Italy Joins the Belt & Road Initiative

Italy has just joined China’s massive infrastructure and development project titled the “Belt and Road Initiative.” In doing so, it has become the first European Union member, as well as the first G7 economy, to join China’s 21st-century “Marshall Plan.” Much has been written about the Belt and Road Initiative (for a useful summary, check out this BT article from earlier this year). However, Italy’s membership brings a new economic and geopolitical dimension to the project, which is worth discussing.

During Chinese President Xi Jinping’s visit to Rome earlier this week, Italy joined China’s Belt and Road Initiative and signed investment deals totalling more than 2.8 billion US dollars. These deals were in a variety of sectors, ranging from energy to finance and agricultural produce. Italian companies will increase their involvement in the Chinese economy, while Chinese companies will invest in the Italian port cities of Genoa and Trieste. The most important document signed is a “a memorandum of understanding” for cooperation on the belt and road plan.

It is clear why the Italian government wants to participate in this program. Italy faces high unemployment and a stagnating economy; in 2018, it experienced the EU’s slowest GDP growth at 0.9%, and in the last quarter of 2018 it slipped into a recession. Italy’s new populist government is keen on establishing its legitimacy, and one way of doing that is increasing economic growth by attracting foreign investment and facilitating trade. China’s Belt and Road Initiative is an easy way of achieving just that. Elections for the European Parliament are also fast-approaching, and above all this decision can be interpreted as a purely political one.

For China, not only does Italy’s involvement provide economic benefits and a key strategic partner in a geographically-important location, but it also lends legitimacy to the initiative. It demonstrates that China is an important economic partner for the other major economies of the world, and that it is able to exert political influence around the world. In conjunction with the signing of the economic deals, the Italian government also agreed to return 796 historical artifacts “taken illegally” from China during the 19th and early 20th century. China estimates that there are nearly 10 million such items around the world, and has made it a matter of national priority and pride to seek to return them to China. China’s economic influence, in this case, has turned political in what is the country’s largest repatriation of stolen artifacts in nearly 20 years.

Italy’s actions have received condemnation from its EU and NATO allies. German foreign minister Gunther Oettinger criticized Italy’s decision, saying that “Countries that believe they can do clever business with the Chinese will wonder when they suddenly wake up in dependency.” The National Security Council of the US tweeted that “Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people.” Earlier in March, the EU issued a 10-point action plan on dealing with the rise of China, calling it “a systemic rival promoting alternative models of governance.”

Chinese president Xi is currently in France on an official state visit; France’s president Emmanuel Macron has urged for caution when dealing with China and a unified European response to Chinese investment. Earlier, Xi Jinping was in Monaco, which has pledged to be the world’s first country entirely covered by Huawei’s 5G network. The United States has previously urged countries to refrain from granting Huawei permission to operate within their boundaries, claiming that this would allow China to track communications and spy on people’s internet activity if it so wishes.

It is clear that China’s increased economic capabilities go hand-in-hand with increased political challenges—not only for China, but also for states around the world. Italy’s entrance into the Belt and Road Initiative and the response of its allies demonstrates China’s ability to entice others through economic means and thus gain political leverage on the world stage. Will Western states confront China in a unified manner, or will they each pursue their own economic interests with a disregard for the political consequences of their decisions? Only time—and the amount of money China throws at the world—will tell.