Four years after joining the ambitious infrastructure investment drive, BRI, Italy is grappling with the implications of the decision.
Italy’s withdrawal from China’s Belt and Road Initiative (BRI) has sparked a discourse about the economic and geopolitical implications of this partnership. The BRI is an ambitious global infrastructure investment program launched in 2013 that aims to improve commerce connectivity between Asia, Europe, and beyond. Italy’s decision to join the initiative in 2019 with a nonbinding Memorandum of Understanding (MoU) worth $2.5 billion (€2.3 billion) was a bold move signifying a major step in China’s global infrastructure ambitions, which also raised eyebrows among China’s Western allies.
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Under Prime Minister Matteo Conte, the agreement was signed, making Italy the only significant Western nation to have taken such a step. Italy saw substantial Chinese investment in the infrastructure of northern Europe, as well as the Greek port of Piraeus, and desired to participate. The Italian agreement included provisions for investment in the important ports of Trieste and Genoa. The agreement was also criticized by western allies, particularly Washington and Brussels.
As the BRI scheme envisions reconstructing the ancient Silk Road to connect China with Asia, Europe, and beyond by investing heavily in infrastructure, critics assert that it is a means for China to expand its geopolitical and economic influence.
Economic realities and trade imbalance to influence the BRI withdrawal
Italy’s economic gains from the BRI are one of the most scrutinized factors, and the agreement is scheduled to expire in early 2024. Initially, Italy’s participation in the BRI was viewed as an opportunity to increase the country’s exports and promote infrastructure development. However, the actuality has proven to be more complex.
Italian Defense Minister Guido Crosetto said, “The decision to join the [new] Silk Road was an improvised and atrocious act” that multiplied China’s exports to Italy, but did not have the same effect on Italian exports to China.
This trade deficit calls into doubt the anticipated economic growth.
Giorgia Meloni, the prime minister of Italy’s far-right coalition, expressed skepticism about the initiative even before her ascent to power. She deemed Italy’s $2.5 billion investment in the BRI as “a big mistake.”
Geopolitical alignments and implications
The BRI has geopolitical dimensions in addition to economic ones. Italy’s participation in the initiative positions the country within a complex geopolitical web. Prime Minister Giorgia Meloni’s vocal opposition to the BRI echoes broader concerns regarding China’s growing global influence. Italy’s approach depicts the delicate balance between pursuing economic interests and upholding geopolitical principles. In addition, the composition of the coalition government, which includes parties with controversial affiliations, complicates the decision-making process.
Italy’s decision to join the BRI has implications for the rest of the European Union (EU). The EU, which is already contending with how to navigate China’s growing influence, observes Italy’s position with keen interest. Contrary to the more cautious approach employed by some EU member states, Italy participated. A potential withdrawal from the BRI could reignite debates regarding the EU’s collective stance toward China and the future of EU-China relations. The EU’s response to Italy’s action could expose the bloc’s underlying divisions and alliances.
Economic considerations and future outcomes
When Italy reconsiders its participation in the BRI, economic considerations loom large. A possible withdrawal from the initiative raises concerns regarding the industries that have benefited from Chinese investments. A balanced evaluation of short-term economic effects and long-term effects is required.
“The issue today is: how to walk back [from the BRI] without damaging relations [with Beijing]. Because it is true that China is a competitor, but it is also a partner,” the defense minister added.
The decision-making process must take into account the potential consequences for Italian industries that have become dependent on Chinese funding and collaboration.
Giorgia Meloni said her government was still deliberating on the BRI and announced a trip to Beijing in the near future.
“We’ll take a decision before December,” Meloni told US broadcaster Fox News in an interview recently. She further said that the issue required discussions with the Chinese government and within the Italian parliament.
In another interview with the TG5 Italian news program, Meloni said it was a “paradox” that even if Italy is part of the BRI, it is not the G7 country with the strongest trading links to China.
“This shows that you can have good relations and trading partnerships” even outside of the BRI, she added.
How may china respond?
Analysts believe a nonrenewal or withdrawal could be humiliating for China, given that the agreement was an important political signal in 2019. Italy was the first (and only) G7 nation to sign, while the Czech Republic, Hungary, Poland, Greece, and Portugal also signed similar memoranda.
“Should Italy withdraw on bad terms, there could be repercussions, Enrico Fardella, a China expert from the University of Naples said.
“If the Italian decision will turn into a loss of face for Beijing, a retaliation may occur,” he said. “It could probably affect the export to Italy of those strategic components that are needed for the Italian industry,” he added.
“The timing and the form of this decision will be crucial,” Fardella said. “A sudden and shortsighted decision taken by Italy over the MoU could further contribute to this dangerous paranoia that is setting China and the West [on] two divergent and conflictual courses,” he further stated.
China’s response to Italy’s prospective withdrawal from the BRI has implications beyond bilateral relations. The BRI represents China’s global ambitions and strategic objectives. Italy’s decision to reconsider its participation in the initiative could have repercussions for other participating nations. The international reaction to Italy’s posture highlights the larger discussion surrounding China’s rise and its impact on the global order.
To conclude, Italy’s ongoing evaluation and consideration on BRI withdrawal encapsulates the intricate interplay between economics, geopolitics, and international partnerships. As Italy contemplates its decision, it must reconcile economic aspirations with geopolitical alignments and global affiliations. This decision carries implications not only for Italy’s trajectory but also for the broader discussions about China’s evolving global role and its impact on international dynamics.