Italy's defence minister urges decision on EU SAFE loans before deadline

ROME, May 14 – Italy’s defence minister said on Thursday he had written twice to the Treasury urging a decision on whether to tap a European Union arms-buying fund, adding that Rome needed to confirm by the end of this month if it wanted access to the scheme.

The Security Action for Europe (SAFE) instrument is a joint borrowing scheme backed by the EU budget to boost the bloc’s defence capabilities and help member states meet more ambitious NATO spending targets.

“A choice on whether or not to access the SAFE fund needs to be made by the end of May, as the contracts need to be signed by then,” Defence Minister Guido Crosetto told reporters on the sidelines of an event to launch a digital platform, adding he was “neither pessimistic nor optimistic” about the final decision.

Last year, Rome was among several countries that asked the European Commission if it could tap the loans, which would allow the government to fund already planned spending at a lower interest rate than it would pay on the market.

Italy pledged to set aside more than 12 billion euros to boost defence spending by 0.5% of GDP through 2028, sparking protests from opposition parties who argued the money would be better spent on struggling public services.

CONTAINING ENERGY COSTS IS TOP PRIORITY

However, Prime Minister Giorgia Meloni’s spending priorities have shifted since the U.S.-Israeli war against Iran triggered a surge in energy prices, worsening public finance pressures in the euro zone’s third-largest economy.

Underscoring tensions within the government, Economy Minister Giancarlo Giorgetti struck a cautious tone in parliament this week about drawing on the funds, noting that they would have to be repaid and would imply budget constraints.

“The government is engaged in intensive talks with the Commission to ensure greater budget flexibility can be granted to support measures aimed at shielding households and businesses from the impact of high energy costs, which I have repeatedly described as the top priority,” Giorgetti said.

A source close to the matter, who asked not to be named, told Reuters that unease was growing in the defence sector over the Treasury’s final decision, as access to SAFE funding was seen as central to spending plans.

Countries including Romania and Poland have so far confirmed they will access the fund, which totals up to 150 billion euros ($175.50 billion). Italy would be entitled to around 14.9 billion euros. REUTERS