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Hedging ‘Light’: Italy’s Intermezzo With China’s Belt and Road Initiative

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Hedging ‘Light’: Italy’s Intermezzo With China’s Belt and Road Initiative

What explains Rome’s brief engagement with the BRI?

Hedging ‘Light’: Italy’s Intermezzo With China’s Belt and Road Initiative
Credit: Depositphotos

In early December 2023, the news spread that Italy had quietly exited from China’s Belt and Road Initiative (BRI). Italy, the first and so far only G-7 member to have joined BRI, thus also became the first and only country to leave China’s giant global infrastructure development scheme. 

The BRI, launched in 2013, seeks to link China and Europe through land and maritime routes, and was later extended to Africa, Latin America, and the Arctic region. Currently over 150 countries have joined the BRI.

Yet Italy’s departure from the BRI did not come as a surprise. Already as an opposition party, Prime Minister Giorgia Meloni’s right-wing Fratelli d’Italia had vociferously criticized Italy’s accession to the BRI, a decision Meloni lambasted in her 2022 election campaign as a “big mistake.” Rumors that Italy might leave the BRI had circulated since May 2023.

The Italian government under then-Prime Minister Giuseppe Conte acceded to the BRI into March 2019 by signing a non-binding Memorandum of Understanding (MoU) during Chinese President Xi Jinping’s visit to Italy. On Italy’s side, the driver of the agreement was the left-wing populist Five Star Movement of Deputy Prime Minister Luigi Di Maio, despite a deeply skeptical coalition partner, Matteo Salvini’s right-wing populist Lega. 

Rome’s unilateral move to join the BRI drew sharp criticism from Washington, which feared that Italy could become a Chinese Trojan horse in Europe, with negative repercussions for the continent’s security. The United States regards the BRI as a geopolitical strategy to change the world order in China’s favor. U.S. officials routinely accuse China of creating debt traps through predatory infrastructure projects in order to enlarge its political influence in recipient countries. With a public debt exceeding 130 percent of its GDP, Italy was seen as particularly susceptible to such risks.

Italy’s BRI accession coincided with the recalibration of the European Union’s China policy. In its 2019 EU-China Strategic Outlook, the EU adopted a much more critical position toward China, designating Beijing no longer only as a “cooperation partner” but also as an “economic competitor” and “systemic rival.” In Brussels and other European capitals, Italy’s accession to the BRI was seen as jeopardizing a common European approach to China. Similar to the “17+1” forum linking China with Central and Eastern European countries, Brussels, Berlin, and Paris suspected Beijing of using the BRI to drive wedges into the fragile European unity.

Still reeling from the 2008 Global Financial Crisis and the Euro crisis of 2011, Italy hoped that BRI membership would boost exports to China’s rapidly expanding market, attract Chinese foreign investment, markedly increase Chinese tourist arrivals and accelerate port development in Trieste, Genoa, Venice, and Palermo with the help of Chinese firms. 

None of these expectations materialized, which was the official reason why Italy ended its BRI membership. Italian exports to China increased only slowly between 2019 and 2023, from 13 billion to 16.4 billion euros. Meanwhile Chinese imports almost doubled from 31.7 billion to 57.5 billion euros, widening Italy’s trade deficit. While the sluggish progress of economic relations must in large part be attributed to the COVID-19 pandemic, which hit both China and Italy severely, Italy’s European competitors, Germany and France, achieved superior economic results with China – even without being BRI members.

Ironically, Sino-Italian relations began to deteriorate soon after the signing of the MoU. The national unity government of Prime Minister Mario Draghi, which in early 2021 succeeded the Conte government, took a much more circumspect course toward Beijing. Tightening the 2012 “golden power” law, a legal mechanism to regulate FDI in security-relevant economic sectors, Draghi’s government blocked Chinese investments in critical infrastructure such as the ports in Trieste and Genoa, 5G telecommunication technology, and space technology. With these measures Draghi realigned Italy with the West’s China-critical “de-risking” policy.

How, then, can Italy’s intermezzo in the BRI be explained? 

Already the preceding Renzi (2014-2016) and Gentiloni governments (2016-2018) had attempted to diversify Italy’s foreign policy by upgrading relations with China in the light of persistently tense relations with the EU over budgetary affairs and migration. Yet it was the first Conte government (2018-2019) that elevated Italy’s China policy to a full-fledged hedging strategy. Hedging is a contradictory policy that can, following Malaysian scholar Kuik Chweng-chee, be divided into two components: “risk contingency” and “return maximization.” 

“Risk contingency” seeks to entertain good relations with all contesting powers and to avoid taking sides. For Rome such “omni-enmeshment” (to quote Evelyn Goh’s concept) implied a modicum of distancing from the United States, NATO and, fanned by profound EU-skepticism, the European Union, while improving relations with non-Western powers. The Five Star Movement focused on China, while the Lega, the junior partner in the coalition, cultivated relations to Russia. Another part of Italy’s hedging was the endorsement of Japan’s Free and Open Indo-Pacific vision immediately after signing the MoU with China. 

Italy’s government at the time hoped that diversifying foreign relations would enable Italy to evade the increasingly heated competition between the United States, China, and Russia and widen the scope for foreign policy autonomy in pursuance of national interests. Of even greater relevance was “return maximization.” For the Five Star Movement, participation in the BRI was the panacea to overcome Italy’s protracted economic malaise.

Giorgia Meloni never bought the hedging logic. In view of the Russian aggression in Ukraine, further deteriorating relations between the United States and China, and the meager economic results of Italy’s BRI membership, she sees Italy’s security better served by a new balancing strategy. This implies close rapport with the Biden administration, unequivocal support of Ukraine against the Russian aggression, improved relations with Taiwan, and a critical attitude toward Chinese repression in Hong Kong and Xinjiang. 

Meloni’s policy change is further corroborated by her courting of India, China’s arch-rival in Asia. In 2023 she met Indian Prime Minister Narendra Modi several times and signed an agreement upgrading Italy’s relations with India to a strategic partnership. Meloni also became a signatory of the India-Middle East-Europe Economic Corridor (IMEC), touted as an alternative to BRI, albeit one that is likely to fall victim to the war in Gaza. 

Yet Italy has not completely discarded hedging. Rome’s exit from the BRI was diplomatically carefully orchestrated and accomplished in a face-saving way for China in order to avoid Chinese retaliations. The Italian government also made clear that even without BRI membership it wishes to cultivate good relations with China. It hopes to strengthen bilateral relations by reviving the strategic partnership that the Berlusconi government once initiated in 2004.

Guest Author

Elisabetta Nadalutti

Dr. Elisabetta Nadalutti is assistant professor in Politics at the Forward College in Lisbon. She works on European integration and comparative regionalism with a focus on Southeast Asia. She published, inter alia, in The Journal of Common Market Studies, Geopolitics, Regional and Federal Studies and The Pacific Review.

Guest Author

Jürgen Rüland

Dr. Jürgen Rüland is professor emeritus in the Department of Political Science at the University of Freiburg, Germany. He has widely published on Asian affairs. His publications appeared, inter alia, in the European Journal of International Relations, International Affairs, Security Dialogue, the Journal of European Public Policy, Democratization, International Relations, Third World Quarterly, Foreign Policy Analysis, IThe Pacific Review, Pacific Affairs, Journal of Contemporary Asia, and International Relations of the Asia-Pacific.