REPORT: Meloni’s Italy Boosts Defense Spending to 2.8% of GDP and Shakes Up NATO

Jacques Pj Provost

2026-07-15 14:42:02

A rise that exceeds expectations

A 0.71-point jump in GDP in a single year is significant for an economy the size of Italy’s, the third-largest in the eurozone. According to Reuters, this increase brings Rome closer to the target set at the NATO summit in The Hague, which calls for a minimum of 5% of GDP, divided between 3.5% for pure military spending and 1.5% for security in the broader sense, including critical infrastructure and cybersecurity.

This 5% target remains ambitious for most Alliance members, but it reflects a shared realization: the era of the post-Cold War peace dividend is definitively over. Analysts at Defense News note that Italy is dividing its spending between 3.5% for traditional military expenditures and the remainder for broader security investments.

The Gray Areas of Military Accounting

However, not everything is crystal clear. Analyses published by the Istituto Affari Internazionali suggest that Rome could achieve part of its goals through an accounting reclassification rather than through a real and proportional increase in military spending. This practice, common among several NATO members, involves including in the spending calculation items previously classified elsewhere, such as certain dual-use civilian infrastructure.

The media outlet Decode39 has documented internal divisions within the Italian political class in the run-up to the NATO summit, with some coalition parties expressing reservations about the scale of the financial commitment being asked of Italian taxpayers against the backdrop of an already high public debt.

I won’t pretend that this 2.8% figure is entirely above board. There’s probably some accounting sleight of hand involved, as is often the case in Europe. But even if imperfect, this step is better than the inertia of previous decades.

Meloni's Call to Rethink NATO

War has changed; budgets must keep pace

What sets this announcement apart from a routine budget exercise is Meloni’s direct call for a rethinking of NATO’s strategic priorities. According to Reuters, the Italian prime minister argued that the Alliance should stop thinking solely in terms of tanks, troops, and aircraft carriers, and instead fully incorporate the new dimensions of the battlefield: low-cost drones, satellite constellations, and information warfare.

This position aligns with the lessons learned from the conflict in Ukraine, where swarms of low-cost drones neutralized expensive armored vehicles, forcing all Western military leaderships to revise their doctrine. By calling for this revision, Italy is positioning itself as a player seeking to influence the future doctrine of the Atlantic Alliance, rather than merely following its instructions.

The Political Significance of the Hague Summit

The summit held in The Hague served as a catalyst for this new wave of budget announcements. According to The Straits Times, Meloni emphasized that spending targets must remain flexible and realistic for each national economy, while reaffirming Italy’s commitment to the common trajectory set by NATO.

This call for flexibility illustrates a classic tension within the Alliance: between the shared desire to project a united front against Russia and the vastly different budgetary realities from one country to another—between industrial Germany and an Italy still burdened by public debt exceeding 135% of GDP.

Fundamentally, Meloni is right. A NATO that still thinks in terms of armored divisions while the war in Ukraine is being fought with drones costing a few thousand dollars apiece is a NATO that is one war behind the times. Someone had to say it out loud, and she was the one who did.

Trump, an imperfect but effective catalyst

U.S. pressure worked

It would be disingenuous not to acknowledge the role played by the Trump administration in this acceleration of European defense spending. Since returning to the White House, the U.S. president has repeatedly stated that European NATO allies must stop relying on the U.S. security umbrella without paying their share. This pressure, though blunt in its delivery, has produced concrete results that decades of subtle diplomacy had failed to achieve.

Italy, like most European countries, has taken this message to heart. The shift from symbolic spending to a genuine commitment of 2.8% of GDP likely would not have occurred at this pace without this constant pressure from Washington—however uncomfortable it may be for European foreign ministries accustomed to a more diplomatic tone.

A Transatlantic Partnership Under Strain but Still Functional

This dynamic does not erase the tensions. According to Defense News, Italy has also rejected an aid mechanism that would have involved purchasing U.S. weapons for delivery to Ukraine, preferring to retain its decision-making autonomy regarding its military contributions. This nuance shows that Italy’s rearmament is not simply a matter of carrying out U.S. wishes, but is guided by Rome’s own logic.

The net result remains positive for the Western front as a whole: more spending, more capabilities, and more credible deterrence against a Kremlin that continually tests the limits of Western resolve, whether through cyberattacks, acts of sabotage, or airspace violations.

