Italy Joins the Belt and Road Initiative: Context, Interests, and Drivers

Introduction

In March 2019, Italy and the People’s Republic of China (PRC) signed a broad and comprehensive, albeit not legally binding, Memorandum of Understanding (MoU) for Italy to join the Chinese-led Belt and Road Initiative (BRI). This has triggered a significant debate—in Brussels as well as in Washington—about whether this decision signalled an Italian shift away from its historical pro-European and pro-Atlantic position, to a more nuanced position open to deepening strategic ties with China. The MoU is not definite proof of such a shift, and the Italian government has denied any strategic change. However, Italy is the first major European country, and the first Group of Seven (G7) member, to formalize its participation with the BRI project. As such, this development is particularly remarkable.

The motivations explaining the Italian approach are economic and geopolitical; they are also linked to the specific ideological preferences of some of the current members of the government. However, this decision also came about at a time in which the European Union (EU) started shifting its rhetoric on China: the EU now describes the PRC not only as an economic partner, but also increasingly as a strategic competitor. As such, the Italian approach on China will represent a critical strategic trend to observe in the coming months, as many believe that this economic cooperation will inevitably turn into a greater geopolitical understanding between the two countries—thus reinforcing Beijing’s influence in Europe and the Mediterranean region.

The MoU: Contents and Significance

The MoU was officially signed on March 23, 2019, during an official visit by PRC President Xi Jinping. Noting that Italian-Chinese relations are excellent, Xi said that “prospects for cooperation between Italy and China have a brilliant future” due to the fact that Italy was eager to deepen these relations further (ADNkronos, March 22, 2019). Italians have focused mostly on the economic impact of such agreements: for Rome, the ten trade agreements on the table are worth about $22.45 billion, and they are expected to provide a significant stimulus to the Italian economy as a whole (Sole 24 Ore, March 23). Under the previous center-left government headed by Paolo Gentiloni of the Democratic Party, Italy had already started a process of considering engagement with the BRI; Gentiloni himself attended the BRI Forum in 2017. However, recent months have seen an acceleration of diplomatic movements following the visit of PRC Foreign Minister Wang Yi to Italy in January 2019 (Il Foglio, January 26).

The MoU does not represent an international agreement, has no binding effect between the parties, and remains mostly generic in its contents and wording (Italian Government, March 2019, Corriere Della Sera {English Translation}, March 12, 2019). The collaboration will focus primarily, but not exclusively, in the sectors of transport, logistics and infrastructure. Infrastructure connectivity has a central role in the MoU, and must be understood within the broader framework of the “Connectivity Platform” between the EU and China, which is intended to facilitate infrastructure and transportation projects (EU-China Connectivity Platform Short-Term Action Plan, July 13, 2018).

The MoU stressed that there would be “open, transparent and non-discriminatory procurement procedures”—historically a significant problem for countries trading with China. Rumours concerning additional MoUs have indicated that Italy’s 5G telecommunications network would be part of the cooperation agreements, but later the Ministry of Economic Development—the institutional actor that more than any other pushed to sign the MoU with China—and President Sergio Mattarella both denied that this would be the case (Ansa, March 13, MISE, March 11).

Italy is not the first European country that China has reached out to under the framework of the BRI. The PRC’s initial focus was primarily on Eastern and Central European countries, and several countries still waiting to become members of the EU. At the end of 2018, China first raised the bar by signing BRI agreements with Greece and Portugal. However, Italy’s entry into this project changed the terms of the debate. Despite all of its problems, Italy remains a European heavyweight: Rome is a founding state of the EU, a member of the G7, a long-standing NATO member, and remains among the top five European countries in terms of economic size, population, and political clout. As such, Italy entering into a BRI agreement, even a non-binding one, has raised concerns among officials in Brussels and Washington (Politico EU, March 13).

Italy as a “Trojan Horse” for Chinese Influence?

Italian Prime Minister Giuseppe Conte has denied that Italy that will become a “Trojan Horse” for the PRC in Europe. He made clear that the MoU is in accordance with EU rules and policies, and in full agreement with the 2030 Agenda, the 2020 EU-China Cooperation Agenda, and the EU Strategy for Eurasian Connectivity (Corriere Della Sera, March 13). The language of the MoU is vague on most matters, and leaves room for interpretation regarding the extent of cooperative projects. In addition, several observers have pointed to the fact that, while deepening economic relations with China is clearly an important goal, this could have been done outside of the BRI framework (ISPI, March 20).

There are a number of further, historical elements of concern that resurface from time to time in Brussels and Washington concerning Italy and its international stance. While Rome has been a firm supporter of the European communitarian project and Transatlantic cooperation, at the same time, for historical, cultural and geopolitical reasons, it has always retained some freedom of action in dealing with strategic competitors or enemies of the EU and NATO. This was the case regarding the Soviet Union, for instance, with Italy being one of the NATO members more active in nurturing relations with Moscow. These concerns still inform the views of many of Italy’s allies, as they are concerned that this inconsistency may resurface again.

