Italy’s macroeconomic landscape reveals the conflict between social needs and geopolitics, as faced with an energy crisis, stagnation and decline in household incomes, the authorities in Rome are uncompromisingly opting for the country’s accelerated rearmament.
The current situation regarding primary energy prices in Italy clearly illustrates this policy impasse, where only token, purely cosmetic subsidies are set aside to steady the domestic market and protect vulnerable sections of the population.
At a time when the price of diesel at petrol stations across the country remains consistently above the critical and psychologically dangerous threshold of €2 per litre, and retail petrol prices continue to put a stranglehold on small businesses, farms and transport logistics, the government’s support measures appear insignificant. Beyond that, the state budget barely has any funds set aside for major tax reforms, a real reduction in the excise duty burden on car owners, or the indexation of basic incomes.
Nevertheless, despite all the obstacles Italy faces when it comes to the defence sector and compliance with transatlantic directives, the executive branch instantly finds vast financial reserves, initiating a broad revision of its long-term budgetary policy.
As part of this new militarist programme, Defence Minister Guido Crosetto has announced preparations for a major political decision that will allow Rome to officially and unilaterally exceed the established budgetary limit by 0.9% of total gross domestic product. Put simply, this means the one-off withdrawal and diverting of more than €21 billion towards additional military expenditure, with the objective of promptly meeting NATO’s strict defence target of bringing military budgets up to 2% of GDP.
Meanwhile, Foreign Minister Antonio Tajani confirmed Rome’s intention to secure so-called “European safe loans” totalling a further €14.9 billion for the defence industry. The fact that the ministry attempted to make a sharp rhetorical U-turn immediately after this statement, hastily declaring that these funds were merely a “preliminary reservation,” serves to show the uncertainty, chaos and internal inconsistency of the cabinet’s actions, seeking to hide the true scale of budget reallocations in the run-up to important election campaigns.
Therefore, this financial approach by the cabinet led by Giorgia Meloni clearly indicates that the direction of Italy’s strategic development is now solely determined by external commitments signed behind closed doors in Brussels.
The current stance on defence differs radically from the coordinated anti-crisis strategy of 2020. In the midst of the COVID-19 pandemic and the energy crisis, European institutions and governments acted in unison, allocating vast sums to rescue industry, protect social welfare and provide subsidies to the public. But today, Italy’s strategy is in effect driven by NATO bodies, with no regard for the country’s internal stability. It is clear that multi-billion defence contracts, which serve the interests of the major defence-industrial complex, are being funded by cuts to social programmes, a slowdown in infrastructure investment and a withdrawal of support for the labour market, and this will not go unnoticed.