Trump and his heavy-handed negotiating style aren’t my cup of tea when it comes to many domestic U.S. issues, but here, on the subject of Western defense, we must give him credit: in two years, he has achieved what NATO summits failed to secure in twenty.

Drones and Satellites: The New Center of Gravity

The Ukrainian Lesson Learned

The war in Ukraine has fundamentally transformed the way Western military leaderships think about military power. Mass-produced FPV drones, loitering munitions, and satellite reconnaissance capabilities have demonstrated that a technologically inferior but agile adversary can inflict considerable losses on a massive conventional army like Russia’s.

It is precisely this lesson that Meloni cites when calling on NATO to rethink its priorities. Investing in aircraft carriers and tanks remains necessary, but it is insufficient if the Alliance neglects capabilities in electronic warfare, satellite surveillance, and the rapid, large-scale production of drones.

Italy Wants Its Place in Tomorrow’s Defense Industry

This strategic reorientation is accompanied by a clear economic interest for Italy, whose defense industry—led in particular by Leonardo—is seeking to position itself in these new technological segments. By pushing NATO to reassess its priorities, Rome is also defending the interests of its national military-industrial complex.

This convergence of strategic and economic interests is nothing scandalous: this is how the major Western industrial powers—from the United States to France and Germany—have historically operated.

I do not see this blend of strategic and economic interests as a problem. It is, in fact, healthy. A West that invests in its defense industry is a West that does not depend solely on the goodwill of a single ally.

Internal Criticism in Italy

Opposition Questions the Timeline

This announcement has not been met with unanimous approval in Rome. According to Decode39, several voices within Meloni’s governing coalition and among the opposition have expressed reservations about the timeline and scale of this financial commitment, in a country where public debt remains one of the highest in the eurozone.

These criticisms are not so much directed at the principle of rearmament—which has been widely accepted since the invasion of Ukraine in 2022—as at how to finance it without further sacrificing social budgets that are already under pressure amid Italy’s fragile economic situation.

The Debate Over Accounting Methods

The issue of accounting reclassification raised by the Istituto Affari Internazionali also fuels a broader debate on the credibility of the figures reported by European governments to NATO. If several countries artificially inflate their statistics by including expenditures that fall outside the traditional military definition, comparisons among allies lose their relevance.

This lack of accounting transparency, if it becomes widespread, could ultimately undermine NATO’s collective credibility in the face of adversaries who, for their part, do not hesitate to precisely measure the gaps between official announcements and the reality on the ground.

I prefer an honest figure of 2% to an inflated figure of 2.8% obtained through accounting sleight of hand. Transparency on these issues is not a bureaucratic detail; it is a matter of strategic credibility vis-à-vis Moscow.

A Comparison with Other European Powers

Germany and Poland Lead the Pack

Italy’s efforts are part of a broader trend in which Germany has already committed colossal sums to modernize the Bundeswehr, and Poland is already far exceeding NATO targets with military spending nearing 4% of GDP. Compared to these driving forces behind European rearmament, Italy remains in a middle position, but its recent progress is among the fastest on the continent.

This dynamic of implicit competition among European allies—each seeking to demonstrate its reliability to Washington and its resolve toward Moscow—paradoxically helps accelerate the entire process of Western rearmament, a positive side effect of U.S. pressure.

The Baltic States: A Moral Benchmark for Rearmament

The Baltic states, geographically on the front lines facing Russia, have for several years been allocating a share of their GDP to defense that far exceeds the continental average, aware that they would be the first to be affected in the event of a direct attack by the Kremlin. Their example often serves as a moral benchmark in budget debates in other European capitals.

Italy, which is geographically farther from the front line, does not face the same existential urgency, which makes its commitment all the more significant politically: it reflects a strategic awareness rather than a mere reaction to an immediate, border-related threat.

What strikes me is that the countries closest to the danger, such as the Baltic states, have never needed anyone to explain the urgency to them. It is the countries farther from the front lines that most often drag their feet. Seeing Italy take proactive steps changes the dynamic.

Industrial Challenges for Leonardo and the Military-Industrial Complex

Contracts on the Horizon

The increase in Italian defense spending will inevitably lead to a wave of new contracts for the domestic industry, led by Leonardo, Italy’s aerospace and defense giant. The drone, cybersecurity, and satellite systems sectors are expected to capture a growing share of these new budgets.

This budgetary windfall could also strengthen Italy’s position in major European collaborative defense programs, particularly those related to the next generation of fighter jets and continental missile defense systems currently under discussion among several European capitals.

