Sun, Mar 24, 2019 - Page 7 News List

Italy’s Belt and Road Initiative blunder

By Lucrezia Poggetti

Barring any sudden reversals, Italy plans to formally endorse China’s Belt and Road Initiative during Chinese President Xi Jinping’s (習近平) visit to Rome this week. Although US President Donald Trump’s administration signaled its disapproval of Italy’s engagement with China’s massive transnational infrastructure investment scheme, Italian Prime Minister Giuseppe Conte on Friday last week confirmed that the government would proceed with signing a memorandum of understanding (MOU).

The MOU would come at a high political cost for Italy, while offering only limited economic benefit, but it has been in the pipeline for some time. Italian Undersecretary of State for Economic Development Michele Geraci, the head of the Italian Ministry of Economic Development’s China Task Force, has made formal endorsement of the initiative his pet project and Italian Deputy Prime Minister Luigi Di Maio has publicly committed to signing the document.

Securing Italy’s official endorsement of the initiative is Xi’s main reason for visiting. Italy is a member of the G7, a founding member of the EU and the eurozone’s third-largest economy, which means that its participation would give Xi a significant political boost at home.

Since coming to power in June last year, Italy’s governing coalition, comprising the populist Five Star Movement and the right-wing League Party, has pursued a China-friendly policy at the expense of wider EU and transatlantic interests.

However, the pushback from the US has at least forced Italian officials — not least Minister of the Interior and League Party leader Matteo Salvini — to recognize that endorsing the initiative would have far-reaching geopolitical implications. As the US National Security Council warned on Twitter, an MOU could legitimize China’s “predatory approach to investment,” while yielding “no benefits to the Italian people.”

That highly public intervention seems to have driven a wedge between the coalition partners. Whereas the Five Star Movement still supports the MOU as negotiated, the League Party is demanding concrete guarantees that Italian companies would be included in infrastructure projects for the initiative.

The MOU presently lacks such assurances, as a leaked draft shows.

Worse, Geraci and Di Maio have failed to make a convincing case for why Italy should embrace the initiative at all. They contend that doing so would help Italy reduce its bilateral trade deficit with China, which was about US$12.1 billion last year. France and Germany have far more balanced trade with China, and neither has officially endorsed the initiative.

Moreover, the EU member states that have already signed onto the initiative — Poland and other eastern European countries — have since complained that the promised economic opportunities never materialized.

In downplaying the geopolitical risks, Italian proponents of the MOU are ignoring China’s history of retaliating against trade partners that do not support its geopolitical interests. The initiative itself has been widely criticized for compelling strategically placed countries’ political obeisance by luring them into debt traps. By signing the MOU, the Italian government would effectively be endorsing that practice.

Given China’s eagerness for a high-level endorsement of the initiative, Italy could have demanded far more in the MOU negotiations, but it is probably too late to go back to the drawing board.

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