MNI: Defence Spending Deepens Italian Government Fractures

Europe’s push for increased defence spending is exacerbating tensions within the Italian government, with Prime Minister Giorgia Meloni worried about a Europe-wide rise in borrowing costs and her deputy calculating whether to abandon the coalition if rearmament becomes too politically unpopular, sources told MNI.

Wary of spiking bond yields, particularly in the wake of Germany’s push to boost its own defence spending, Meloni is currently little tempted by the European Commission’s offer of granting national escape clauses permitting an exemption from fiscal rules for military expenditures of over 1.5% of GDP, officials said. (See MNI: France, Other EU States, To Forego Defence Escape Clause)

“Markets look at debt sustainability. Debt-to-GDP ratio—and this might not go down well,” one official said. 

Electoral pledges including the introduction of a flat tax system, already delayed as the prime minister has been distracted by the need to respond to U.S. President Donald Trump’s policies in areas such as Ukraine, might be endangered by higher military spending, sources noted. (See MNI: Italian Tax Cuts Delayed As Meloni Distracted - Sources).

Meanwhile Deputy Prime Minister Matteo Salvini is laying the groundwork to withdraw his party, the League, from Meloni’s coalition if opposition to boosting defence grows, a source close to him said.

LEAGUE DECLINE

While the League’s core support, including many with connections to small and medium-sized Northern Italian businesses, might be wary of any move to undermine Meloni, Salvini wants to position himself as the first to capitalise on potential public discontent over militarisation, the source said, adding that the deputy prime minister shared many views with U.S. Vice President J.D. Vance.

“[Vance] rejects some consensus ideas and Salvini is comfortable with that,” the source said, noting that Salvini spoke to Trump’s number two last week.

Salvini has remained in charge of his party despite its poor showing in 2024 European Parliament elections, though his leadership has been severely weakened despite the absence so far of any strong rival. Support for the League has collapsed from over 30% in the 2018 elections to around 8% today and now trails even that of Forza Italia, the smallest coalition member.

Senior League officials are openly warning that Italy should not divert resources from other priorities to meet defence spending targets, prompting accusations of undermining the government’s agreed stance from both Meloni’s Brothers of Italy and Forza Italia. They fear Salvini’s positioning signals a renewed alignment with Moscow, echoing Hungarian prime minister Viktor Orban’s approach, sources said.

Meanwhile, Meloni remains firmly in control, despite disappointment in her attempts to act as a bridge between Trump and the European Union, and is determined to hold her government together until the next scheduled elections in 2027— which would be an unprecedented milestone in Italian politics, a person close to her told MNI.