Italian Prime Minister Giorgia Meloni is pressing Brussels to ease EU fiscal rules to help governments cope with the economic fallout from the Iran conflict, Politico reports.
In a letter to European Commission President Ursula von der Leyen, Meloni has demanded that investments and emergency measures needed to address the energy crisis be exempted from the bloc’s Stability and Growth Pact, which currently caps the budget deficit of EU member states at 3% of gross domestic product. The Italian prime minister wrote in the letter that the Middle East crisis and tensions over the Strait of Hormuz, which are compounded by the war in Ukraine, are already having a major impact on energy prices, with families and businesses bearing the brunt.
Meloni pointed out that, just as defense spending is excluded from the calculation of the pact’s requirements, energy-related costs should not be taken into account either. She insisted that there must be political courage to recognize that energy security is now also a strategic priority for Europe, and wrote that she wanted the rules attached to defense spending to be temporarily applied to emergency energy needs.
The prime minister’s proposals come at a fragile moment for her government. In April, the EU confirmed that Rome’s 2025 budget violated Brussels’ fiscal rules. The ruling added to the outcome of Italy’s referendum on the justice, which was already a major defeat for Meloni.
The EU’s conclusions are expected to force the government to cut spending ahead of an election year.
Polls show Meloni’s center-right coalition sharing ground with its center-left rivals.
Since the US and Israeli attacks on Iran on the 28th of February triggered a war, Europe has been grappling with soaring energy prices, with concerns growing about gas supplies, disruptions to oil refineries and a potential shortage of jet fuel. The Strait of Hormuz, now virtually closed, was a vital transit route for about 20% of the world’s oil.
Brussels has so far resisted calls for sweeping changes to EU policy to deal with the crisis. This year, the EC has already rejected demands from Austria, Germany, Italy, Spain and Portugal to impose a corporate tax on companies that make extra money from the Iran war. On the 17th of May, the EC signaled it would hesitate to implement Meloni’s proposals. In a statement to Italian media, EC spokesman Olof Gill said the EU had already offered governments a range of options to deal with the crisis.
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