Italy seeks special EU debt clause for energy crisis spending

Italy wants an exemption from the European Union’s strict debt rules to allow more public spending to tackle the energy crisis, Finance Minister Giancarlo Giorgetti said on Friday.

Giorgetti reiterated a demand raised earlier this week by Italian Prime Minister Giorgia Meloni for a special clause similar to one introduced for defence spending.

“Economic security is national security,” Giorgetti said on the sidelines of a meeting with EU counterparts in the Cypriot capital of Nicosia.

He argued that the developments in the Middle East were comparable, in terms of their economic impact, to Russia’s invasion of Ukraine in 2022.

In a letter sent to European Commission President Ursula von der Leyen, Meloni had urged the EU to introduce an exemption similar to the defence spending clause, which allows countries to take on new debt for military spending without risking disciplinary procedures under EU fiscal rules.

Italy would “continue to do its part to strengthen European security and defence,” Meloni wrote in the letter. But there was now “another equally concrete and immediate emergency: energy supply.”

Italy is one of the EU’s most heavily indebted countries.

Spain has also pushed for greater flexibility in EU debt rules in response to the energy crisis. Madrid wants certain energy and green transition spending to be treated differently from regular government expenditure.

Oil prices have surged since the strategically important Strait of Hormuz was effectively closed to commercial shipping, fuelling higher energy costs for businesses and consumers.

EU already discussing issue

EU Economy Commissioner Valdis Dombrovskis said in Nicosia that there had already been extensive discussions about possible policy responses to the situation.

He did say that Italy is the one country that has been asking consistently for more flexibility.

Others have brought it up but overall there appears to be an agreement to have a focused response that is not broad-based, does not promote fossil fuels and takes into consideration the EU’s fiscal limitations, Dombrovskis said.