The government’s compromise on the Safe bill will result in a loss of 3 billion euros

In the end, the government chose to request 8 billion from the European Safe Fund for defence out of the approximately 15 billion originally earmarked. “We have decided to use less of it because we need to invest more in healthcare and social policies,” explained Foreign Minister Antonio Tajani at the Rimini Meeting. The truth is exactly the opposite. The government will be able to spend less on healthcare and social policies because it has not requested all the available SAFE funds.

The issue is fairly straightforward and boils down to the answers to two questions. Are Safe (Security Action for Europe) interest rates higher or lower than those of Italian BTPs? And will Safe loans be used to finance additional spending or not?

As regards the first question, although sections of the League close to Salvini – such as Senator Claudio Borghi and MP Alberto Bagnai – maintain that there is no economic benefit in using European loans, the government has already responded in two official documents. In the April Public Finance Document (DFP), the Ministry of Economy and Finance (MEF), led by Lega member Giancarlo Giorgetti, has already made a clear assessment: “The [Safe] instrument offers certain financial advantages compared to standard sovereign issues. The loans benefit from the European Union’s high credit rating, offer very long maturities of up to 45 years, and include a 10-year grace period for the repayment of principal.” The same view was expressed by the Ministry of Defence in the 2025–27 Multi-Annual Planning Document, which sets out the investment plans for the Armed Forces.

The decision to seek the Safe, writes Minister Guido Crosetto, “enables us to support the modernisation of the armed forces through a more advantageous method of financing than ordinary public debt”. Therefore, for the same level of expenditure, it is clear that it is more cost-effective to borrow through a European bond at lower rates than through Italian government debt.

But now we must address the other question. Is this an increase in spending? Because Italy could simply decide to increase spending by less than the 15 billion provided for under the Safe programme and therefore take on less debt. It would therefore make no sense to request all the loans earmarked. But this is not the case. And it is the government itself that states this, in no uncertain terms. “The SAFE loans – as stated in the Draft Financial Plan (DFP) presented by Meloni and Giorgetti and approved by the government – are consistent with the path of defence investment expenditure set out in current legislation.” This means that the plan originally submitted to the European Commission includes all expenditure items for programmes already covered by the current budget chapters. In other words, these are not additional expenditure items. This interpretation has, moreover, been confirmed more recently by Minister Crosetto: “The SAFE, as it has been structured, is not an additional instrument for financing military expenditure, but rather one for the expenditure already provided for in the budget,” he said during a parliamentary hearing. “It is a purely technical decision regarding how much of the SAFE to use as an alternative to BOTs.” This is the same line of reasoning put forward by Giorgetti in June, when he said that “as Minister of Finance, I must assess whether these 15 billion in SAFE, as debt, cost more or less than BTPs”.

By taking all 15 billion from the Safe fund, Italy would simply be replacing a loan with more expensive Italian debt with a loan with cheaper European debt for expenditure that has already been planned. This is a financial operation which, moreover, has already been used extensively with the NRRP. There is no doubt about the economic assessment: out of the total of 15 billion, the savings over the entire duration of the loan would amount to around 6 billion.

The problem is that, contrary to what the ministers say, the decision was not a technical one but a political one. Different needs and visions were at odds with one another. For Crosetto, who is focused on security, the key is to increase or accelerate planned military investment, regardless of the source of funding: using the SAFE fund solely for expenditure already planned is irrelevant. For Giorgetti, on the other hand, who is focused on the deficit and the infringement procedure, the priority is to minimise expenditure: the ideal scenario would be to use the entire SAFE allocation for expenditure already planned. For Meloni (and Tajani), the priority is not to make a bad impression in Europe by turning down the SAFE funds after having reserved them. For Salvini and his allies, who are instead feeling pressure from Vannacci, the priority is not to use the SAFE funds (or to use as little as possible) because they are opposed to Europe and military spending.

The compromise reached was to request the Safe, but not in full: 8 billion out of 15. Roughly half. This means an additional 2–3 billion in interest expenditure on the loan. And therefore fewer resources available for healthcare, welfare or tax cuts. It is the opposition that ought to be protesting. But the broad coalition on one side and Vannacci on the other, rather than criticising the government for spending too much on interest by not taking the full SAFE allocation, are accusing the government of spending too much on defence by taking just a portion of the SAFE allocation.