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ROME: European Union budget rules are “stupid and senseless” and need to be changed to allow member states to boost defense spending as recommended by Brussels, Italian Economy Minister Giancarlo Giorgetti said on Thursday.
The EU Commission has introduced flexibility clauses to allow more investment in security, but Giorgetti said their current form penalizes countries such as Italy, which are under a so-called EU infringement procedure for their excessive deficits.
“It is essential to find ways to bring these rules up to date with the crisis we are experiencing so that they do not seem stupid and senseless,” the minister said in a statement issued by his staff on the sidelines of a meeting with euro zone peers in Luxembourg.
The title of the statement was blunter, saying Giorgetti called for changes to “stupid and senseless rules.”
Brussels has proposed allowing member states to raise defense spending by 1.5 percent of gross domestic product each year for four years without any disciplinary steps that would normally kick in once a deficit is more than 3 percent of GDP.
The plan came amid growing pressure in Europe to boost military spending to deter a potential attack from Russia and become less dependent on the United States.
Highly-indebted Italy is set this year to meet the NATO defense target of 2 percent of GDP through a series of accounting changes, but an alliance summit next week is expected to raise the goal to 5 percent of GDP.
Giorgetti said that, under the Commission’s scheme, member states not subject to the EU’s excessive deficit procedure would be allowed to use the extra leeway on defense without breaching budget rules, even if their deficits rise above the 3 percent of GDP ceiling.
However, “member states already in the infringement procedure cannot use the same flexibility,” he added.
In this situation Italy is reluctant to use the EU flexibility clause because it would prevent it from lowering its deficit to 2.8 percent of GDP in 2026 from 3.4 percent last year, as planned.
“Italy is committed to a timely exit from the infringement procedure and accepting the invitation to increase defense spending would forever prevent this,” Giorgetti said.
Rome is also wary of any move that could harm its improving reputation on financial markets, two government officials said.
Last month, credit ratings agency Moody’s upgraded Italy’s outlook to “positive” after rival S&P Global raised the country’s rating to “BBB+” from “BBB.”
Italy’s preferred option would be the issuance of common EU debt to finance higher defense spending, one of the officials said, but such a plan would require support from the other bloc members. (Editing by Alvise Armellini and Gavin Jones)

MADRID: Spain has rejected a NATO proposal to spend 5 percent of gross domestic product on defense needs that’s due to be announced next week, calling it “unreasonable.”
Prime Minister Pedro Sánchez, in a letter sent on Thursday to NATO Secretary-General Mark Rutte, said that Spain “cannot commit to a specific spending target in terms of GDP” at next week’s NATO summit in The Hague, Netherlands.
Any agreement to adopt a new spending guideline must be made with the consensus of all 32 NATO member states. So Sánchez’s decision risks derailing next week’s summit, which US President Donald Trump is due to attend, and creating a last-minute shakeup that could have lingering repercussions.
Most US allies in NATO are on track to endorse Trump’s demand that they invest 5 percent of GDP on their defense and military needs. In early June, Sweden and the Netherlands said that they aim to meet the new target.
A NATO official on Thursday said that discussions between allies were ongoing about a new defense spending plan.
“For Spain, committing to a 5 percent target would not only be unreasonable, but also counterproductive, as it would move Spain away from optimal spending and it would hinder the EU’s ongoing efforts to strengthen its security and defense ecosystem,” Sánchez wrote in the letter seen by The Associated Press.
Spain was the lowest spender in the trans-Atlantic alliance last year, directing less than 2 percent of its GDP on defense expenditure.
Sánchez said in April that the government would raise defense spending by 10.5 billion euros ($12 billion) in 2025 to reach NATO’s previous target of 2 percent of GDP.
On Thursday, Sánchez called for “a more flexible formula” in relation to a new spending target — one that either made it optional or left Spain out of its application.
Sánchez wrote that the country is “fully committed to NATO,” but that meeting a 5 percent target “would be incompatible with our welfare state and our world vision.” He said that doing so would require cutting public services and scaling back other spending, including toward the green transition.
Instead, Spain will need to spend 2.1 percent of GDP to meet the Spanish military’s estimated defense needs, Sánchez said.
At home, corruption scandals that have ensnared Sánchez’s inner circle and family members have put the Spanish leader under increasing pressure to call an early election, even from some allies.
Increased military spending is also unpopular among some of Sanchez’s coalition partners. In April, when Sánchez announced that Spain would reach NATO’s previous 2 percent spending target, the move angered some coalition members further to the left of his Socialist Party.
NATO allies agreed to spend 2 percent of GDP on military expenditure after Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022. But the alliance’s plans for defending Europe and North America against a Russian attack require investments of at least 3 percent.
The aim now is to raise the bar to 3.5 percent for core defense spending on tanks, warplanes, air defense, missiles and hiring extra troops. A further 1.5 percent would be spent on things like roads, bridges, ports and airfields so armies can deploy more quickly, as well as preparing societies for possible attack.
Several allies have committed to reaching the new spending goal, even though other nations will struggle to find the billions required.
Rutte had been due to table a new proposal on Friday aimed at satisfying Spain and trying to break the deadlock. European allies and Canada want to end the standoff before the leaders meet with Trump on Wednesday.
Poland and the Baltic countries — Estonia, Latvia and Lithuania — have already publicly committed to 5 percent, and Rutte has said that most allies were ready to endorse the goal.
But Spain isn’t alone among NATO’s low spenders. Belgium, Canada and Italy will also struggle to hike security spending by billions of dollars.
A big question still to be answered is what time frame countries will be given to reach an agreed-upon new spending goal.
A target date of 2032 was initially floated, but Rutte has said that Russia could be ready to launch an attack on NATO territory by 2030.