“The politics of war,” writes Giulio Marcon in the first of the articles that opens the dossier Armed Economy 2024. “Military spending and the arms industry in Europe and Italy* – is based on rearmament, nationalism, the domination of economic interests and raw materials, power politics, the ideology of geopolitics, spheres of influence, a liberal economy and inequalities. Peace politics is based on disarmament, conflict prevention, international cooperation, international democracy and the role of supranational bodies, an economy of justice and equality. There is no state realism (politics that also presupposes war) opposed to an idealism of peace (that rejects weapons): on the contrary, there are different policies, opposing strategies, irreducible visions”.
World and European militarisation
“The five permanent members of the United Nations Security Council are the main players in the international arms trade,” writes Giorgio Beretta, “with a transaction volume of almost 430 billion dollars, which represents about three quarters (72.3%) of the volume of transfers of the largest conventional military systems in the last twenty years.” Where does Italy fit into all this? Let us start with Europe (The dossier can be downloaded for free here in Italian).
“After years of American pressure,” writes Francesco Strazzari, “the first signs of a turnaround in military spending appeared a decade ago, between the derailment of the Arab Spring (Syria and Libya in primis), the emergence of the caliphate and the intensification of the ‘war on terror’. From 2019 to date, military spending on the continent has increased by around 25-30%, with a leap after the invasion of Ukraine and increasingly significant initiatives by the EU itself. For a political entity born on the basis of peace, built on the ruins of the Second World War, and which has long defined itself as a ‘civilian force’, we are in the midst of a change of epoch.”
Specifically, “European countries have taken the path of militarisation. In the last ten years,” write Chiara Bonaiuti, Paolo Maranzano, Mario Pianta and Marco Stamegna, “the military expenditure of the NATO member states of the European Union (using NATO definitions and data) has increased by almost 50 percent, from €145 billion in 2014 to a projected budget of €215 billion in 2023 (calculated at constant 2015 prices): an amount higher than the annual gross domestic product of Portugal. With the war in Ukraine, military spending is expected to increase by almost 10 per cent in real terms in 2023 compared to the previous year. Overall, EU NATO countries spend 1.8 per cent of their GDP on their armed forces, approaching NATO’s target of 2 per cent…. Over a decade, Germany has increased real military spending by 42%, Italy by 26% and Spain by 59%.
In all countries, the increase is entirely due to the acquisition of weapons and equipment; in 2023, arms spending in EU NATO countries reached EUR 64.6 billion (+168% over the decade); Germany tripled its spending to EUR 13 billion; Italy reached EUR 5.9 billion; Spain EUR 4.3 billion. EU arms imports (based on SIPRI data) have soared, tripling between 2018 and 2022; half of all imports come from the US. The European Union has aligned itself with this push towards militarisation: it has established the European Defence Fund, endowed with EUR 7.9 billion for research and production of new armaments for the period 2021-2027, and the European Peace Fund, endowed with EUR 12 billion over the same period for military aid and supplies to non-EU countries”.
Of the top 30 European defence companies in terms of military sales, “the largest group,” writes Gianni Alioti, “is Britain’s BAE Systems, with sales of $26.9 billion in 2022, ranking sixth in the world. ….The world’s top 20 include other European groups: Italy’s Leonardo ($12.5bn) in 13th place, Europe’s Airbus ($12.1bn) in 14th and France’s Thales ($9.4bn) in 17th.”
The Italian situation
“The Italian defence industry,” writes Alioti in the chapter dedicated to our country, “is part of a European context analysed separately, and is characterised by the dominant role of Leonardo (formerly Finmeccanica) in aeronautics, electronics and land weapons, and Fincantieri in naval shipbuilding. These are two large multinational companies in which the state has retained a controlling stake. Their turnover in military production reached USD 15.3 billion in 2022, equivalent to 12% of the turnover of the European military industry and about 2.6% of the world military industry; together they account for between 80 and 90% of the turnover of the military sector in Italy. An important part of their production is carried out abroad: for Leonardo in the US, UK, Poland and Israel, for Fincantieri in the US. Based on SIPRI data, Leonardo was ranked 13th among the world’s top 100 military companies in 2022.”
