Meloni threatens to pull out of EU defense fund over energy rules

Italian Prime Minister Giorgia Meloni has sent a letter to European Commission President Ursula von der Leyen demanding that the budget exemptions currently in place for defense spending be extended to energy spending as well. Without this condition, Rome may refuse to participate in the European defense fund SAFE.

In the letter, which Reuters reviewed, Meloni wrote that “Italy considers it necessary to temporarily broaden the scope of the National Escape Clause, which already applies to defense expenditure, so as to cover investments and exceptional measures needed to address the ongoing energy crisis.”

The National Escape Clause allows EU member states to exceed the bloc’s established budget deficit ceiling of 3% of GDP by up to 1.5% of GDP annually in defense spending without risking the opening of an infringement procedure.

Meloni warned that without such flexibility in the energy sphere, “it will be extremely difficult for the Italian government to explain to the public any recourse to the SAFE program under the conditions currently envisaged.” The SAFE initiative is a defense financing fund worth EUR 150 billion, which Italian Defense Minister Guido Crosetto has been pressing Rome to access before the deadline expires.

Fiscal pressure and the energy crisis

Meloni’s demand came after several months of mounting fiscal pressure in Italy. In April, Rome revised its growth forecasts downward and raised its deficit and public debt projections amid rising energy prices and instability in the Middle East. Economy Minister Giancarlo Giorgetti warned at the time that “it will be necessary to reprioritize and adjust the planned spending increases in other areas, including defense.”

Italy has committed to reducing its budget deficit to 2.9% of GDP by 2026 — just below the EU’s 3% threshold — compared with 3.1% last year. Meloni has repeatedly stated that her government’s priority is energy spending rather than defense. In April she told journalists:

“Today we have different priorities. For me, the priority is the cost of energy and the need to respond to the demands of citizens.”

Diplomatic escalation

The letter marks a direct diplomatic escalation. For several weeks, Italy has been calling on the EU to extend to energy spending the same fiscal flexibility that applies to defense spending. By linking energy flexibility to its participation in the SAFE program, Meloni is raising the political stakes ahead of Italian parliamentary elections next year, framing the issue as one of fairness toward Italian taxpayers who are bearing the brunt of the energy crisis while Brussels grants budget relief exclusively for military spending.