by Marcello Rossi

March 27, 2019
from WorldPoliticsReview Website

On March 23, Italy officially joined China's Belt and Road Initiative, or BRI, an expansive development strategy first unveiled in 2013 that aims to build a network of roads, railways and ports connecting China with more than 60 countries across Africa, the Middle East and Europe.

In addition to the memorandum of understanding on the infrastructure-building initiative, signed during Chinese President Xi Jinping's visit to Rome last week, the two countries,

agreed on a constellation of deals worth 2.5 billion Euros ($2.8 billion), ranging from banking and energy to sports.

The visit's outcome reflects deepening relations between the Eurozone's third-largest economy and the Asian powerhouse.

Italy is the first member of the Group of Seven, or G-7, to back the BRI, in what some have seen as a defiant act toward an already embattled European Union and a diplomatic coup for Xi.

The decision to sign up to the initiative bears the stamp of the Five Star Movement, the euro-critic, anti-establishment party that, along with the far-right League, governs the country in a populist coalition.

Matteo Salvini, the head of the League and deputy prime minister, took a more circumspect view of the deal, but expressed support as long as it did not undermine Italy's national interests.

Rome's backing of China's centerpiece foreign policy initiative comes at a sensitive moment for the trans-Atlantic partnership, with the U.S. struggling to counter China's growing political and economic clout worldwide and the EU failing to take a unified stance toward Beijing.

In the days before Xi's visit to Rome, Garrett Marquis, a spokesman for the Trump administration's National Security Council, criticized the agreement in interviews and also on Twitter.

The National Security Council's official Twitter account also warned Italy about siding with America's trade rival.

"Endorsing BRI lends legitimacy to China's predatory approach to investment and will bring no benefits to the Italian people," it said in a Twitter post.

 

The White House, already at odds with Beijing due to bilateral trade tensions, fears that providing China a gateway into Italy - which is crammed with NATO bases and is pivotal for maintaining fragile geopolitical balances in the Mediterranean region - is a risky move that could dangerously increase Chinese clout.

The Trump administration also worries it will help Chinese firms gain access to key sectors of EU members' economies, particularly telecommunications.

So far, Washington has failed to convince Italy and most of its European partners to ban China's Huawei from being involved in their next-generation 5G networks, escalating espionage concerns.

Italy's endorsement of the BRI has also provoked apprehension in Brussels, whose relationship with Rome is marred by tensions over immigration and fiscal policy.

A week before Xi's visit, the European Commission released a paper (EU-China - A Strategic Outlook) describing China as an,

"economic competitor" and "a systemic rival promoting alternative models of governance," calling for a united front against Beijing's global aspirations.

To date, about a dozen EU countries

have signed formal agreements

on the Belt and Road Initiative.

But none rival Italy's economic weight

or political significance within the EU.
 

There was,

"a growing appreciation in Europe that the balance of challenges and opportunities presented by China has shifted," the paper said, adding that "China can no longer be regarded as a developing country... China's publicly stated reform ambitions should translate into policies or actions commensurate with its role and responsibility."

To date, about a dozen EU countries, including,

• Greece

• Hungary

• Poland

• Bulgaria

• Croatia

• the Czech Republic

• Slovenia

• Portugal

• Slovakia,

...have already signed formal agreements with Beijing on the BRI.

But none rival Italy's economic weight or political significance within the EU.

In the wake of the deal, both sides focused on the economic nature of the agreement.

"The co-operation between the two countries will bring mutual benefit," Xi told the press Saturday.

Italian Prime Minister Giuseppe Conte, who is expected to attend the second Belt and Road summit in Beijing next month, echoed Xi's statement, claiming that the framework is,

"beneficial for both countries' economic development and trade," and that both nations will act "on an equal and transparent basis."

Conte also said that the deal is non-binding and doesn't involve telecom technology.

Michele Geraci, Italy's undersecretary for economic development and one of the accord's main architects, dismissed concerns over the agreement, stressing the two-way nature of the Belt and Road deal.

In a CNBC interview, he said the partnership is a way to boost trade and the economies of the countries involved and an opportunity for Italian businesses to expand into China.

Currently, he claimed, Italy's trade with China is lagging 20 years behind that of its European counterparts.

Critics are wary of China's lending practices, which have been dogged by controversy in some of the countries already involved in the BRI, and are often referred to as debt-trap diplomacy.

"Belt and Road provides something that countries desperately want - financing for infrastructure," said John Hurley, a visiting fellow at the Center for Global Development who recently co-authored a study (Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective) examining the initiative's debt risks.

 

"But when it comes to this type of lending, there can be too much of a good thing."

Some critics cited the case of the Piraeus port in Greece, which China essentially acquired.

Zeno D'Agostino, the head of the Trieste port authority - one of the Italian ports involved in the deal unveiled last weekend, along with those of Palermo, Genoa and Ravenna - rejected that comparison, saying during a radio show that China will only be granted infrastructure concessions and that Italian law makes such a takeover impossible.

For some, such as the Nobel Prize-winning economist Joseph Stiglitz, Italy's signing on to the BRI was an unavoidable outcome of the EU's long-term austerity policy.

"What does a stagnating and economically depressed country have to do?" he asked in an interview with HuffPost.

For others, it's too early to claim that the Italy-China deal will bring significant changes in the countries' respective foreign policies, or to say that China represents a real challenge for the liberal order that continues to govern Europe, even if it has lost ground globally.

The deal is nevertheless a significant marker, particularly in the run-up to a crucial round of European Parliament elections in May that may translate into a huge success for anti-Brussels parties.

By signing the agreement, Italy's populist coalition government is breaking ranks with the Euro-Atlantic alliance, challenging the Trump administration and emphasizing the unresolved debate within Europe on how to deal with China's mounting global ambitions.

Whether it is a harbinger of growing Chinese influence in Europe or a banal bilateral commercial accord will depend on the EU's ability to bridge its internal differences and adopt a common stance on the challenge that China represents.