MARCH 18, 2019
Attending the first Belt and Road Forum in Beijing in 2017, the previous Italian prime minister Paolo Gentiloni stopped short of signing up to join the global mega-project, as no other European Union country had shown interest. However, a lot has changed since Italy’s populist right-wing government took over last June, and Rome has formally announced that it will participate in China’s Belt and Road Initiative (BRI) after three high-level visits to Beijing
As a country that connects Europe and Africa, Italy is on its way to becoming a prime BRI destination, which will decisively put the contemporary version of the old Silk Road on the ground. In 2018, the EU announced an exclusive mega-project of its own, the “EU Corridor,” as a suitable alternative. Setting aside this option, Rome is determined to participate in the Chinese mega-project instead. Engaged in preliminary negotiations, Rome is about to clinch a deal with Beijing and sign some memoranda of understanding during President Xi Jinping’s visit to Italy at the end of March.
Confirming reports in the media, Italian Prime Minister Giuseppe Conte has said he will also attend the second BRI Summit next month. However, he stressed that EU trade standards would have to be applied and agreed upon by China as this was one of the main reasons the European Union had opted out. Highlighting the importance of Italy’s decision, Conte has described it as a “strategic choice for the country … and such choices need coordinating with traditional partners. Dialogue with the United States, for example, is constant.”
At this point in time, the US does not welcome the prospect, as it is waging a trade war with China. The latest controversy is regarding Chinese technology company Huawei and its role in bringing about a 5G (fifth-generation) telecommunications revolution in other countries. As expected, Washington warned Rome that joining the BRI could significantly damage its global reputation without helping its economy. Implying that the project is beneficial only for Beijing, US National Security Council spokesman Garrett Marquis said, “We view BRI as a ‘made by China, for China’ initiative.” But the main fear may be that Italian ports are at risk because of the confidential terms that usually define Chinese investment.
The Port of Trieste in northeastern Italy is being described as the Chinese gateway to Europe in the New Silk Road, as it is one of the biggest maritime hubs in the Mediterranean. Trieste moved 62.7 million tons of goods last year and it promises to become a central connection for Eurasia as a deal is coming through between the China Communications Construction Company (CCCC), the main builder involved in BRI projects, and the Trieste Port Authority. Another important destination for Beijing is the Sicilian city of Palermo, as it is close to the African continent. In the meantime, a new company is being created in partnership with the Chinese state-run shipping company COSCO to run the Port of Genoa.
Ports are a main priority for the BRI as it comprises roads and maritime links. The EU is concerned about whether the contract terms of any of the Italian ports will be mentioned in the MOUs being signed by Rome and Beijing in the coming weeks. In the past, details of such contracts with other BRI countries have been unclear. Having welcomed Chinese investment, Greece’s largest seaport of Piraeus is now operated by COSCO. Resisting China’s economic influence as a result, many of the EU states are mulling over screening measures to streamline and limit Chinese investment in the region.
Italy could face a fierce backlash from the West due to suspicions about China’s geopolitical ambitions. Significantly, Italy will be the first G7 member to help China establish a permanent presence in Western Europe
Most of all, Italy could face a fierce backlash from the West due to suspicions about China’s geopolitical ambitions. Significantly, Italy will be the first Group of Seven member to help China establish a permanent presence in Western Europe. Undoubtedly, this is a major win for China, which has always emphasized that the BRI is a global project but failed to get a welcoming response outside Asia. Being the world’s eighth-largest economy and a European country, Italy’s partnership in the BRI will finally elevate it to the rank of a truly global project and take it to the next level. Where Beijing is concerned, this is a perfect win-win situation as the BRI is an official part of China’s constitution and foreign policy.
Last week, it was also reported that Italy was looking into seeking funding from the China-led Asian Infrastructure Investment Bank. According to an EU diplomat, “The potential involvement of the AIIB in the BRI in Italy is a game changer. Without the AIIB’s involvement in lending to projects, it would be difficult for the BRI to fly in a key EU member state.”
Italy had to concentrate on reviving its faltering economy as it fell into recession last year for the third time in a decade. In return for becoming a “BRI country,” Rome wants a good chunk of investment and a boost in exports to improve its financial standing. Other EU countries have excellent trade links with China, with German exports to that country alone worth €93.8 billion (US$106 billion) last year. In comparison, Italy’s exports to China totaled just €13.17 billion in 2018 and it is feeling left out.
Stressing that Italy remains part of the EU and the North Atlantic Treaty Organization, an Italian Economic Development Ministry official, Michele Geraci, recently observed, “We are in no way tilting the geopolitical axis.” However, the fact remains that Italy has opted to abstain from the EU vote taken this month to scrutinize foreign investment in Europe, since it has decided to take a chance on the world’s biggest mega-project.