the country\u2019s fiscal situation and defense spending shows that the target of 5% spending is not impossible to achieve. The fact that it is achievable, however, does not mean that it will correspond to a real increase in the country\u2019s defense capabilities. At the NATO summit in The Hague on June 24-25, 2025, member countries divided<\/a> the commitment to increase spending into 3.5% dedicated to \u201ccore defense requirements\u201d and 1.5% for \u201cdefense- and security-related investments.\u201d<\/p>\n

After some sudden changes in the accounting methods in May, just before the NATO meeting, Italian Defense Minister Guido Crosetto made a surprise announcement<\/a> that Italy had reached the minimum NATO target of spending 2% of its GDP on defense, mainly by adding military pensions to those expenditures. \u201cWe know very well that this is a starting point,\u201d he said. \u201cOur goal is not to achieve a numerical result but to have the capabilities that NATO asks us to give to the Alliance and to have the ability to secure and defend this country. \u2026 Unfortunately, since we come from a very long period in which the resources were not what were needed to reach these objectives, it will take many years to recover the deficit accumulated in the last decades.\u201d Starting from a 2% level to achieve 3.5% over 10 years means that the defense spending needs to be increased yearly by around 0.15% of GDP, or 3 billion to 4 billion euros ($3.52 billion to $4.69 billion). This is a sizable, though not overwhelming, addition to the public sector\u2019s deficit that the Italian governments already struggle to keep under control.<\/p>\n

Meanwhile, Meloni commented<\/a> on Italy\u2019s commitments, saying, \u201cThese are necessary expenses, but we are committed to not diverting even a single euro from the government\u2019s other priorities.\u201d Meloni presides over a nationalist-conservative coalition made up of parties with different ideas about defense spending; moreover, she is well aware of the Italian public\u2019s reservations about military spending and wants to avoid sacrificing welfare spending.<\/p>\n

Help for Meloni might come from the European Commission\u2019s new plans to finance defense preparedness. In March 2025, the European Commission proposed to mobilize approximately 800 billion euros ($937 billion) over four years through various facilities.<\/p>\n

The European Union (EU) wants to borrow 150 billion euros (about $175 billion) to provide loans with a maturity of up to 45 years to governments for defense investment in air and missile defense, artillery systems, missiles and ammunition, drones and anti-drone systems, strategic enablers, and critical infrastructure protection, including in relation to space, cyber, artificial intelligence, electronic warfare, and military mobility. Countries can apply for the loan program, called Security Action for Europe<\/a>, or SAFE, until the end of 2030. The EU Commission also proposed to exempt defense expenses from EU limits on public expenditures, as expressed in the recently reformed Stability and Growth Pact<\/a>, which regulates member states\u2019 public finances. The exemption will be valid for four years, starting in 2025, with 1.5% of GDP for extra spending each year. More European money will come from the seven-year EU budget, whose cohesion funds can be used for defense-linked projects.<\/p>\n

Until recently, the Italian government declined to apply for the SAFE funds as well as the exemption clause, primarily because doing so would imply a higher public debt. Moreover, the exemption clause is available only for countries that have their deficit-to-GDP ratio below the 3% threshold\u2014which Italy does not.<\/p>\n

Yet this attitude of fiscal prudence might change by late September, when Italy is expected to revise its macroeconomic forecasts. Italy\u2019s rigorous handling of its public finances is bringing down the level of interest rates, with sizable savings for the state. Moreover, the primary budget (before interest rate payments) will return to a surplus in 2025, and the overall deficit could drop below 3%. In that case, the EU\u2019s \u201cexcessive deficit procedure\u201d against Italy will be repealed, and it will be possible for Italy to activate the escape clause that allows defense expenses of up to 1.5% of GDP to not be part of the deficit definition relevant to the EU\u2019s fiscal rules. Even the loans provided by the SAFE EU facility could become more interesting. Those loans amount to 14 billion euros (approximately $16.4 billion) and would not have an immediate impact on the debt level, because they must be repaid in 45 years.<\/p>\n

Under these conditions, it would be both financially possible and politically reasonable for Italy to develop a serious plan for its defense. However, this would require the government to align its political priorities with those of its closest European allies\u2014and so far, that is not happening. Meloni\u2019s government maintains a pronounced nationalist rhetoric that prevents it from coordinating with Germany, France, and the United Kingdom. The consequence is that, since \u201cgoing it alone\u201d makes little sense given the current geopolitical chessboard, Italy\u2019s defense projects are of secondary relevance for the government.<\/p>\n

Keeping Italy\u2019s public debt under control, even though largely thanks to European money, remains a higher government priority. During the crisis between 2008 and 2013, euro-area member states affected by fiscal or financial instability (Greece, Ireland, Portugal, Spain, and Cyprus) were subject to fiscal programs, enforced by the so-called Trojka, that limited their sovereignty. For a nationalist-conservative coalition, such as Italy\u2019s current government, relinquishing national (economic) sovereignty must be avoided at all costs. Consequently, part of the newly available fiscal margins will be used only nominally for defense spending, while being employed for other projects that are already planned and will now be reclassified under the military budget.\u00a0<\/p>\n

