In 2019, Italy shocked the United States and European world when it announced that it would become the first Group of Seven (G7) country to join China’s ambitious Belt and Road Initiative (BRI). Now, four years later, it seems that Italy is done with the BRI and is pulling out of the project.
Italy’s prime minister Giorgia Meloni, according to various media reports, privately hinted to Chinese premier Li Qiang at the G20 Summit that her country plans to exit the plan. Reacting to media reports, Meloni did clarify that a final decision on whether to leave the BRI was still to be taken.
Interestingly, the news of the reported departure from the BRI comes at a time when India announced the launch of India-Middle East-Europe economic corridor, seen as a competitor to China’s BRI, of which Italy is a signatory.
We take a closer look at why Italy is choosing to part ways with BRI and what is the significance of such a move.
End of the BRI road for Italy
On the sidelines of the G20 Summit being held in New Delhi, Italy’s Giorgia Meloni in a private conversation with China’s Li Qiang said that her country is seeking to exit the BRI project. For the uninitiated, the BRI project, dubbed as the New Silk Road, was launched by Xi Jinping in 2013. It is essentially a vast collection of development and investment initiatives devised to link East Asia and Europe through physical infrastructure.
A Bloomberg report stated that Meloni told Qiang that the project was testing Italy’s relations with United States.
In a press conference later, Meloni referred to her conversation with the Chinese premier, saying, “A cordial and constructive dialogue on how we can deepen our bilateral partnership… I intend to keep my commitment to visit China… It makes more sense to go to China when we have more information on our bilateral cooperation and how to develop it.”
“Leaving the Silk Road does not compromise relations, but the decision still has to be taken,” the prime minister assured.
The BRI project, it seems, has become a thorn for Italy. In the recent past, there have been voices of dissent against the initiative from the Italian side. In July, Italian defence minister Guido Crosetto had told the newspaper Corriere della Sera that the country wanted to “walk back (from the BRI) without damaging relations with Beijing”.
“The choice to join the Silk Road was an improvised and wicked act, made by the government of Giuseppe Conte, which led to a double negative result. We exported a load of oranges to China, they tripled exports to Italy in three years,” said Crosetto in the interview, as quoted by Politico.
However, China has signalled that leaving the project could spell trouble for Italy. The Chinese ambassador to Italy had earlier in the year warned that there would be “negative consequences” for Italy if it withdrew from the agreement.
Italy’s change in stance when it comes to the BRI is much different today from 2019 when it signed to join the project. At the time, Italy was looking to attract investment and expand Italian exports’ access into China’s huge market. Moreover, several Italians felt abandoned by Europe and were more than willing to turn to China to fulfil its investment needs.
However, the BRI has not been able to meet Italian hopes and expectations. Despite signing numerous arrangements under the BRI – from pork exports to everything else under the sun – it did little to change the Italy-China economic ties. Since Italy joined the BRI, its exports to China have increased from €14.5 billion to €18.5 billion, while Chinese exports to Italy have grown far more dramatically, from €33.5 billion to €50.9 billion.
Also, data reveals that Chinese investment in non-BRI countries in Europe has far outstripped its investments in Italy, with Chinese FDI in Italy dropping from $650 million in 2019 to just $33 million in 2021.
This makes it clear that joining the BRI does not necessarily confer a country’s special status with China or guarantee it more trade and investment with China.
Bye bye BRI, hello India-Middle East-Europe Corridor
While there have been rumblings against the BRI in Italy, the timing of the departure from the project is notable.
Firstly, Italy will hold the G7 presidency next year. Hence, the announcement could hold Rome in good stead with its Western allies.
Secondly, India announced the new India-Middle East-Europe economic corridor, which is being dubbed as a game changer. Leaders of India, the United States, Saudi Arabia, the United Arab Emirates, France, Germany, Italy, and the European Union jointly unveiled this mega economic corridor on Saturday at the sidelines of Day 1 of the G20 Summit.
The new project will consist of two corridors. The east corridor will connect India with Gulf countries and the northern corridor will connect Arabian Gulf with Europe. The corridors will consist of a ship-to-rail transit network to facilitate cost-effective transport routes for the countries. The memorandum of understanding read,” It will enable goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe.” The countries also plan to lay down a cable network for electricity and digital connectivity along with pipes for clean hydrogen export.
Many view the India-Middle East-Europe economic corridor, which US president Joe Biden called a ‘big deal’, as India’s way of countering the BRI. New Delhi has long been against Xi’s ambitious infrastructure project. This is because the BRI passes through Indian territory illegally held by Pakistan.
The announcement of the India-Middle East-Europe economic corridor also comes at a time when the BRI is receiving increasingly bad press. Many countries that joined it enthusiastically now find themselves staring at a massive debt burden to China.
An analysis by the Associated Press “of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia” found that paying back the debt “is consuming an ever-greater amount of the tax revenue… and draining foreign currency reserves”. Behind this, AP said, “Is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help.”
With inputs from agencies
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