Parting ways? The uncertain future of the Belt and Road Initiative in Italy

14 June 2023

The year 2019 marked a significant turning point in Sino-Italian relations with the signing of a Memorandum of Understanding (MoU) that engaged Italy in the Chinese Belt and Road Initiative (BRI). As of now, Italy remains the sole G7 country participating in Chinese President Xi Jinping’s flagship infrastructure project. However, there are indications that this situation may soon change, as ongoing rumours suggest that the government led by Prime Minister Giorgia Meloni may opt against renewing the MoU. This decision would align with Meloni's prior foreign policy stances, as the prime minister has never viewed the MoU as a successful accomplishment. Furthermore, the cabinet is seeking to reinforce its Atlanticist credentials. Nevertheless, there are inherent risks involved, as there could be potential repercussions from the Chinese side, prompting the Meloni administration to approach the renewal issue with great caution.

The MoU signature and its aftermath

Since the signing of the MoU in 2019, significant changes have taken place in Sino-Italian relations. Each of the four different Italian governments since then had its own distinct approach toward China. The Memorandum saw the light under then-Prime Minister Giuseppe Conte’s first government, formed by the Five Star Movement and the League, which aimed at deepening ties with Beijing by entering a framework potentially facilitating Italian exports to China. Besides the MoU, 28 additional agreements were signed across diverse sectors, also encompassing issues such as critical infrastructure, while the US and other EU partners such as Germany expressed significant concern.

While an automatic continuation of the MoU might dissuade a Chinese reaction, it would squander the political capital invested to reassure the American allies. Conversely, exiting the Initiative would complicate Chinese-Italian relations even further since an alternative agreement with Beijing would be needed.

During the second Conte government, which saw the inclusion of the Democratic Party in place of Matteo Salvini’s League, the enthusiasm about China among Italy’s main political parties quickly declined. This trend was further reinforced by the successive government headed by Mario Draghi, who mentioned China in his first Parliamentary address only to express concern for the growing tensions in Asia. The Draghi cabinet acted decisively, vetoing multiple corporate takeovers by Chinese companies in Italy. The Alpi Aviation case is a notable example, as the Draghi administration annulled the sale of a military drone company to Chinese investors which had occurred under the first Conte government.

The Memorandum in the eyes of the Meloni government

Currently, it appears that the Meloni government is not changing the course set by the Draghi administration. During the 2022 electoral campaign, Meloni explicitly stated that the Memorandum was a mistake. Therefore, it is not coincidental that the first bilateral meeting between China and Italy at the G20 Summit in Bali in 2022 did not touch on the BRI. Behind closed doors, the Italian government seems to firmly uphold the prime minister's position. Indeed, during private discussions on semiconductor production with their Taiwanese counterparts in April 2023, officials from Rome’s industry ministry hinted at a possible exit from the BRI. Similarly, a month later, Meloni conveyed the same message to the US House Speaker Kevin McCarthy during a meeting in Rome, telling the Speaker that her government was favouring an exit from the BRI. Conversely, during public press conferences or interviews, Meloni has adopted a more subdued tone but has not reversed her stance. For instance, following a bilateral meeting with Czech Prime Minister Petr Fiala in Prague in early May, Meloni stated that the Italian government has “not yet taken a decision” as the debate on the MoU renewal is still open.

Meloni publicly emphasises the need for a cautious handling of the issue, as reiterated in a recent interview for Il Messaggero. The prime minister also noted that other Western European countries, such as Germany, enjoy deeper economic ties with China. Consequently, Meloni suggested that positive relations with Beijing could be established even in the absence of a comprehensive strategic framework. At the same time, she implied that the MoU failed to deliver on its promise of significant export growth towards China. Overall, in public appearances and interviews Meloni aims to quell rumours and speculation while promoting caution, even as the deadline for the automatic renewal draws nearer. Indeed, the MoU is going to be automatically renewed in March 2024 unless Rome formally notifies Beijing of its intent to withdraw three months beforehand. On the other hand, private settings offered the Meloni government the opportunity to assure American and Taiwanese representatives that an exit from the BRI is feasible. But how?

