Italy is weighing whether to withdraw from a second EU-backed defense funding initiative, potentially giving up nearly €27 billion ($31 billion) earmarked for military expansion as the government prioritizes rising energy expenses.
Prime Minister Giorgia Meloni has reportedly informed European Commission President Ursula von der Leyen that Italy may decline €14.9 billion in low-interest SAFE loans offered by Brussels. These loans are considered important for helping Italy move closer to NATO’s target of allocating five percent of GDP to defense.
Italy’s Defense Minister Guido Crosetto said a final decision on the SAFE loans must be made before the end of May and ultimately rests with the finance ministry. He added that he had contacted Finance Minister Giancarlo Giorgetti twice seeking clarification on the government’s intentions but had not yet received a reply.
This is the second occasion in recent months that Meloni has publicly questioned participation in EU initiatives designed to increase defense spending.
In April, she indicated that Italy might also avoid using the EU’s National Escape Clause (NEC), a mechanism that would allow additional defense expenditure without breaching EU deficit limits. Had Italy applied the clause, defense funding could have increased by roughly €12 billion over three years.
Instead, Rome is now urging the EU to allow the NEC framework to be used to offset extraordinary energy-related expenses from deficit calculations. In a letter sent to von der Leyen on Sunday, Meloni stressed the importance of deploying public funds to cushion households and businesses from surging energy prices and higher living costs caused by disruptions in oil supplies linked to the closure of the Strait of Hormuz.
Meloni argued that energy security should be viewed as strategically important for Europe, just as defense is. She wrote that supporting families and companies through the energy crisis would strengthen the economy and, in turn, improve Italy’s long-term defense capacity.
She further stated that unless the EU approved broader use of the NEC mechanism for energy spending, her government might reconsider Italy’s participation in the SAFE loan program. According to Meloni, it would be difficult to justify use of the SAFE facility to the Italian public under the current structure.
Last year, Italy applied for funding from the EU’s €150 billion SAFE defense fund, intending to direct its €14.9 billion allocation toward projects such as armored combat vehicles and tanks.
Meloni’s indication that Italy could forgo both the SAFE loans and the defense spending flexibility offered through the NEC — together worth around €27 billion — comes at a politically sensitive moment, with opinion polls suggesting limited public support for increased military procurement ahead of national elections next year.
The Italian leader has previously sought to raise defense expenditure from around two percent of GDP toward NATO’s five percent benchmark, partly in response to pressure from U.S. President Donald Trump on European allies to spend more on defense.
However, relations between Trump and Meloni have recently cooled after Italy declined to support U.S. military operations involving Iran. Trump criticized Meloni last month, saying he had misjudged her resolve.
Meloni is now expected to face questions from NATO allies at the alliance summit in Istanbul on July 7–8 regarding Italy’s hesitation over EU defense spending measures.
