Italy pulls out of China’s Belt and Road Initiative, claims the deal doesn’t meet expectations.
Italy’s foreign minister expressed disappointment over the controversial investment agreement with China just before his visit to Beijing. According to the foreign minister, the trade deal between Italy and China has failed to meet Italy’s expectations. This directly implies Italy pulling out from China’s Belt and Road Initiative.
Under a previous administration, Italy took the bold step of becoming the first major Western nation to join China’s infrastructure initiative. Not even deterrence from the United States stopped the alliance of Rome and Beijing in what the former believed to be a potential goldmine along the Silk Road.
China’s global influence and its foreign policy framework have been significant factors in the trade deal between Italy and China. China’s Belt and Road Initiative is a massive infrastructure project to connect China with the rest of the world through a network of railways, ports, and other infrastructure projects.
In the years following this economic alliance, Italy pumped massive sums of money into the Silk Road. This move reveals its confidence in the trade deal. Rome’s exports to China totaled more than €16.5 billion ($17.8 billion) in 2022 alone, just behind Germany and France.
In February 2023, Italy’s exports to China reached a monthly record of €3 billion ($3.3 billion), a 62% surge from the same period in 2022. In the first three months of 2023, Italian exports to China totaled €7.1 billion ($7.8 billion), compared with €3.7 billion ($4 billion) in the same period in the previous year.
However, the money flowing into Beijing is set to be cut off, as members of the Italian government are already disgruntled at what they believe to be a losing venture. In a statement by Antonio Tajani, in which he voiced the hitherto unspoken words of the Italian administration, Italy seems to have decided on the next line of action.
“The Silk Road did not bring the results we expected,” he stated.
“We will have to evaluate; the parliament will have to decide whether or not to renew our participation.”
With the current state of affairs, Rome is doubtful to renew the deal when it expires in March 2024 and has until December to formally withdraw from the accord. If it doesn’t cancel its own accord, the alliance will be extended for another five years.
Tajani will meet Chinese authorities during a three-day visit to Beijing from Sunday to Tuesday and prepare a planned visit by Prime Minister Giorgia Meloni that some experts believe will confirm Italy’s exit from the deal.
Experts believe the withdrawal “has likely already been agreed in principle with Chinese authorities,” This point of view was reaffirmed by Lorenzo Codogno, a former chief economist at the Italian treasury.
According to him, Italian Prime Minister Giorgia Meloni will make the official announcement during her state visit to Beijing, expected by mid-October, as a sign of respect for China’s leadership. He also added that the Italian parliament will make the final decision on the issue.
The issue on Italy’s plate at the moment is how to pull out of the Belt and Road Initiative without harming relations with China. This sentiment is echoed by Defence Minister Guido Crosseto when he said,
“The issue today is how to walk back (from the BRI) without damaging relations (with Beijing). Because it is true that China is a competitor, but it is also a partner,” the defense minister stated.
Following this disappointing close to a trade deal with high prospects, Italy will now look elsewhere in a bid to recoup its losses and bolster its profits from international trade.
Prior to Italy’s public announcement, President Joe Biden met with Italy’s new leader on Thursday, July 27, 2023, at the White House, where the two reaffirmed their support for Ukraine and talked of countering Beijing’s growing ambitions. This might have set the stage for Italy’s withdrawal from the BRI, and President Biden suggested that the U.S. could fill the gap.
“We’re going to talk about our deepening economic connection that has fueled more than $100 billion in trade last year,” Biden said. “In my mind, there’s no reason why that can’t increase.”
After the meeting, the two leaders released a lengthy statement affirming their “unshakable alliance, strategic partnership and deep friendship.”