Italy’s Belt and Road Agreement: Much Ado About Nothing?

In early March, Italian Prime Minister Giuseppe Conte announced that he was mulling signing an official Belt and Road cooperation agreement with China during President Xi Jinping’s trip to Italy at the end of the month. “With all the necessary precautions, Italy’s accession to a new silk route represents an opportunity for our country,” Conte said, while addressing a foreign policy seminar.

The comments sparked a wave of hand-wringing over the wisdom of Italy’s interest in the Belt and Road Initiative (BRI). In many ways, Italy is going against the prevailing trend. More and more European countries – especially Germany and France, but also previous China enthusiasts like Poland and the Czech Republic – have been raising questions about China’s influence in Europe. The United States was also outspoken about its opposition, with the White House National Security Council’s official Twitter account warning that “Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people.”

Rome stuck to its guns, with Conte signing the BRI memorandum of understanding with Xi on March 23. Italian politicians tried to clarify that their interest was purely economic. “If we are looking at the Silk Road towards China for our exports, it is not to strike a political deal with China but only to help our companies,” insisted Deputy Prime Minister Luigi Di Maio.

Of course the symbolism of a signed cooperation agreement is important – but only to a certain extent. In reality, the Belt and Road reached Italy years ago, even without a formal document.

In February 2017, China Communications Construction Company (CCCC) inked a $4 million contract to design new offshore and onshore terminals for Venice port. A few months later, Italy’s then-Prime Minister Paolo Gentiloni attended the Belt and Road Forum in Beijing, where he endorsed Venice’s role as a BRI terminal in Europe. The port of Genoa also has its own framework cooperation agreement with CCCC.

Similarly, the port of Trieste has been actively courting Chinese investment, with port chief Zeno D’Agostino having made several trips to China. After returning from an October 2018 visit to Chengdu, D’Agostino told media that the Chinese “are not only interested in funding the realization of new terminals, docks and yards, or innovative logistics platforms…They want to contribute to the expansion and modernization of the port’s free zone, industrial areas and internal rail system.” The Italian government, through Di Maio, has also given its stamp of approval to potential Chinese investment in Trieste. However, despite verbal expressions of interest from China, the only deal involving Trieste so far is an agreement for the port and CCCC to explore opportunities for future logistics cooperation.

Those efforts are an important reminder that the Belt and Road can predate formal agreements, taking shape on the ground first as contracts between individual companies. Greece, for example, only signed an official BRI cooperation agreement in August 2018 – two years after its Piraeus port fell under the majority control of China Ocean Shipping Group Company (COSCO). COSCO’s involvement at Piraeus goes even farther back – the Chinese state-owned firm first leased two docks at the Greek port for a 35-year concession in 2009, well before the Belt and Road was even conceived of.

If Belt and Road cooperation can precede official government-to-government agreements, the opposite is also true: such an agreement doesn’t always guarantee increased cooperation. Nepal, for example, famously signed on to the BRI in May 2017, much to India’s consternation. But nearly two years later, Kathmandu still has yet to greenlight any specific BRI projects. Nepal is reportedly held back both by sensitivity to India’s concerns and by its own fears of being burdened with too much debt. 

Back in Europe, Poland was one of the earliest European countries to officially sign a BRI cooperation agreement – so early, in fact, that when Poland joined in 2015 the project was still being called the “One Belt, One Road” initiative. Yet years later, Polish analysts remained underwhelmed by the lack of concrete progress. As of 2017, Chinese investment in Poland amounted to only $31 million, according to CSIS’s China Power Project. Germany, the Netherlands, the United Kingdom, France, and Switzerland all received well over $1 billion in Chinese investment that same year, despite none being official BRI partner countries. (Italy itself raked in over $530 million in Chinese investment in 2017, two years before signing its BRI agreement.)

Meanwhile, in 2017, with a new Polish government in place, Defense Minister Antoni Macierewicz began fiercely criticizing the BRI for negatively impacting Poland’s sovereignty. In 2018, Poland’s government blocked three public tenders that had been won by Chinese companies. The negative publicity for China-Poland ties culminated in accusations of Chinese spying, including the arrest of a Huawei executive for espionage this January. Clearly, the 2015 agreement has done little to tie Poland’s hands as concerns mount about the BRI’s implementation on the ground.

The second half of Conte’s original comments on the prospect of a BRI agreement with China thus deserve more attention. Signing an agreement “won’t mean that the next day we will be forced to do anything,” the prime minister said. “It will allow us to enter into this project and have a dialogue.”

Italian officials have also indicated that Italy is well aware of the pitfalls and will be cautious moving forward. For example, Italy wants to avoid following in the footsteps of Greece and Sri Lanka, both of which wound up ceding control of important ports to Chinese firms. According to Trieste port manager D’Agostino, Italy will not allow China to buy up national assets but instead will limit Chinese companies to holding minority stakes in its ports.

Also noteworthy is the fact that Italy has a high rate of government turnover. As Philippe Le Corre and Carlotta Alfonsi pointed out in a recent Diplomat article, Italy has had five separate governments since 2012, and each one adopted a different approach toward China. “Lingering skepticism about Chinese objectives and the benefits to Italy of supporting its global advance,” Le Corre and Alfonsi write, “suggest that this [pro-China] policy might not outlive the current government.” Indeed, many of the about-faces China has seen in the reception of its Belt and Road – from Poland and the Czech Republic in Europe to Malaysia and Sri Lanka in Asia – have followed the installment of new, more skeptical governments. Italy might be poised to join that trend a few years down the road, further diluting the significance of this year’s Belt and Road agreement.

What, then, does Italy’s signing of a Belt and Road document with China actually mean? In practice, as outlined above, very little – but symbolically, it’s a victory for Beijing. China adds not only another European country to its list of BRI partners, but a G-7 member at that. Italy became the largest economy in the world to sign on to the BRI to date and that symbolism is significant. The Belt and Road itself is at its heart a branding exercise, where nearly any project involving China and a third country is eligible for inclusion. At a time when the BRI is plagued by narratives of debt and “white elephant” projects, Italy provided a much-needed endorsement of the initiative’s fundamental attractiveness.

There’s also the perception that Italy is choosing China over the United States, but that is mostly due to Washington’s dire warnings against signing up for the Belt and Road. And that drives home the folly of the current U.S. approach of badgering and insulting countries who are drawn to the economic potential of the BRI. Given how little these BRI agreements tend to mean in practice, a far better strategy would be silence from the United States to avoid forcing allies to choose between Washington and Beijing. If the BRI is half as bad as the United States claims it is, countries will quickly realize that for themselves and quietly put their BRI agreements up on a shelf to gather dust.