Between status quo and de-risking

The issue of the MoU renewal is attracting considerable attention, and Meloni seems reluctant to tackle it solely on her own. One possible solution could entail the involvement of the Italian parliament. Indeed, during her visit to Prague, Meloni emphasised the importance of considering multiple stakeholders, including the parliament, in the renewal discussions. In this context, a parliamentary debate could serve two main purposes. First, it could take some of the mounting pressure off the prime minister while providing answers to the opposition parties. These have been voicing their concerns by asking the government to explain “what the [government’s] real intentions are”. Second, Meloni seeks to prevent a repetition of the situation in 2019, when the MoU was signed without a prior parliamentary discussion.

Taking everything into account, the MoU renewal issue can lead to two potential outcomes. On the one hand, the Meloni government may opt to maintain the status quo and renew the Memorandum. According to Beatrice Gallelli, a researcher at the Istituto Affari Internazionali, halting a vague BRI commitment would attract more attention than its automatic renewal. In this scenario, the framing of the issue becomes crucial as the Meloni administration would need to effectively present the BRI as non-threatening to European and American allies. A successful framing and renewal would also serve to deter any Chinese reaction. Indeed, the Meloni cabinet is more than aware of the retaliatory measures China adopted against Lithuania and Australia, the latter case involving Canberra’s decision to scrap two BRI deals. For the moment, the Chinese side has reacted to rumours pertaining to Italy’s reluctance vis-à-vis the BRI only verbally: “There is a need for both sides to further tap into the potential of our BRI cooperation” and “step up mutually beneficial cooperation across the board”, Foreign Ministry Spokesman Wang Wenbin told reporters at a regular press briefing in May. He also added that the two countries have seen “fruitful outcomes” in trade, manufacturing, and clean energy since signing the agreement. Jia Guide, China’s ambassador to Italy, also focused on the achievements the MoU has brought about in a late April interview for Il Sole 24 Ore. These tempered comments show that Beijing currently aims at keeping Italy within the ranks of the BRI. The loss of a G7 country would indeed amount to great reputational damage to the Chinese infrastructural grand project, which has lost momentum since the outbreak of Covid-19.

On the other hand, Meloni may choose to align with EU Commission President Ursula von der Leyen’s approach towards China and attempt to de-risk by exiting the BRI. While the modes for such an exit are still unclear, this move would send a strong signal to Washington in an international context characterised by heightened US-China tensions. According to the former Italian Ambassador to NATO Stefano Stefanini, exiting the BRI might be the only choice at Meloni’s disposal. Given that China represents a bigger threat than Russia in Washington’s eyes, the Italian government must choose a side, says Stefanini. Being both a BRI member and a credible US ally is not possible, he cautions, thus hinting at the necessity of negotiating a peaceful exit from the BRI. Such negotiations would almost inevitably interconnect with another thorny issue in Sino-Italian relations: the “Pirelli case”. The Chinese company Sinochem, already the largest shareholder of Pirelli, wants to appoint more board members and potentially future CEOs of the tire-making company. Before granting approval to this renewed shareholders agreement scheme — in accordance with the government’s ‘Golden Power’ regulations, the Italian investment screening mechanism — the Meloni administration will thoroughly assess the situation and might adopt a neutral stance on Sinochem's plans. While this approach may guarantee a secure departure from the BRI, Pirelli’s independence would be put at stake.

The Pirelli case shows that the Meloni government will have to navigate a delicate path, irrespective of the scenario in which the renewal issue will play out. While an automatic continuation of the MoU might dissuade a Chinese reaction, it would squander the political capital invested to reassure the American allies, who have already been praising Meloni for having “exceeded all expectations”. Conversely, exiting the Initiative would complicate Chinese-Italian relations even further since an alternative agreement with Beijing would be needed. In this case, keeping cordial bilateral relations in a post-BRI context would become not only a pivotal diplomatic goal but also a decisive test for the foreign policy of the Meloni cabinet.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Francesco Giovanni Lizzi is a PhD candidate in Political and Social Science at the University of Bologna. His research focuses on Sino-Italian and Sino-German relations, especially on how the two EU countries have securitized their ties with China. Previously, he served as an intern at the Italian Embassy in Vietnam. Image credit: Wikimedia/ European Commission (Christophe Licoppe).