Rome In Rome, Kevin McCarthy didn’t just want to talk about the “excellent bilateral relations” between the USA and Italy. On his first trip as the newly elected speaker of the US House of Representatives, the Republican also had an urgent wish for the government in Rome, which puts Prime Minister Giorgia Meloni under pressure: Italy is the only G7 country to have joined China’s Silk Road Initiative – and should leave the agreement as soon as possible, according to the will of the Americans.
The Belt and Road Initiative (BRI) is a gigantic infrastructure project that China launched in 2013. So far, more than 150 countries have signaled their cooperation, and there are 14 agreements within the EU alone. China is all about investing in energy, technology and infrastructure. In Italy, the country is particularly interested in ports and large construction contracts.
The USA was skeptical about the initiative from the start, calling it “debt trap diplomacy” because China is buying into the infrastructure of many countries by investing in it. But there was also a great deal of misunderstanding in Germany and France when the populist alliance of left-wing and right-wing parties that ruled Italy at the time signed a declaration of intent in 2019.
Meloni has so far followed a clear foreign policy line in her right-wing coalition: pro-European and transatlantic, committed to NATO and Ukraine. Your right-wing populist party, Fratelli d’Italia, coordinates closely with the United States.
Even before the elections in September, the prime minister declared Italy’s entry into the BRI a “big mistake” – and of all things in an interview with a Taiwanese news agency. Already at the weekend, when the G7 countries meet in Japan, Meloni could announce a final decision. According to media reports, she is said to have signaled to McCarthy that her government favors an exit.
Doubts in the Italian Ministry of Foreign Affairs
But there is a rift in the coalition, and there are doubts in the Foreign Ministry of all places. “Apparently Italian diplomats surrounding Meloni fear that China could take revenge for an exit,” says Francesco Galietti of the political consultancy Policy Sonar. From the ministry, headed by Forza Italia Vice Antonio Tajani, it can be heard that China remains an important interlocutor and that dialogue must be maintained. The right-wing Lega, whose party leader Matteo Salvini is said to have a friendship with Russia, is keeping a low profile on the subject of the Silk Road.
So far, the head of the Lega has left it unclear what he thinks of China’s Silk Road project.
(Photo: AP)
Economist Lorenzo Codogno sees the government “torn” between the temptation to unilaterally cut the Silk Road for geopolitical reasons and the desire to pragmatically continue an important economic relationship. But time is of the essence: at the end of the year, the agreement is automatically extended by four years. And in addition to the USA, the other G7 partners are also expecting a clear signal.
Italy is in a dilemma: China is one of the country’s most important trading partners, almost nine percent of imports come from there. Italian exports to China accounted for at least 2.6 percent.
On the other hand, there is fear of hostile takeovers in Rome. All Silk Road projects were frozen under Meloni’s predecessor, Mario Draghi. Instead, Italy used the “Golden Power” rule to block the purchase of a microchip maker and takeover of truck maker Iveco. “We cannot be an ally of the United States and at the same time remain in the Silk Road Initiative,” said Stefano Stefanini, former Italian ambassador to NATO.
Meloni’s balancing act between economics and geopolitics
There are already close ties: The Chinese electricity supplier State Grid Corporation owns 35 percent of the Italian grid operator CDP Reti, which holds shares in the pipeline group Snam, the gas supplier Italgas and the electricity grid operator Terna. Since 2016, the Chinese shipping company Cosco has held a 40 percent stake in a small port in Liguria.
We cannot be an ally of the US and at the same time remain in the Silk Road Initiative. Stefano Stefanini, former Italian ambassador to NATO
It’s all a balancing act for Meloni. Shortly after taking office, she traveled to the G20 summit in Bali and told China’s President Xi Jinping that she had an interest in “promoting mutual economic interests”. At the time, she did not explicitly mention the Silk Road. Meloni has still not accepted Xi’s invitation to the inaugural visit. Probably also because she doesn’t want to come to Beijing empty-handed.
One solution could be to confirm the agreement but to exclude strategically sensitive areas such as energy, telecommunications and important technologies. Italy would remain open to doing business with China, which large parts of the economy are demanding. “It would be an attempt to strike the right balance between business interests and national security,” says Codogno.
He considers a complete break in relations to be problematic. And not only for Italy itself, but also because of the increasing division of world trade into two blocs.
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