Belt-Road deal with Italy will be a political breakthrough for China

Chinese President Xi Jinping travels to Italy this week to reportedly sign a Memorandum of Understanding (MoU) for his landmark Belt and Road (BRI) initiative. The expected move will be the first time any G7 state has backed the $1 trillion (Dh3.67 trillion) plan which lies at the centre of a geopolitical struggle between China and the United States for global influence.

While Rome is not always seen as being among the top-tier global powers, part of the reason why the development has such potential significance is Italy’s continued systemic importance in Europe. As a G7 country, it is the third-largest Eurozone economy and poses perhaps the biggest threat to the single currency area’s future because the country has the second biggest debt load in the bloc after Greece.

The revelation that Rome has been deep in discussions with Beijing first emerged last week when Italian Undersecretary of Economic Development Michele Geraci said that Italy was considering signing an “initial framework” accord. That prospect, which predictably irritated Washington, drew an immediate rebuke from Garrett Marquis, a National Security Council spokesman who asserted that there is “no need for the Italian government to lend legitimacy to China’s infrastructure vanity project”.

Yet, it is not just Washington that is concerned, but also Brussels too. EU officials are increasingly conscious of Beijing’s influence across the continent, including the so-called “16+1” initiative of China and key countries in Eastern and Central Europe. Buttressing this, a number of EU states have already signed MoUs with China on BRI, including Croatia, the Czech Republic, Hungary, Poland, Greece, Malta and Portugal.

Like Washington, Brussels has reservations about BRI, not least given wider frustrations over Beijing’s perceived slowness to open up its own economy, and a wave of Chinese takeovers of European firms in key industries. Yet, Brussels has declared it will cooperate with the grand initiative “on the basis of China fulfilling its declared aim of making it an open platform which adheres to market rules, EU and international requirements”.

As well as being divisive with Washington and Brussels, Geraci’s initial comments prompted an apparent split in the Italian government itself too indicating that Rome had not 100 per cent made up its mind on this issue. Take the example of Deputy Minister for Foreign Affairs and International Cooperation Guglielmo Picchi, who commented last week that “at the moment, I do not think we should proceed with the signature”.

Signs that Italy might back out of the plan, especially in light of US criticism then irked China. Take the example of Foreign Minister Wang Yi who hit back that “Italy is an independent country. We trust that you’ll stick to the decision you have independently made” on BRI.

Wang’s frosty response, and the concern about BRI in much of the West, stems from the scheme’s immensely ambitious nature.Beijing has big plans to boost trade and stimulate economic growth across Asia, Africa and beyond by building massive amounts of infrastructure and connecting it to countries around the globe.

Take the example of Pakistan, for instance, where Beijing has already made commitments of around $60 billion under BRI. While this is to be largely spent on infrastructure, it has cemented warming geopolitical ties with Islamabad, a previous long-standing US ally during the Cold War.

In this context, one of the key reasons why Washington will have been so upset by recent revelations from Rome is that the Trump team had been trying to form its own strong relationship with the populist government there. Indeed, Italian Prime Minister Giuseppe Conte, who met with Donald Trump several times last year, including at the White House, was perceived by some to be emerging as the US president’s strongest supporter in western Europe.

Trump last year declared Conte “a really great guy” and that he “will do a great job — the people of Italy have got it right”. And this political affinity appeared to rest not just on apparent personal chemistry, but also the alignment of their policy positions of key issues like Russia and immigration.

While the Trump team therefore has particular perceived reason to feel vexed, should Conte sign the MoU with Xi as reported, Concern about BRI is bipartisan in Washington given the concern of many Democrats too about growing Chinese international influence. This was underlined, during the Obama administration, when Washington raised significant concerns about the degree to which London was then perceived to be cosying up to Beijing under the previous government of David Cameron, including the UK’s decision to become a founder member of the Asian Infrastructure Investment Bank which is being championed be Beijing as a potential alternative to the World Bank.

Taken overall, Italy’s anticipated endorsement of BRI will be a political breakthrough for Beijing. This is especially so given that the White House had perceived that the populist stripe of the administration in Rome had brought new spice to bilateral bonds following the positive initial meetings last year between Trump and Conte.

Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.