Italy urges EU guarantee on bonds to raise defence spending

By Angelo Amante

ROME, Nov 7 (Reuters) - Italy urged the European Union to guarantee bond issuance needed for defence spending on Thursday, as the government struggles to meet a NATO spending target of at least 2% of gross domestic product (GDP) by 2028.

Donald Trump insisted during his first term as U.S. president that members of the North Atlantic Treaty Organization (NATO) hit the 2% goal. Now he has won a second term, Italy's low defence spending is likely to become sensitive for Giorgia Meloni's right-wing administration.

Official figures show Rome is unlikely to achieve the spending requirement on time as it is constrained by debt that is expected to hit 135.8% of GDP this year.

"Mechanisms will probably have to be devised to allow these issues to be given special treatment and not weigh on national (debt) emissions," Defence Minister Guido Crosetto told parliament.

Crosetto, a senior member of Meloni's Brothers of Italy party, said there could be "a European cover and guarantee" to reduce the amount of interest paid on any increased debt to support the NATO target, preventing any impact on social spending.

"That would give each state the opportunity to make defence spending neutral, absolutely neutral," he told a hearing in the Senate upper house.

Following Russia's invasion of Ukraine, NATO's European members came under pressure to boost their defence capabilities. The alliance said 23 out of the enlarged 32-strong group will reach 2% this year, but not Italy.

"Now everyone, first and foremost the U.S., France, Germany itself, is talking about 2.5%. We are far from 2% by 2028," Crosetto said. He said the Italian defence budget should get to around 1.6% of GDP in 2027.

In July, Economy Minister Giancarlo Giorgetti also said the EU - which imposes budget constraints on highly indebted members - should allow spending leeway to finance defence investments. (Reporting by Angelo Amante; editing by Barbara Lewis)