On March 23rd this year, Italy became the first G7 country to sign up to China’s global investment program ‘Belt and Road Initiative’. In other words Italy became the first developed economy to be a part of this initiative. Deal worth 2.8 billion dollar were signed between China and Italy involving twenty nine MoUs. Deals were inked in the fields of energy, finance, and agricultural produce among others. So before one analyses the deal threadbare , lets first look at what is there in the deal for both the countries.
Gains for Italy
Italy is one of ten largest economies of the world but has been facing recession since towards the end of 2018. Its crumbling infrastructure has become a major political issue for the first time in decades specially after the collapse of Genoa bridge that killed dozens. The national debt of Italy is among the highest in Eurozone. Probably in this situation it had no option but to accept Chinese money on the offer. Italy’s Deputy prime Minister Di Maio after signing the deal said “Italy has arrived first on the Silk Road and therefore other European countries at this moment have taken a stance on our trade decisions.
He said “They have taken a critical view and they have the right to this opinion. We do not want to override our European partners. We firmly remain in the Euro-Atlantic alliance and we remain allies of the United States in Nato,”
There is, however, dissent within the Italian government. Mr Di Maio’s coalition partner, the other Deputy Prime Minister, Matteo Salvini, who heads the right-wing League, was conspicuously absent from all official ceremonies. Mr Salvini has warned that he does not want to see foreign businesses “colonising” Italy.
Her later said “before allowing someone to invest in the ports of Trieste or Genoa, I would think about it not once but a hundred times.”
What’s in it for China?
Italy’s move is “largely symbolic”, according to Peter Frankopan, professor of Global History at Oxford University and a writer on The Silk Roads ‘but even Rome admitting the BRI is worth exploring “has a value for Beijing”, he said. “It adds gloss to the existing scheme and also shows that China has an important global role. The seemingly innocuous move comes at a sensitive time for Europe and the European Union, where there is suddenly a great deal of trepidation not only about China, but about working out how Europe or the EU should adapt and react to a changing world,” .
The simple question is that stakes are too high. If investment does not come from China to build ports, refineries, railway lines and so on, then where will it come from? China has the money to invest and is willing to invest, Italy has no problem to rebuild its infrastructure.The “made in Italy” label carries a reputation for quality worldwide, and is legally protected for products items processed “mainly” in Italy.
China and Italy have signed MoUs but the agreements signed in Rome come amid questions over whether Chinese firm Huawei should be permitted to build essential communications networks – after the United States expressed concern they could help Beijing spy on the West. That was not part of the negotiations in Italy. When President Xi toured Rome, EU leaders in Brussels considered their approach for relations with China. Donald Tusk, President of the European Council, said.’our aim is to focus on achieving a balanced relation, which ensures fair competition and equal market access. In March, US National Security Council spokesman Garrett Marquis pointed out that Italy was a major economy and did not need to “lend legitimacy to China’s vanity infrastructure project”.
It’s a trade war in which global politics is taking centre stage. World will have to deal with.