Italy and Germany are rewriting the balance of power in Europe

For decades, the relationship between Italy and Germany has been treated as a fact of European life: economically vital, politically secondary, rarely strategic. That assumption no longer holds. In recent months, Rome and Berlin have begun to test whether their deep economic interdependence can be turned into political leverage at the center of the EU.

The signal moment came in late January, when Prime Minister Giorgia Meloni met Chancellor Friedrich Merz and signed a cooperation agreement on defense and security. 

The substance of the deal matters less than what it represents: a deliberate effort to elevate a traditionally commercial partnership into a strategic one, at a time when Europe’s old assumptions about security, trade and power are rapidly eroding.

From interdependence to ambition

Italy and Germany have always been economically entwined. Germany is Italy’s largest trading partner; their industries are stitched together across automotive, machinery, chemicals and advanced manufacturing. 

What is new is not the scale of exchange, but the ambition behind it. Rome and Berlin are no longer content to coexist within the single market. They are probing whether a bilateral axis can shape decisions in Brussels on security, industrial policy and Europe’s place in the world.

The defense agreement is the clearest expression of that ambition. Framed around closer strategic coordination, NATO cooperation and support for a stronger European defense pillar, it reflects a shared diagnosis that Europe can no longer outsource its own security. The language of “joint responses” and “autonomous capacity” is carefully calibrated. Neither government is challenging the Atlantic alliance. Both are signaling that the EU must become a more credible strategic actor within it.

Whether that signal translates into reality is another question. Joint procurement, shared industrial programs and large-scale defense investment have long foundered on national interests and bureaucratic inertia. Without concrete follow-through, the agreement risks becoming another declaration of intent in a crowded European archive.

Competitiveness, with caveats

The same tension runs through the economic dimension of the renewed partnership. At a business forum held alongside the summit, officials from both countries emphasized competitiveness, energy costs and the need for a more assertive European industrial policy. Rome and Berlin share a growing frustration with what they see as a regulatory culture in Brussels that constrains manufacturing just as global competition from the U.S. and China intensifies.

Here, the Italian-German convergence points toward a broader political challenge. Both governments are pushing for a Europe that does more than regulate markets, one that actively supports production, innovation and strategic value chains. Yet the asymmetry between them remains unavoidable. 

Germany’s economic weight gives it far greater agenda-setting power, raising the risk that “coordination” becomes shorthand for Berlin’s preferences, with Italy playing catch-up rather than co-author.

The promise and problem of alignment 

There is also a more symbolic and cultural dimension, often invoked in public debate. Italy and Germany are frequently portrayed as countries united by a long history of intellectual and political interaction, a bond that should today translate into a shared responsibility for the European project. This narrative, while evocative, tends to gloss over the real divergences that continue to surface on crucial issues such as economic governance, fiscal flexibility and the role of the state in the economy.

Taken together, the renewed Italian-German activism is best understood as an attempt to reshape the internal balance of the European Union during a period of transition. Faced with geopolitical fragmentation and economic pressure, Rome and Berlin are testing whether closer alignment can compensate for a more divided Europe.

The risk is that this axis remains inward-looking, a tactical convergence of national interests rather than a driver of deeper integration.

If Italy and Germany are to succeed, they could help push Europe toward greater strategic coherence. If they fail, their rapprochement will look less like a new foundation for the Union and more like a temporary response to a moment of crisis. At a time when Europe’s margins for error are narrowing, the distinction matters.