For spending on \u201ccore defense requirements\u201d\u2014the 3.5% in NATO\u2019s formula\u2014that will be difficult. But defense experts have already suggested some shifts in the budget. For instance, coastguard activities currently serving mostly as anti-migration patrols, are likely to be relabeled as military operations. Others have proposed incorporating the Guardia di Finanza, Italy\u2019s tax police, as a military unit, which would be exceptional but legal in times of war. However, NATO will have the final word on such accounting acrobatics. Notoriously, NATO has adopted both a taxonomy and definitions for core defense spending. It also has a procedure for observing the achievement of so-called \u201ccapability targets\u201d derived from the NATO Defense Planning Process.<\/p>\n

The transparency surrounding \u201cdefense- and security-related investments\u201d\u2014the other 1.5% in NATO\u2019s formula\u2014is notably lower. On August 7, an inter-ministerial committee granted final approval for the Messina bridge project, with investments surpassing 13.6 billion euros (approximately $16 billion), and noted its military relevance. Additionally, other expenditures will be reclassified under defense-related categories, enhancing the overall budget allocation for defense.<\/p>\n

The government is considering including several ports<\/a> in the list of infrastructural investments that will contribute to the achievement of the NATO goal on defense spending. The idea is to allocate resources for the renovation and expansion of the areas dedicated to ship construction and maintenance. A new breakwater already planned in Genoa might be used to dock military vessels. Moreover, as Deputy Minister of Infrastructure Edoardo Rixi has said<\/a>, \u201cthe investments could also include access routes to ports, such as exceptional transport corridors, also for Italian metalworking.\u201d So, roads and railways are being built with the excuse that some of Italy\u2019s infrastructure was not designed to accommodate big and heavy military tanks.<\/p>\n

Ultimately, Italy\u2019s contribution to European military readiness will be limited. Its commitment to redistributing NATO\u2019s financial and military burden will, at least in part, be nominal. Italy\u2019s credibility in foreign affairs is likely to suffer from all this. On the domestic political front, however\u2014with the United States, Italy\u2019s main traditional ally, conducting transactional policies and enforcing its national interests over former partners\u2014Giorgia Meloni might be able to represent her policies as a form of prioritization of national interests, consistent with a world in which cooperation is waning.<\/p>\n

Over her three years in government, Meloni has adjusted her rhetoric toward Europe and its institutions but has not given up her goal of weakening Europe\u2019s supranational institutions. Just days before the 2022 elections, she declared<\/a> that under her leadership, Europe\u2019s \u201cgravy train\u201d would come to an end.\u00a0 While in opposition, she had previously called Europe a failed project and a Soviet-style bureaucratic monster<\/a>. \u00a0Meloni also harshly criticized most forms of European integration, beginning with the euro. Her party\u2019s platform proposed that European treaties should be subordinate to national law.<\/p>\n

Today, Meloni has toned down her criticism. She fears<\/a> that the European Union is drifting toward irrelevance, unable to meet the competitive challenges posed by China and the United States. Her vision, however, still favors a confederal Europe\u2014a union of states without supranational institutions\u2014as outlined<\/a> in her party\u2019s manifesto for the last European Parliament election.<\/p>\n

Yet this confederation concept is particularly challenging for a nationalist leader, as hierarchies among states, especially regarding defense, are difficult to avoid. In Europe, France and the U.K. take leading roles due to their nuclear capabilities, and Germany is rapidly building its military to have greater influence in European defense. Italy, however, lacks the fiscal capacity and the political consensus to significantly expand its military. The awkward decision to rebrand the Messina Strait Bridge\u2014a project conceived at the start of the century\u2014as military infrastructure highlights Italy\u2019s struggle to reconcile its military commitments with financial constraints. \u00a0<\/p>\n

Preserving national fiscal sovereignty at the cost of the country being unable to defend itself is an obvious mistake. European countries must transparently acknowledge to the public the need to increase their defense readiness. If the fiscal margins are too tight, in Italy as well as in France and other countries, some form of long-term shared borrowing must be researched. There should also be a shift toward central provision of defense equipment at the European level, as part of a comprehensive common strategy coordinated with non-EU member states, such as the U.K. in particular.<\/p>\n

For the euro-area member states, shared financing and procurement would require common political institutions that would choose priorities, instruments, and financial tools to defend Europe. Ultimately, sharing European sovereignty cannot be avoided.<\/p>\n","protected":false},"excerpt":{"rendered":"The idea of building a three-mile suspension bridge between Sicily and Italy\u2019s mainland was notoriously a pet project…\n","protected":false},"author":2,"featured_media":392524,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[3907,18538,25902,25910,6178,8095,31,25904,2000,299,18541,5187,1699,805,45006,3976,18537,2199],"class_list":{"0":"post-392523","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-article","9":"tag-center-on-the-united-states-and-europe","10":"tag-cities-communities","11":"tag-commentary","12":"tag-conflict","13":"tag-defense-security","14":"tag-democracy","15":"tag-economic-development","16":"tag-eu","17":"tag-europe","18":"tag-europe-eurasia","19":"tag-european","20":"tag-european-union","21":"tag-foreign-policy","22":"tag-foreign-politics-elections","23":"tag-governance","24":"tag-international-affairs","25":"tag-italy"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115136067257098106","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/392523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=392523"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/392523\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/392524"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=392523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=392523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=392523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}