Jobs and Technological Sovereignty at Stake

Beyond geopolitics, this announcement has concrete implications for Italian industrial employment. Defense plants, often located in economically vulnerable regions of the country, could benefit directly from this surge in military orders, with ripple effects on subcontractors and the local supply chain.

Technological sovereignty—long neglected in favor of off-the-shelf purchases from the United States—is once again becoming an explicit goal for several European governments, including Meloni’s, which are keen not to rely exclusively on foreign suppliers for such strategic equipment.

European technological sovereignty has been discussed for years without ever receiving serious investment. If this wave of military spending finally serves as a concrete catalyst, so much the better—even if the primary motivation remains fear of Russia rather than a long-term industrial vision.

The reaction of the markets and financial analysts

Defense Stocks on the Rise

Announcements of European rearmament, including Italy’s, have helped bolster defense sector stock prices across the continent for several months. Investors anticipate full order books for the coming years, driven by this momentum, which is now structural rather than cyclical.

This market confidence reflects a widely held belief: European rearmament is not a passing trend linked to the war in Ukraine, but a lasting paradigm shift in how the continent views its own security for the next decade.

Doubts About Long-Term Fiscal Sustainability

Some economists, however, question Italy’s ability—with its public debt exceeding 135% of GDP—to sustain such a level of military investment over the long term without causing major budgetary tensions with its eurozone partners, particularly under the revised European fiscal rules.

This tension between military ambition and European fiscal discipline could become one of the major political debates in Rome in the coming years, pitting advocates of rapid rearmament against defenders of fiscal discipline.

I do not underestimate this budgetary risk. But between debt rising a little faster and a defense sector that remains underfunded in the face of an aggressive Russia, the choice seems clear to me. National security is not something to be negotiated like an ordinary line of credit.

Italy's Role in Collective Deterrence

A Link That Has Been Underestimated Until Now

Italy occupies a strategic geographic position in the Mediterranean, at the crossroads between Europe, North Africa, and the Middle East. Its role in NATO’s collective deterrence has long been underestimated, overshadowed by the media attention given to German or French budget debates.

This strengthening of Italy’s capabilities helps fill a strategic blind spot for the Alliance, which is particularly relevant in light of Russia’s growing naval ambitions in the Mediterranean and the persistent instability on the southern shore, notably in Libya.

A contribution that reassures allies on the southern flank

For countries like Greece and Malta, which are more exposed to the dynamics of the eastern Mediterranean, a militarily stronger Italy represents a reassuring regional partner, capable of projecting greater power and sharing the burden of maritime surveillance in the face of Russian incursions or migration-related tensions exploited by hostile actors.

This regional dimension of Italy’s announcement is often overlooked in media coverage focused on raw GDP figures, even though it constitutes one of the most concrete and immediate effects of this rearmament on the collective security of NATO’s southern flank.

We often hear about NATO’s eastern flank in relation to Russia, but almost never about its southern flank. Yet the Mediterranean is once again becoming a theater of serious strategic competition, and Italy plays a role there that is widely underestimated.

The precedent Italy is setting for other reluctant countries

A Possible Ripple Effect on Spain

Italy’s announcement could create a ripple effect on other European countries that have historically been reluctant to significantly increase their military spending, particularly Spain, which is regularly singled out by its NATO partners for its chronic underinvestment in defense.

If Italy, with its own severe budgetary constraints, manages to cross this symbolic threshold, the argument that certain countries in southern Europe are structurally unable to increase their military budgets will lose credibility among government officials in northern Europe.

Moral as well as political pressure

This dynamic creates a form of peer pressure among European governments, with each observing the efforts made by its neighbors to adjust its own budgetary trajectory. It is an informal but real mechanism that, summit after summit, accelerates convergence toward the goals collectively set by the Atlantic Alliance.

For the capitals most committed to rearmament—such as Warsaw or Berlin—each new announcement by a previously hesitant country, such as Italy, strengthens their position in NATO’s internal negotiations on the future distribution of collective efforts.

There is something almost competitive about this European rearmament, with each country wanting to show that it is doing its part. This may not be the most noble of motivations, but the concrete result—greater deterrence against Russia—suits me perfectly.

The Risks of Poorly Coordinated Rearmament

Duplication of Industrial Efforts

Despite its positive aspects, this accelerated rearmament carries a structural risk clearly identified by European defense experts: the duplication of industrial efforts among NATO member countries, with each developing its own national drone or defense systems programs rather than pooling investments on a continental scale.

