Policy failure with Italian characteristics?

Author: Simone Dossi, University of Milan

Italy’s participation in the Belt and Road Initiative (BRI) may soon come to an end. The country entered China’s initiative in March 2019, when a Memorandum of Understanding (MoU) was signed in Rome by former Italian prime minister Giuseppe Conte and Chinese President Xi Jinping. Less than five years after the MoU was signed, the whole BRI story risks becoming a major foreign policy failure for Italy.

The MoU will be automatically extended in March 2024, unless terminated by either party at least three months in advance — that is, by the end of 2023. As the deadline approaches, the government of current Prime Minister Giorgia Meloni is expected to announce its decision soon. Comments by members of government and Italy’s low-profile participation in the recent BRI Forum suggest that Rome may be ready to leave the initiative.

In 2019, the Conte I government’s decision to sign the MoU was made amid a heated yet highly ambiguous political debate. Different views coexisted within the government itself, where the strong pro-China orientation of the 5 Star Movement contrasted with traditional hostility towards Beijing from influential sectors of the League. In turn, the most vocal opponent of the MoU — the opposition’s Democratic Party — had in fact promoted closer relations with China under the previous Renzi and Gentiloni governments, when Chinese investments in Italian strategic sectors were finalised and Rome’s interest in the BRI was first conveyed to Beijing. A strong push towards the Chinese initiative also came from Italy’s bureaucratic machine, which was aware of the BRI’s potential well before the Conte I government came to power.

In this context, the decision to sign the MoU was a ‘tactical gamble’ by Rome. Lacking the resources to effectively address longstanding issues in relations with China (most notably, unbalanced trade flows), the Conte I government went for a deal that offered China what it wanted most — recognition of the BRI by a G7 member — in exchange for China’s assurance of more balanced economic relations. Inherent asymmetry made this gamble risky. While for Italy the rationale behind the deal was mostly economic, for China it was mostly political. While China immediately gained the political recognition it valued, the more balanced trade relations that Italy aimed to achieve were projected into the future.

Just four and a half years later, it is difficult to conclude that Italy’s gamble was a win. On the one hand, the costs sustained in joining the BRI have been higher than originally expected. Criticised both in Washington and in Brussels since the beginning, Italy’s involvement in the BRI came under even greater scrutiny as US–China relations rapidly deteriorated and the European Union increasingly focused on ‘systemic rivalry’ with China. The Conte I government had evidently underestimated the magnitude of the changes that were taking place in policy debates on China both in the United States and in Europe.

On the other hand, Rome has been unable — and maybe, also unwilling — to reap some of the benefits originally expected from the MoU, especially when it comes to trade relations. Developments outside Rome’s control had a major negative impact. Most notably, the COVID-19 pandemic frustrated expectations that a boom of Chinese tourists may bring positive spillovers to the Italian economy as a whole. But this is only part of the story. For a rebalance in trade relations to materialise, Italy needed to leverage the MoU and engage with a plurality of institutional and corporate interlocutors in China. Yet, in a damage-control mode vis-à-vis its allies, and amid increasingly negative views of China among the Italian political elite, Rome soon started to de-emphasise its involvement in the BRI.

A few months after signing the MoU, the Conte I government collapsed and was replaced by the Conte II government, which included a Democratic Party now keen on distancing itself from the BRI. In February 2021, the Conte II government was in turn replaced by the ‘responsibility government’ of prime minister Mario Draghi, whose cold attitude towards China had been evident since his inaugural speech.

On balance, the political costs of Italy’s participation in the BRI were entirely paid (and seemingly at a higher price than expected), while the economic benefits were not fully reaped, in part due to factors outside Italy’s control, but also due to Italy’s unwillingness to politically invest in the BRI. If the decision is eventually made to terminate the MoU, additional costs must be expected, either in the form of a Chinese retaliation or, more optimistically, in the form of a colder attitude from Beijing. In both cases, Italy’s relations with China would emerge from the BRI story worse off than they were before 2019.

Italy’s trajectory with the BRI may present all the ingredients of a major foreign policy failure for the country — a failure with Italian characteristics. These characteristics include government instability, which makes it more difficult for Rome to carefully plan and implement policies; a highly polarised media environment, which is not conducive to a healthy debate on China and international affairs altogether; and a lack of long-term visions for the future of the country, which complicates Italy’s ability to navigate a rapidly changing international environment.

Simone Dossi is Associate Professor of International Relations at the University of Milan.

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