Defense and military spending: Giorgetti wants to reach 2% of GDP without activating the clause
Economy Minister Giancarlo Giorgetti declared in Warsaw, on the sidelines of the informal Ecofin, that Italy intends to reach the 2% GDP defense spending target “without activating the national safeguard clause” provided for by the new European Stability Pact. This clause, designed to support countries that need to increase defense investments without incurring sanctions for excessive deficit, is one of the tools put on the table by the European Commission together with the Readiness 2030 plan.
Readiness 2030 is the rearmament strategy proposed by the Union to strengthen the military capabilities of the Member States. It is based on increased national spending and includes two pillars: the use of the safeguard clause and access to financing from the European SAFE (Supportive Anti-Fragile Environment) instrument, which provides loans for 150 billion euros. On the latter, Giorgetti commented: "There are still some details missing, so we cannot make a definitive assessment".
Waiting for NATO to make an informed choice
Giorgetti stressed that any decision must be taken after the NATO summit in June, where a possible new military spending target will be discussed, likely 3.5% of GDP.It is important to strengthen European defence within the Atlantic Alliance“, said the minister, adding that it is necessary to act with “cold blood, rationality and without the frenzy that often leads to wrong choices“.
Italy's cautious approach is part of a complex European context, where very different sensitivities and economic situations coexist. While countries like Germany can count on a large fiscal margin, Italy must maintain a balance between financial discipline and international obligations. Giorgetti reiterated: "We are committed to respecting a fiscal discipline that rewards us so much, and at the same time to respect international commitments".
In the meantime, the European Commission has clarified, through Commissioner Valdis Dombrovskis, that the deadline of the end of April to submit the request for activation of the national clause is not peremptory, but serves to prepare the recommendations by July. A subsequent request will also be considered valid. The invitation, however, is to move in a coordinated manner, to strengthen common political action.
Towards a European defence market?
During the informal meeting in Warsaw, the economy ministers also examined a document from the Bruegel think tank entitled “The governance and financing of European rearmament”. The authors propose the creation of a European Defence Mechanism (EDM), also open to non-EU countries such as the United Kingdom and Norway. This instrument would centralize purchases and financing, creating a single defense market and maintaining ownership of military materials until actual use. The aim is to optimize operational effectiveness, promoting synergies and reducing costs.
Giorgetti did not directly comment on Bruegel's proposal, but he highlighted the need to also mobilize private capital to support the European defense industry: "It is important to stimulate not only demand but also supply, supporting the industrial sector." He also recalled that public spending is not the only tool available and that Europe must consider the economic differences between its members.
Tariffs, China and the economic outlook
On the international front, Giorgetti expressed concern about the progress of the trade war between China, the United States and the European Union. He explained that "not only Trump's duties, but also implicit or explicit ones such as Chinese dumping policies are very harmful to the Italian economy and industry." In this scenario, he stressed that Europe must find an autonomous position: "There are those who go to China and those who go to Washington, but Europe risks being crushed in the middle."
In the event of a worsening of the international economic situation, Giorgetti did not rule out the activation of the general safeguard clause provided for by Article 25 of the Stability Pact, already used in 2020 during the pandemic: "If the trade war degenerates into an economic crisis, it will be natural to reactivate the clause".
Finally, the minister commented with satisfaction on the upgrade of Italy's rating to BBB+ by Standard & Poor's, calling it "an acknowledgement of the government's seriousness". The governor of the Bank of Italy Fabio Panetta also underlined how this improvement opens the way to further progress, while warning that "the weakness of the euro area is more persistent than expected".
The debate on defense spending, between European clauses and budget constraints, will continue in the coming months, awaiting a decisive clarification at the NATO summit in June.
Published by Condoralex
Born Alessandro Generotti, C.le Maj. Parachutist on leave. Military Parachutist Patent no. 192806. 186th RGT Par. Folgore/5th BTG. Par. El Alamein/XIII Cp. Par. Condor.
Founder and administrator of the website BRIGATAFOLGORE.NET. Blogger and computer scientist by profession.
