Italy To Join China's Belt And Road Initiative

What is 'Belt And Road Initiative'?

The Belt and Road Initiative (BRI) is an ambitious effort to improve regional cooperation and connectivity on a large scale. The main aim of BRI is to strengthen infrastructure, trade, and investment links between China and  65 other countries that covers over 30 percent of global GDP, 62 percent of  the world population and 75 percent of the known energy reserves. The BRI primarily consists of the Silk Road Economic Belt, linking China to almost all Central and South Asia and onward to Europe, and the New Maritime Silk Road, linking China to the nations of South East Asian countries, the Gulf Countries, North Africa, and on to Europe. China has identified six other economic corridors to link other countries to the Belt and the Road initiative. The scope of the initiative is still taking shape. More recently the initiative has been interpreted to be open to all countries as well as international and regional organizations.

Overall, the BRI has seen some 2,220 deals worth $1.2tn announced in more than 80 countries since the scheme’s inception in 2013.

Italy In Belt And Road Initiative

Recently Italian Prime Minister Giuseppe Conte said China’s “Belt and Road Initiative” infrastructure plan could be good news for Italy, confirming that he might sign an accord with Chinese President Xi Jinping.

Xi is due to travel to Italy from March 22-24 and Giuseppe Conte said Rome and Beijing were looking to agree to a framework deal during the state visit. Despite reports that the United States was concerned about their key ally joining the venture. Italy agreed to join China's BRI. 

1.WHAT ITALY STANDS TO GAIN
The BRI is not a multilateral organisation and it does not have any protocol for admitting members. Neither is it a trade pact that imposes clear rules on participants in return for trade benefits.When a country signs  memorandum of understanding (MOU), it does not becomes a “member” of the BRI,  neither does it necessarily become entitled to the construction of Chines-funded infrastructure projects, though such deals do sometimes follow an MOU’s signing.

2. WHY IT MATTERS FOR ITALY 

One of the main reasons behind the decrease of direct investment by Chinese companies in Europe dropped by 40 per cent last year to €17.3bn was because of stricter controls imposed by Beijing on outward investment.

Since Italy is a part for EU, it is facing difficulties in balancing its growth targets with the EU's stringent fiscal norms, the same way the UK was facing which resulted in Brexit. The tensions surfaced in recent negotiations with Brussels led to a revised Italian budget. Now Italy is counting on its BRI endorsement to boost their investments, given recent reductions in Chinese outflows into the EU.

Italy–United States Relation

Italy has beens USA's close ally ever since NATO was created. Italy has many American military bases at Vicenza and Livorno (army), Aviano (air force), and Sigonella, Gaeta, and Naples the home port for the U.S. Navy Sixth Fleet. There are about 11,500 American military personnel stationed in Italy. Italy hosts the NATO Defense College in Rome.

USA’S RESPONSE

A White House spokesman criticised BRI on Wednesday as a “made by China, for China” initiative and said the US was “sceptical that the Italian government’s endorsement will bring any sustained economic benefits to the Italian people”.

UNITED STATES NATIONAL SECURITY COUNCIL

CHINESE INTEREST IN ITALY 

Gaining access to Italy’s ports infrastructure, to expand its trading routes from the Mediterranean to northern Europe, is a priority for the Chinese. Italy’s state naval construction group Fincantieri last year struck a deal to make cruise ships for China, which was again not liked by American Government.

CHINESE IMPACT IN ITALY 

• China has swooped on strategic assets such as Italy’s power grid, high-tech manufacturers and luxury brands. 
• According to the Italy-China Foundation more than 600 Italian companies have received some kind of Chinese investment for a total value of €13.7bn since 2000.
• China accounts for about 2.7 per cent of Italy’s exports, worth €11.1bn, making it Italy’s eighth largest export market. Imports from China are worth €27.3bn, equal to 1.3 per cent of the Chinese export market, and China’s 19th largest export market.