Italy is under pressure to decide whether to draw on the EU’s Security Action for Europe loan instrument, with Rome eligible for around €14.9bn as Brussels seeks to accelerate joint defence procurement and industrial readiness.

Italy is approaching a decision point over whether to use the European Union’s new defence loan instrument, with Defence Minister Guido Crosetto urging the government to settle its position before the end-May deadline.

The issue concerns the Security Action for Europe, or SAFE, programme, which provides up to €150bn in EU-backed loans to member states for defence investment. The mechanism is designed to support common procurement, increase production capacity and strengthen Europe’s defence technological and industrial base.

Italy is eligible for around €14.9bn under the scheme. The decision now before Rome is whether to take up the available loan allocation and incorporate it into its defence investment planning, or to rely on other national budget channels at a time of pressure on public finances.

Crosetto has argued that the decision cannot be delayed much longer, with the end of May identified as the deadline for the government’s position. The question has created a visible tension between defence requirements and fiscal caution. Economy Minister Giancarlo Giorgetti has been more reserved about adding EU loans to Italy’s public financing mix, given repayment obligations and the wider budgetary implications.

SAFE is one of the EU’s main instruments for financing the increase in European defence investment after Russia’s full-scale invasion of Ukraine and the subsequent reassessment of European military readiness. The Council of the EU describes the instrument as a loan facility worth up to €150bn, intended to help member states make “rapid and significant increases” in defence investment through common procurement.

The instrument entered into force in May 2025 under Council Regulation (EU) 2025/1106, which established SAFE through the reinforcement of the European defence industry. The programme sits within the broader EU effort to move from national, fragmented defence procurement towards larger-scale joint purchases and more predictable industrial demand.

For Italy, the immediate question is not simply whether the country needs additional defence investment. That point is already reflected in NATO spending commitments and in the wider European debate on capability gaps. The more difficult issue is how such investment should be financed.

Rome is already balancing higher defence requirements against debt, energy costs, industrial priorities and domestic fiscal constraints. Using SAFE would give Italy access to EU-backed financing on favourable terms, but it would still be borrowing. That makes the decision politically and financially sensitive, especially for a government seeking to manage budget discipline while also responding to pressure from allies to increase defence expenditure.

The defence ministry’s case is likely to focus on timing. Defence procurement requires long planning cycles, industrial capacity and certainty over financing. Delays in deciding whether to use SAFE could affect equipment programmes, contracts and the ability of Italian industry to participate in joint European procurement.

The finance ministry’s caution reflects the opposite concern: that loans, however favourable, still carry repayment obligations and may narrow future fiscal room. This is particularly relevant for a country with high public debt and competing spending priorities.

The wider European context increases the significance of Italy’s decision. SAFE was designed not only to provide financing, but also to shape procurement behaviour. By encouraging joint purchases, Brussels wants to reduce duplication, increase interoperability and give European defence manufacturers the demand signals needed to expand production.

Poland has already moved ahead with SAFE financing. Warsaw signed a loan agreement earlier this month, becoming the first country to access funding under the scheme, with a much larger allocation intended to support its military modernisation and industrial base. That step has increased pressure on other major EU states to clarify how they intend to use the instrument.

Italy’s participation would matter because of the size of its defence industry and its role in European capability programmes. Italian companies are active in aerospace, naval systems, electronics, land systems and missile-related projects. A decision to use SAFE could therefore have consequences beyond national procurement, particularly if it supports multinational programmes or joint orders involving other EU member states.

The debate also exposes a broader unresolved issue in European defence policy: the gap between political commitments to strengthen defence and the budgetary decisions needed to deliver those commitments. EU institutions have created a financing tool, but member states must still decide whether to borrow, what to buy, and how to align national plans with European priorities.

For Rome, the coming decision will therefore be both fiscal and strategic. Taking up the SAFE allocation would signal that Italy intends to use EU-level borrowing to support its defence modernisation. Declining or delaying participation would indicate continued caution over debt and repayment exposure, even as the EU seeks to accelerate the shift towards joint defence investment.

The deadline leaves limited room for ambiguity. If Italy proceeds, attention will turn to which capabilities are prioritised and how Italian industry is positioned within joint European procurement. If it hesitates, the decision may raise questions about whether the EU’s new defence financing instruments are sufficient to overcome the fiscal constraints facing several large member states.

First published on eutoday.net.