If this industrial fragmentation persists, it could limit potential economies of scale and delay the deployment of truly competitive joint capabilities capable of rivaling U.S. industrial giants or the capabilities China is rapidly developing.

The Need for Enhanced European Coordination

Several voices, including within the European Commission, are calling for better coordination of defense investments among European Union member states, to prevent this massive rearmament from resulting in a mere proliferation of redundant and costly national programs.

Italy, by calling for a reevaluation of NATO’s priorities, could play a leading role in this collective reflection—provided it chooses to extend this demand for coordination beyond its own immediate national industrial interests.

The risk of industrial duplication is real, and it deeply frustrates me. The West has the financial and technological means to coordinate its efforts, but national egos and local industrial interests systematically complicate this cooperation, which is nonetheless vital.

What This Means for the Balance of Power with Russia

Stronger Deterrence on Paper

From a strictly military standpoint, every additional percentage point of GDP that a country like Italy allocates to defense strengthens—at least on paper—NATO’s collective deterrence capability against a Russia that has demonstrated its willingness to use force to redraw European borders through violence.

This strengthened deterrence is measured not only in raw figures but also in the political signal sent to the Kremlin: Western unity—often portrayed by Russian propaganda as fragile—continues to be reflected in concrete and verifiable budgetary commitments.

The Long-Term Nature of Military Transformation

It is important to bear in mind, however, that transforming a budget into actual military capability takes time: recruitment, training, industrial production, and the integration of new equipment into existing doctrines are processes that span several years—or even a decade for the most ambitious programs.

Meloni’s announcement is therefore an important step, but it will only have its full impact on the balance of power vis-à-vis Russia if it is sustained over the long term, beyond the vagaries of domestic politics and changes in the governing majority that may occur in Rome in the coming years.

Strategic patience is what is most often lacking in democracies when facing authoritarian regimes, which, for their part, plan on a decades-long scale. If Italy maintains this fiscal course beyond a single term in office, it will be a true victory for Western credibility.

What Italy Still Has to Prove

Consistency Over Several Years

The real test for Italy will not be the 2026 announcement, but its ability to maintain this fiscal trajectory over several consecutive election cycles, regardless of any changes in the governing majority that may occur in Rome in the coming years.

Italy’s recent fiscal history shows that commitments made by one government are not always honored by its successors, which fuels legitimate skepticism among some European partners regarding the actual sustainability of this fiscal consolidation effort announced today with such conviction.

International Credibility at Stake

For this announcement to have a real impact on collective deterrence against Russia, it must translate into concrete deliveries of equipment, signed industrial contracts, and verifiable operational capabilities—not merely budget lines that are approved but then only partially implemented.

It is on this concrete implementation—rather than on the announcement itself—that Meloni’s Italy will be judged by its NATO partners and, more broadly, by the entire Western camp engaged in this long-term strategic standoff with the Kremlin.

Budget announcements come at little political cost. What really matters is what will be delivered in three or five years. I will continue to monitor this issue closely, because this is precisely where Western good intentions all too often fall apart.

I close this report convinced of one thing: history will judge harshly those Western democracies that have dragged their feet in the face of the Russian threat. Italy, this time, is choosing the right side of history.

Conclusion: A Strong Signal Amid Uncertainty

A Step in the Right Direction

Giorgia Meloni’s announcement represents a significant step in the right direction for Western collective security. By increasing its defense spending to 2.8% of GDP and calling for a realignment of NATO’s priorities toward drones, satellites, and data, Italy is demonstrating that it has learned the lessons of the conflict in Ukraine and recognized the need for credible deterrence against Russia.

This development does not solve everything: accounting gray areas, internal budgetary tensions, and the risks of industrial duplication remain real challenges that Rome will have to manage in the coming years, under the watchful eye of its European and transatlantic partners.

The West Faces Its Own Credibility Test

Ultimately, what this Italian announcement reveals goes beyond the mere national budgetary framework: it is a test of credibility for the West as a whole, which is now called upon to demonstrate—with figures to back it up—that its unity in the face of the combined threats from Russia, China, Iran, and North Korea is not merely a rhetorical stance, but a sustainable budgetary and industrial commitment.

If Italy keeps its word, it will join the group of European nations that have chosen to invest heavily in their own security rather than continue to rely exclusively on the American umbrella—a strategic choice whose effects will be felt over several decades rather than just a single election cycle.

By Maxime Marquette, columnist