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Italy’s Pivot: Unravelling China’s Belt and Road?

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Italy’s Pivot: Unravelling China’s Belt and Road?

If Italy formally withdraws from the Belt and Road, it would be another blow to the prestige of Xi Jinping’s signature foreign policy initiative.

Italy’s Pivot: Unravelling China’s Belt and Road?
Credit: Depositphotos

In 2019, Italy became the first European Union member – and the only G-7 state – to join China’s Belt and Road Initiative (BRI). Four years later, now under a new government, Italy is seeking not to renew the agreement, which expires in December this year.

Italian Defense Minister Guido Crosetto said Italy’s decision to join the BRI was an “improvised and atrocious act.” His remark came just after Italian Prime Minister Georgia Meloni concluded her visit to the United States late last month. Earlier in May, Meloni had also called Rome’s inclusion in the BRI a “big mistake.”

Italy joined the BRI under Meloni’s predecessor, Giuseppe Conte in 2019, when it was facing economic turmoil. A feeling of being “left out” from the Western countries in the policy sphere also motivated Italy’s decision to join the Chinese-led connectivity initiative. Meloni also highlighted this aspect to U.S. President Joe Biden during her maiden visit to the White House. Most notably, Italy’s linking up with the BRI was also motivated by the intent to boost Italian exports.

Although the Italian defense minister claimed there had only been a “little boost” in its exports, a spokesperson of the Chinese Foreign Ministry, citing the data from the Italian government, said that the BRI helped bring about a 58 percent increase in Italy’s exports in the first five months of 2023. The Chinese ambassador to Italy also noted a 42 percent increase in Italy’s exports to China from 2019 to 2021.

Today, however, at a time of growing geopolitical complexity in the international political environment, Rome is envisioning a new path forward. Italy’s withdrawal from the Chinese Belt and Road Initiative carries multifaceted objectives, while the repercussions of this decision are destined to shape the contours of China’s visionary ambitions.

Meloni’s resolve to leave the BRI can be better explained by geopolitical interests than by the economic pitfalls. Her victory in the Italian elections last year was a serious concern for Europe and the United States due to her party’s extreme right tendencies and neo-fascist roots. Even Biden himself called her victory “a warning for democrats.” Despite that, Meloni won an invitation from Biden to visit the United States, highlighting the broader share of Italy in the foreign policy realm. It may seem strange for Biden and the Democrats in the United States to welcome a far-right politician, but Meloni’s vociferous support for increasing military aid to Ukraine has prompted her acceptance on the international stage. By the same token, positioning Italy as a bulwark against Chinese BRI can win U.S. goodwill for her government.

Italy is not only trying to draw stalwart support to NATO and Ukraine but also harmonizing itself with U.S. interests in Taiwan. In the joint statement issued after the Biden-Meloni meeting, they “reiterate[d] the vital importance of maintaining peace and stability across the Taiwan Strait, which is instrumental to regional and global security and prosperity.” The joint statement continued to say that both sides had committed to “strengthen bilateral and multilateral consultations on the opportunities and challenges posed by the People’s Republic of China.” Italy is also promoting its ties with Taiwan. It has opened a second Taiwanese Representative Office in the country and two of its senators visited Taipei, though unofficially.

Russia’s invasion of Ukraine has reshaped the geopolitical realities of the world. The West, particularly Europe, started thinking about its vulnerability due to the changing world order. China’s ambitions to bring into being a new world order, in concert with its junior partner Russia, is particularly alarming for European policymakers as Russian troops continue to occupy Ukrainian soil.

Amid these changing realities in international politics, Italy is pushing to be included in crucial policymaking decisions. During the Wagner crisis in Russia, for example, Biden discussed the situation with his counterparts in France, Germany, and Britain, while Italy did not merit a separate call. Italy is demanding political unity and a proper share in policymaking in Europe. Pointedly highlighting areas of common ground with the United States on issues like Taiwan and the BRI is Rome’s way of bolstering its importance for Washington.

Italy’s policy shift is also guided by highly influential gas politics in Europe. For years, Russia has been supplying gas to its European neighbors. It remained one of the largest gas suppliers to the EU, accounting for 45 percent of its gas imports. After the Ukrainian war started in February 2022, the EU faced a crisis in its gas supplies due to strict conditions made by the Kremlin such as the “gas for rubles decree” and the suspension of gas from the Nord Stream 1 Pipeline.

Europe is now seeking to wean itself off Russian gas. This has switched the EU’s dependence from Russia to Azerbaijan and Norway. Gas imports from Azerbaijan and Norway increased to 11.4 and 90 bcm in 2022, respectively. Therefore, Italy’s policy shift toward the European Union is intended to reduce its trade dependence on Eastern countries, particularly Russia but also China.

That said, even while disengaging itself from the BRI, Meloni’s administration does not want to antagonize China. Crosetto in his interview also noted the vitality of economic relations and partnership with Beijing. “The issue today is: how to walk back [from the BRI] without damaging relations. Because China is indeed a competitor, but it is also a partner,” the defense minister noted.

It’s not prudent for Italy to “decouple” from the world’s second-largest economy, especially when the European Union does not intend to. The EU’s balanced approach of launching a “de-risking” strategy rather than “decoupling” will ensure supply chains for chemicals, electric vehicle batteries, and semiconductors.

Italy’s withdrawal from the BRI is primarily motivated by specific concerns, but it will reverberate globally. Adding a member of the G-7 to the BRI group was a major narrative boost for the Chinese effort to revitalize the concept of the ancient silk route. Coming in a year when China is marking the 10th anniversary of the Belt and Road Initiative, including by hosting a major summit of BRI member states this fall, Italy’s pending withdrawal could put a damper on the celebratory mood.

Italy’s participation in Beijing’s BRI always went deeper than trade and investment ties, to the level of what China calls “cross-civilization” ties. Italian universities were teaching China studies and hundreds of collaboration agreements and frameworks were signed between them. Therefore, an abrupt exit by Italy will disturb China’s grand strategy and damage Chinese soft power strategies to promote Chinese civilization and its preferred norms.

Italy’s proposed exit from BRI is being driven by geopolitics rather than economics Despite ideological differences, Meloni seeks to align  her country with Western countries. Prompted by the changing geopolitical realities, particularly after the Russian invasion of Ukraine, Rome is reshaping its foreign policy objectives. Meanwhile, it is cautious not to damage political and economic ties with Beijing due to its enormous economic importance.

Overall, Italy’s proposed withdrawal from the BRI reflects its efforts to navigate the complex dynamics of the international political environment and assert its interests while maintaining important partnerships with both Western and Eastern nations. The decision will undoubtedly have implications for China’s ambitions as a world leader and influence the evolving global geopolitical landscape.