Weapon Watch (the observatory that produced the atlas of Italian companies operating in the aerospace and defence sector, in collaboration with OPAL ed.) has identified 212 companies that, in the last six years,” writes Alioti, “have been authorised to export armaments and represent the ‘top tier’ of the Italian military-industrial complex. The top twenty Italian military companies are headed by Leonardo (which controls over 70% of military production and exports around 75%) and Fincantieri (over 20,000 employees worldwide, including 10. 445 in Italy), followed by Avio Aero (aeronautics, owned by the American GE Aerospace), Thales Alenia Space Italia (aeronautics, owned by the French Thales, with Leonardo participation), Avio Space Propulsion (aeronautics, with Leonardo participation), MBDA Italia (missiles and electronics, controlled by Airbus, BAE Systems and Leonardo), Iveco Defence Vehicles (armoured vehicles, a division of the Iveco Group that remained with the Agnelli family’s Exor Group after the sale of FCA – Fiat Chrysler Automobile to Stellantis). “These seven companies in 2021,” Alioti continues, “ concentrate more than 80% of the total turnover in the military sector, while two thirds of the 212 companies are small: 40% have a turnover of less than 10 million euros and 19% between 10 and 20 million euros”.
“All in all,” concludes Alioti, “the Italian defence industry, which AIAD estimates to employ just over 30,000 people in military production17 , plays a modest role in the country’s manufacturing system. It has some niches of international specialisation, in continuity with the past. The two largest companies – Leonardo and Fincantieri, which are publicly controlled – have become multinationals in the last 20 years, with a significant foreign presence and, especially Leonardo, a strong financial orientation. The industrial policy choices of past governments and the production strategies of Leonardo (like those of the former Finmeccanica) and other players in the sector have led to higher stock market prices and higher dividends for shareholders, but make military production a “‘bad deal’ for the economy and employment in Italy. In Italy, as in Europe, the expansion of the ‘military-industrial complex’ only fuels rearmament and the risks of widening conflicts”.
Italian military expenditure in 2024 *
The increase in military expenditure for the year 2024 is driven by the Ministry of Defence’s budget (and) for the first time exceeds 29 billion euros (29,161 million to be precise), with an increase of no less than 1,438 million euros (+5.1% compared to 2023), which follows an increase of around 1.8 billion already realised between 2022 and 2023. All in all, the defence budget will increase by around 12.5% in two years (more than 3.2 billion in monetary terms)… Funding for land, naval and air force equipment will all see slight decreases (around 250 million euros in total), which will be more or less fully offset by an increase in funding for the Joint Force Commands. Instead, about 1.4 billion more will be allocated to the ‘General Planning of the Armed Forces and Military Procurement’ programme (more than 95 per cent of which will go to the ‘Modernisation, Renewal and Support of Capabilities and Research Programmes for the Technological Upgrading of the Military Instrument’, i.e. new weapons), bringing the total for this programme to more than 8 billion euros for the first time in history. If we add to this the 2 billion or so earmarked for the defence industry in the MIMIT budget, we can say that in 2024, for the first time, Italy will allocate around 10 billion euros to defence investment.
The total amount of the defence budget is only the starting point for assessing Italy’s overall military spending, The total amount of the defence budget is only a starting point for assessing Italy’s total military expenditure, which must include the figures recorded by other ministries (the fund for military operations abroad in the Ministry of Economy and Finance and the funds allocated by the new Ministry of Enterprise and Made in Italy to the acquisition and development of weapons systems) and, for the sake of consistency in terms of destination and type of use, the vast majority of the budget of the Carabinieri Corps (due to the specific role played by this structure, in particular the forestry part), which is only taken into account for the component relating to operations abroad. Using the methodology of the Mil€x Observatory on Military Expenditure, we arrive at a first tendentious assessment of the total “direct” military expenditure for 2024 of about 28.1 billion euros, with an increase of more than 1400 million compared to the same assessments made for 2023: a percentage growth of 5.5% compared to the previous year.
On the cover poster, a soldier loads a machine gun in a poster by Gino Boccasile (XX century) – cropped ©Catalogo beni culturali
* This last sub-chapter is taken from the article Italy’s military expenditure forecast in 2024: analysis and proposals of the Sbilanciamoci Campaign, written in collaboration with the Italian Peace and Disarmament Network.
Authors: Gianni Alioti, Sofia Basso, Giorgio Beretta, Chiara Bonaiuti, Raul Caruso, Andrea Coveri, Marinella Correggia, Dario Guarascio, Paolo Maranzano, Giulio Marcon, Mario Pianta, Guglielmo Ragozzino, Carlo Rovelli, Marco Stamegna, Francesco Strazzari, Francesco Vignarca