The Drivers of the Italian Approach

Economic considerations, geopolitical needs, and specific political conditions were at the core of Italian motivations in signing this MoU. The economic rationale is particularly significant, as Italy considers the BRI a vital opportunity to boost Italian exports to China. Italy has suffered from serious financial problems in recent years, and the recent deterioration of the global economic outlook is set to have an immediate impact on Rome, threatening to trigger a new economic recession (Sole 24 Ore, January 21). As such, Italian policymakers, whatever their political stripe, are always very focused on finding opportunities for Italian companies abroad as long as the Italian domestic market remains stagnant. The Chinese consumer market is perceived as a terrific opportunity, particularly in light of the rising Chinese interest in Italian products.

In addition, Italy is eyeing Chinese investments in the infrastructure sector. The PRC is particularly interested in the port of Genoa—and above all in the port of Trieste, the historical Mediterranean gateway to trade and business with Danuban Europe. In an interview with the Italian daily La Repubblica, Wang Huiyao, the founder of the Center for China and Globalization (a Chinese think tank close to the government), said that “the Italian economy is going nowhere and joining the Belt and Road earlier than others is a great opportunity… Italy has many economic problems, Europe is in crisis and the BRI is the only major global investment plan” (La Repubblica, March 22).

Another critical reason motivating the Italian approach is the shifting geopolitical reality of the Mediterranean. The past ten years have shown clearly that the United States, while remaining a significant Mediterranean player, is less and less interested in this region: the hands-off American approach towards the conflicts in Syria and Libya is an example of this shifting reality. As such, while this dynamic does not imply that Washington is disappearing from the Mediterranean geostrategic equation, a number of external powers are now trying to deepen their presence in this space. China is one of the foremost of these powers, and it is increasingly active in the Maghreb, in the Mashreq (primarily in Egypt), and in a number of European Mediterranean countries (for example, Greece, Serbia, and Croatia) (Balkan Insights, September 28, 2018, Egypt Today, December 28). As such, while Italy joining the BRI does not mean that Rome is ready to abandon its historical pro-Atlantic stance, the fear of American disengagement from the Mediterranean is raising concerns in Rome about future Italian security. Inevitably, this will lead Italy to interact with all those global powers who are becoming more involved in the Mediterranean region.

Lastly, the Italian position towards China has been influenced by the peculiar political and ideological features of the current Italian government. The current governing “yellow-green coalition” is formed by the 5 Stars Movement (5S) and the League (previously the Northern League)—two parties that are both relatively new to power (although the League has shared government responsibilities in earlier cabinets led by Berlusconi). The less clearly defined historical legacies, institutions, and political cultures of these parties have left greater room for specific political personalities to drive the government’s agenda, and shape its stance on global affairs.

In this context, the two deputy prime ministers of Italy—the leader of the League, Matteo Salvini, and the leader of the 5S, Luigi Di Maio—have had a clear and visible influence in shaping the international political agenda of the government. Salvini has prioritized his relations with the so-called “Sovranist” bloc and Russia, and he has expressed several criticisms of ties with the PRC, fearing that Beijing would “colonize” the Italian economic system (Huffington Post Italy, March 11, 2019). However, these concerns did not stop the Italian government from moving ahead with the BRI MoU. The main political supporter of this decision was the other governmental coalition partner, the 5S, some of whose members share vital links with China. The 5S Movement remains a diversified and heterogeneous movement, and the lack of a well-defined political ideology leaves room to individuals to shape the movement and the government’s priorities on several dossiers.

Luigi Di Maio, the Minister for Economic Development and leader of the 5S, was the major institutional actor in crafting this agreement—together with one of his undersecretaries, Michele Geracci, whose role in promoting the deepening of Italo-Chinese relations can be hardly underestimated. Geracci is considered close to the League, a party he joined in 2018 as an “expert in foreign markets,” but he was also very close to Beppe Grillo, the founding father of the 5S movement. Geracci lived for years in China, has an unusually broad network of contacts in the country, and his role in government has been characterized since the very beginning by an intense focus on deepening ties with China (Il Foglio, March 7).

Conclusions

While the BRI MoU that Italy signed with China does not mean that Rome is changing its historical foreign policy approach and its major alliances, it has raised concerns in Brussels and Washington. This was inevitable since Italy was the first European heavyweight that formalised its participation in the BRI project. While the MoU is non-binding and somewhat generic, this latter element might be used in the future to further deepen relations in several strategic sectors. Economic and geopolitical considerations drive Italy’s approach to the BRI. However, this evolution was also favoured by the presence of elements in the current government particularly sympathetic with Chinese interests. Although the latter might change in the future if the government changes (or if less pro-China elements within the 5S movement emerge), economic and geopolitical considerations are set to remain significant in the coming years. Given the geopolitical significance of the BRI, the evolution of Italian relations with China will be particularly significant—not only from an economic standpoint, but also for the future of the European and Mediterranean geopolitical equations.

Dario Cristiani is a political risk consultant working on Mediterranean countries and a Visiting Fellow at the International Centre for Policing and Security at the University of South Wales (UK). Previously, he was the director of the Executive Training in “Global Risk Analysis and Crisis Management” and an adjunct professor in International Affairs & Conflict Studies at Vesalius College (VUB) in Brussels. He received his PhD in Middle East & Mediterranean Studies from King’s College, University of London, in 2015.