Italy Tells Brussels Energy Aid Must Match Defence Flexibility as Fiscal Standoff Deepens
Italian Foreign Minister Antonio Tajani said on Tuesday, June 2, that he expects the European Union to approve Rome’s request for greater fiscal flexibility on energy-related spending, framing the issue as a matter of political fairness to Italian citizens and businesses. Tajani told the daily Corriere della Sera that the request was “absolutely legitimate” and expressed confidence that Brussels would respond positively. The statement comes as Italy ratchets up pressure on the European Commission ahead of a formal reply due from Commission President Ursula von der Leyen on June 3. Global Banking and Finance
Italy is among a group of EU member states pushing to adapt the bloc’s fiscal rules to better address the economic impact of energy shocks, arguing that energy spending should receive the same budgetary treatment as defence. The campaign has grown more assertive in recent days, with Rome deploying both diplomatic signals and fiscal leverage to force Brussels to act. Global Banking and Finance
Rome Scales Back Defence Loan Participation
Italy had reserved 14.9 billion euros under the EU’s Security Action for Europe defence loan scheme, known as SAFE, but the government now intends to draw on only between four and five billion euros — just enough to cover projects for which contracts have already been signed. Euronews
“On SAFE we will ask for less than the 15 billion envisaged,” Tajani said on Rete 4’s Dritto e Rovescio, adding: “We have to honour the commitments we have made with NATO, but this is not the time to tap that loan so heavily. We hope to get at least a positive response. We are fighting for it, we hope to see some movement.” Euronews
Prime Minister Giorgia Meloni set out the government’s position in direct terms. “We cannot tell citizens that there is money only for defence,” Meloni told Mattino Cinque. “If in the face of crises, we are unable to give answers to citizens and businesses, we risk there being nothing left to defend in this country. So, we have to try to find a balance.” Euronews
To increase pressure on Brussels, the Italian government allowed the May 31 deadline for submitting SAFE projects to pass without submitting anything, though Rome considers that deadline “not binding.” Euronews
The Fiscal and Economic Case
Extending budget flexibility to energy spending would potentially allow Italy to fund aid measures for firms and families worth almost 35 billion euros. Italy has committed to keeping its budget deficit at 2.9% of GDP in 2026 — just inside the EU’s 3% ceiling — but both Meloni and Economy Minister Giancarlo Giorgetti have said the government could renegotiate those deficit goals with EU authorities if needed to respond to the energy crisis. Global Banking and FinanceGlobal Banking and Finance
According to a Reuters report citing Bloomberg News, the plan under discussion in Brussels would allow governments to spend approximately 0.3% of GDP on energy-related measures outside the EU’s normal fiscal rules, though Reuters said it could not immediately verify the report. https://eutoday.net
Economy Commissioner Valdis Dombrovskis told a press conference following a Eurogroup meeting that Brussels was “assessing the possible options, including the forms of flexibility provided for under the current rules,” and confirmed that Italy was pushing for such flexibility “more consistently” than other member states. He nonetheless cautioned against expecting significant concessions. Eunews
“We have put flexibility on energy is necessary to support households and businesses,” Economy Minister Giancarlo Giorgetti said at an informal EU meeting in Cyprus on May 22. Eunews
Brussels Under Pressure — But Cautious
Tajani said the requested flexibility could remain in place until market conditions stabilise, including the resumption of normal shipping flows through the Strait of Hormuz. Global Banking and Finance
A separate proposal came from Raffaele Fitto, Executive Vice President of the European Commission and Commissioner for Regional Policy, who wrote to governments and regional leaders proposing to reallocate existing European funds — including the European Regional Development Fund, the Cohesion Fund, and the Just Transition Fund — to combat high energy prices, cut fossil fuel dependence, and secure fertiliser supplies following the closure of the Strait of Hormuz. The proposal followed a review that had already diverted 34.6 billion euros of those funds toward energy security, competitiveness, and defence. Euronews
Italy faces particular fiscal pressure: it narrowly missed its 3% deficit target for 2025, remains under the EU’s excessive deficit procedure, and has revised growth forecasts downward while raising deficit and debt projections amid energy price volatility. Italy’s debt-to-GDP ratio is projected to rise to approximately 138.6% in 2026, surpassing Greece as the eurozone’s most indebted nation. Brussels SignalGlobal Banking and Finance
Domestic Opposition Pushes Back
The government’s approach has drawn sharp criticism at home. Former Prime Minister and former European Commissioner Paolo Gentiloni attacked the strategy in an interview with La Stampa. “Enough with the attacks on Europe, this way we risk making ourselves look ridiculous. We are last in terms of growth and first in terms of debt, even though Italy has received an enormous amount of European funds,” Gentiloni said. Euronews
Within the governing coalition, Lega senator Claudio Borghi said on social media platform X that if Brussels refused the request, Italy should act unilaterally. Brussels Signal
Background
Italian Foreign Minister Tajani first publicly called for energy spending to be treated identically to defence spending under EU budget rules in late April, telling reporters in Pistoia: “Just as the EU has done with defence spending, the same can be done with energy spending.” In a letter sent to Commission President Ursula von der Leyen on May 17, Meloni stressed that the extension of the national escape clause to cover energy should occur without altering the overall deviation limits already set out in existing EU rules. She wrote: “We cannot justify in the eyes of our citizens that the EU allows financial flexibility for security and defense strictly understood and not to defend families, workers and businesses from a new energy emergency.” The EU only recently reformed its economic governance rules, which entered into force in April 2024 after years of debate over debt reduction, investment needs, and national budgetary discretion. Global Banking and Finance + 3
What Happens Next
Commission President Ursula von der Leyen is expected to reply to Meloni’s May 18 letter on Wednesday, June 3 — a response that Rome has been treating as the central near-term test of whether Brussels is willing to move. Economy Commissioner Dombrovskis has indicated that any process of assessing flexibility options will take weeks rather than days. Italy has signalled it has not ruled out a unilateral budget deviation if talks fail to produce a result. A separate diplomatic question is also developing: Germany has called an E5 summit in Berlin on June 2 to discuss NATO and Ukraine, and if Berlin does not move the date to accommodate Italy’s Republic Day, Rome may be represented by Deputy Prime Minister Tajani rather than Meloni. Euronews + 2
