Italy faces uncertainty over achieving NATO's 2% defence spending target

Italy's government is privately sceptical that its strategy to meet NATO's defence spending target of 2 per cent of GDP will pass scrutiny, despite public assurances to the contrary.

Officials in Rome have suggested that they can reclassify existing civil expenditures to reach the target. However, two sources familiar with the budget discussions, speaking anonymously to POLITICO, believe this approach might not convince either the European Commission or NATO.

This uncertainty emerges as pressure intensifies from Washington, which has been pushing NATO members to allocate up to 5 per cent of their GDP to defence spending.

Finance Minister Giancarlo Giorgetti reaffirmed earlier this week that Italy plans to raise its defence spending to 2 per cent of GDP by 2025 by incorporating costs related to defence-adjacent infrastructure, including the financial police and coast guard. This move would allow Italy to avoid increasing its defence budget in absolute terms, thereby preventing potential cuts to other sensitive sectors, such as the country's struggling healthcare system.

The Italian parliament’s lower house will discuss and vote on Giorgetti’s proposal on April 24.

However, doubts remain about whether the European Commission and NATO will accept this accounting strategy when they review Italy’s finances later this year. Officials indicated to POLITICO that both the EU and NATO will likely exert political pressure at the NATO summit in June for Italy to increase its defence spending. These sources requested anonymity due to restrictions on speaking with the media.

The sources also suggested that NATO and the Commission may challenge the legal basis for Italy's approach. While the current arguments might hold up, they said, both institutions are expected to reassess defence commitments, which could lead to a more rigorous review of the criteria used by member states.

“There will certainly be political pressure from both the EU and NATO to spend more,” one official stated, noting that the 2 per cent target is viewed as merely a “baseline.”

This could force Italy to divert funds from other areas to boost defence spending. Alternatively, Italy might meet the 2 per cent target initially but gradually reduce it as it focuses more on maintaining its armed forces.

The official emphasised, however, that the proposed accounting manoeuvre had been meticulously structured to withstand legal scrutiny. Despite the inevitable pressure, the official noted that Italy could potentially navigate the challenge by purchasing American-made weapons systems and spending less on personnel and "dual-use" goods, which serve both defence and civilian purposes.

Defence spending has become a growing priority in Rome as the U.S.'s commitment to European security appears increasingly uncertain, with President Donald Trump calling for higher defence contributions from NATO allies. Last week, Prime Minister Giorgia Meloni incorporated a defence budget increase into her pitch to Trump, aiming to strengthen U.S.-European cooperation and negotiate a reduction in tariffs.

At the same time, defence spending has become a politically charged issue. The push for greater rearmament across Europe is unpopular in Italy, which is also facing new austerity measures aimed at stabilising its finances. Although Italy spent only 1.49 per cent of its GDP on defence last year—one of the lowest rates in the EU—it is under strict orders from Brussels to reduce its deficit, following significant pandemic-related spending.

The European Commission has proposed exempting up to 1.5 per cent of GDP in new defence spending from deficit calculations. However, Giorgetti recently informed Italian lawmakers that the government would not accept this option, choosing instead to incorporate civil infrastructure costs into its defence calculations.

By Tamilla Hasanova