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Belt and Road controvesy: Italy signs up to Chinese cash as Europe, US worry about debt trap

MARCH 13, 201911:22am

How the U.S. Is Countering China's Global Push

Jamie Seidel

News Corp Australia Network

Roads. Railways. Ports. Power. Communications. What national government doesn’t want more money to provide such things?

Cash-strapped Italy certainly does.

Regarded as one of Europe’s ‘basket case’ economies threatening to destabilise the economic union, it’s now looking elsewhere for an easy source of funds.

And Beijing’s Belt-and-Road initiative is ready to deliver.

Italy has announced it will sign a memorandum of understanding with China to join the project seeking to link the economies of Asia, the Middle East and Europe, the Italian Undersecretary of Foreign Affairs said earlier this week.

The signing will take place during a visit of Chinese President Xi Jinping to Rome on March 20, and will make Italy the first G7 nation to join the so-called “New Silk Road” project, Manlio Di Stefano told La Stampa daily.

Xi Jinping “will meet the head of government and the President of the Republic. There will be economic meetings since he will be accompanied by a team of entrepreneurs, and a memorandum of understanding will be signed,” he said.

But the United States and Europe are unsettled.

If the agreement goes ahead, Italy would be the first G7 country to back China’s Belt and Road Initiative.

And is Beijing’s ambitious infrastructure project really a diplomatic ‘Trojan horse’ concealing an ambition to further assert its international influence?

Italian deputy Prime Minister and Interior minister Matteo Salvini is pictured during a press conference onboard the Costa Venezia cruise (Costa group), a ship specially designed for Chinese tourists. Picture: AFPSource:AFP


European media group Euractiv reports it has obtained a copy of the confidential ‘memorandum of understanding’ signed between Italy and China.

It states China is seeking to invest further in the EU, “by supporting synergies between the Belt and Road Initiative and priorities identified in the Investment Plan for Europe and Trans-European Networks”.

It designates new investment by Chinese companies in the port of Trieste, one of the major maritime hubs of the Mediterranean. With rail connections to most of Europe, it shifted 62.7 million tons of goods last year alone. Trieste is now being promoted as a ‘gateway to Europe’ for China’s new Silk Road’.

Also selected for Chinese investment is Italy’s power grid.

The port of Trieste onboard the Costa Venezia cruise ship. Picture: AFPSource:AFP

The memo states the two nations “will promote synergise and strengthen communication and co-ordination” well as engaging the EU in “technical and regulatory standards” dialogue — an oblique reference to Chinese tech firm Huawei’s controversial 5G network.

Euractiv reports an anonymous source within Italys’ foreign affairs ministry as saying the creation of the memorandum by the ministry of economic development had come as a surprise, as the foreign ministry is formally in charge of international agreements.

This turf war had already resulted in a clash between the ministries over Huawei’s contract to build a 5G network in Italy.

But all opposition to Beijing’s ‘Belt and Road’ now appears to have been brushed aside.

A signing ceremony of the memorandum is scheduled for President Xi’s visit, with the involvement of Italy’s Prime Minister Giuseppe Conte and deputy Prime Minister Luigi Di Maio.

Pope Francis greets faithful from China on St. Peter's square in the Vatican. Beijing has been cracking down on Catholics inside China. Picture: AFPSource:AFP

Europe and the United States, however, are worried.

China’s trillion-dollar “Belt and Road” initiative aims to expand commerce by building ports, railways and other infrastructure across 65 countries from the South Pacific through Asia to Europe and Africa. Projects under the initiative have faced complaints that they target economically weak host countries with too much debt, and with too little work going to local companies.

And when the projects almost inevitably collapse, Beijing steps in and takes ownership over the vital pieces of national — and sometimes international — infrastructure.

A Chinese People's Liberation Army soldier adjusts a hat of a member of a guard of honour as they prepare for a welcome ceremony for visiting Italian Prime Minister Matteo Renzi held outside the Great Hall of the People in Beijing, China. Picture: APSource:AP


US-China relations are at the lowest level since the Cold War, in part over US opposition to the ‘Belt and Road’ initiative which Washington has argued drowns its partners in debt and infringes on their sovereignty.

And Washington has made this sentiment clear to Italy: it wants it to back down from any such agreement for fear of it becoming a ‘debt trap’.

It’s a similar story with the European Union: it reasserted the need for any such agreement to abide by “market rules, EU and international requirements and standards. Neither the European Union nor any of the member states can effectively achieve their aims with China without full unity,” EU Commission spokesperson Maja Kocijancic said last week.

Italy is, after all, already struggling to pay its enormous national debt.

But Di Stefano has sought to allay its fears, stating the “memorandum is not binding”.

“It does not have the status of an international agreement”, he added. Neither, he said, does it concern the telecoms sector, access to which critics fear could allow China to create “backdoors” that could allow Beijing to spy on European countries.

Italian Prime Minister Giuseppe Conte says Beijing’s ‘Belt and Road’ represents an opportunity for his country. Picture: AFPSource:AFP

Prime Minister Giuseppe Conte has been effusive with praise for the agreement’s prospects:

“With all the necessary precautions, Italy’s accession to a new silk route represents an opportunity for our country. It won’t mean that the next day we will be forced to do anything. It will allow us to enter into this project and have a dialogue.”

Chinese foreign ministry spokesman Lu Kang criticised comments by the White House National Security Council spokesman, Garrett Marquis, about Italy’s interest in the project. Marquis told the Financial Times the US believed the initiative benefits China, not Italy.

“The US statement is very laughable,” Lu said. “As a large economy and a big country, Italy is very clear about its own interests and can independently make its own policies and judgments.”

With AFP and AP


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