Italy Presses for EU SAFE Loans Decision Ahead of Funding Deadline
Italy's Consideration of EU SAFE Fund Amidst Shifting Economic Priorities
By Angelo Amante and Giuseppe Fonte
Urgency Surrounding the SAFE Fund Decision
ROME, May 14 (Reuters) - 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.
Defence Minister's Position and Timeline
"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's Defence Spending Commitments
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.
Government Priorities and Internal Tensions
Containing Energy Costs as a Top Priority
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.
Economy Minister's Cautious Approach
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.
Concerns in the Defence Sector
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.
SAFE Fund Participation Across Europe
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.
($1 = 0.8547 euros)
(Reporting by Angelo Amante and Giuseppe Fonte; Editing by Aidan Lewis)
