When in Rome: The Italian-German motor in action

As Italian prime minister Giorgia Meloni and German chancellor Friedrich Merz meet today in Rome, the EU faces a number of major global tests. The Italy-Germany partnership could knock down the barriers that are holding Europe back.

Three tests facing Europe

The EU must become more competitive if it is to thrive economically. However, since the publication of the Draghi report, the bloc has struggled to move to systemic adaptation. It needs to adopt fast-track regulatory procedures, get rid of outdated rules and scrutinise new legislation more strictly.

The bloc must also act more geopolitically. One recent big question concerned frozen Russian assets and financial support for Ukraine, where tensions surfaced over risk-sharing and asset utilisation. Unity and leadership are required for Europe to survive in a world of great power competition.

The EU also requires strong political leadership. This month’s ructions over Greenland saw a hardline posture from France’s Emmanuel Macron, who put the EU’s anti-coercion instrument explicitly on the table while others preferred a more conciliatory approach to America. Europe’s strategy towards China remains in flux.

Shared goals

For decades, Italy was often framed—explicitly or implicitly—as Europe’s “naughty pupil”, struggling with fiscal credibility, political instability and delayed reforms. This was most visible during the eurozone crisis and resurfaced, in subtler form, in debates on budgetary flexibility, state aid and industrial policy.

Italy and Germany increasingly engage eye-to-eye, not as debtor and creditor, but as two industrial powers

Under Meloni and Merz, Italy and Germany increasingly engage eye-to-eye, not as debtor and creditor, but as two industrial powers confronting similar challenges. The shift is not merely tonal. Rome is no longer treated as an exception to be managed, but as a co-author of policy priorities, from regulatory simplification to industrial scale-up, that both governments view as existential for Europe’s economic and political sovereignty.

Their shared approach calls for cutting regulatory red tape, accelerating permitting procedures, strengthening the single market and deepening integration across services, energy, capital markets and digital infrastructure. Both governments view completing the capital markets union and modernising merger rules as essential to Europe’s competitive future. Where they had until now remained largely at the level of political signalling, intergovernmental exchanges and discreet technical consultations between ministries have now been formalised in a joint non-paper, which will serve as the basis for the informal EU leaders’ retreat scheduled for next month in Belgium.

Meloni and Merz also converge on the need to integrate environmental, technological and industrial objectives within a single competitiveness framework. While formally committed to climate goals, both governments have pushed for a rewrite of elements of the European Green Deal, including the planned 2035 ban on new internal combustion engines.

North and south (and more)

Crucially, they have been able to put these ambitions into action. Unlike traditional Franco-German initiatives, which have at times generated resistance among northern, eastern or fiscally conservative member states, the Italy-Germany relationship is structurally better placed to build cross-regional coalitions capable of breaking recurring deadlocks. On competitiveness and regulatory reform, the two governments are well positioned to align northern states concerned with efficiency and compliance, southern economies seeking growth and flexibility, and industrial heavyweights wary of regulatory overreach. Germany brings long-standing credibility and dense networks with northern and “frugal” countries—including the Nordic states and the Netherlands—particularly on issues of fiscal prudence, market integration and regulatory discipline. Italy, by contrast, retains political capital across southern and central Europe, while also maintaining channels of dialogue with more sovereigntist governments in central and eastern Europe. Rome’s capacity to engage leaders such as Hungary’s Viktor Orban gives Italy a brokerage role.

Vis-à-vis Russia, Meloni backed the proposal to underpin loans to Ukraine through collectively issued EU debt. This ultimately gained traction, even though it met early resistance from Berlin. The move marked a return to instruments of debt mutualisation—last deployed during the pandemic and long opposed by fiscally conservative member states.

Finally, at the European Parliament level, cooperation between the European People’s Party—Friedrich Merz’s political family—and the European Conservatives and Reformists, led by Meloni, has intensified markedly over the current legislative term. Once largely on the fringes of the parliamentary mainstream, the ECR has moved closer to the EPP on files related to competitiveness, industrial policy, migration and regulatory simplification.

Meeting in Rome

Today’s meeting in Rome marked a qualitative shift from alignment to structured co-governance. The  two sides formalised a 32-page action plan and a binding agreement on security, defence and resilience, which institutionalised annual “2+2” consultations between foreign and defence ministers and embedded systematic coordination inside both the EU and NATO. This is new: Rome and Berlin are no longer just converging positions ex post, but committing to ex ante policy synchronisation on strategic theatres ranging from Ukraine and the Balkans to the Arctic, the Sahel and the Indo-Pacific. The defence chapter is particularly significant as it explicitly links political coordination to industrial output, identifying joint capability gaps, defence industrial capacity and military mobility as shared priorities. In practical terms, this consolidates the Leonardo-Rheinmetall-KNDS partnership and places programmes such as Bromo, Eurodrone, air defence and naval platforms inside a common political framework. This sends a signal that Italy and Germany intend to shape the European defence pillar together rather than merely contribute to it separately.

Equally novel is the geo-economic dimension. Italy and Germany jointly endorsed a coordinated push on critical raw materials, explicitly framing dependence on China as a strategic vulnerability and announcing a structured link between their respective national funds to secure supply chains. The Rome meeting also connected competitiveness to external action in a way that goes beyond bilateralism: joint export missions, a common stance in favour of Mercosur and the explicit integration of the Italian Mattei Plan with German development tools in the Sahel and Lake Chad region. All this points to a coordinated projection of economic power.