First EU Step On New Silk Road

Italy endorses China's Belt and Road Initiative.

The decision rattled both US and EU allies. When the Italian government’s endorsement of China’s $1.3 trillion global Belt and Road Initiative (BRI) was made official during President Xi Jinping’s visit to Rome last month, it heralded a major break with most other advanced economies.

Launched in 2013 with the purpose of creating an ultramodern successor to the fabled Silk Road of yore, the mammoth Chinese project aims to finance and build infrastructure in over 60 countries in Eurasia, Africa and the Middle East. There’s historic resonance to Italy’s endorsement, since it was a key terminal point for the Silk Road of old. Italy signed 30 different agreements impacting a wide range of commercial enterprise—seaports, satellites, agriculture, media, banking, technology and more.

As the first G7 country to sign on, however, Italy, which entered a recession in late 2018, is raising concerns about its political independence. The fourth-richest European nation is stepping into a Beijing-laid debt trap, critics say, exposing it to external pressures and compelling it to favor Chinese interests in ways that could threaten established commercial and military arrangements.

“Italy hopes to have better access to the Chinese market and increase exports, attract Chinese investments and perhaps partake in some other capacity in those investments,” says Giorgio Prodi, an economist at the University of Ferrara who specializes in Italian-Chinese relations.

The long-term repercussions, however, are not easy to foresee. “While this is definitely a political success for China, the economic implications are more difficult to understand,” he adds, “because the language of the accord is vague.”

Nor is it clear Italy needed to sign onto BRI to achieve its economic goals with China, Prodi argues. “Other European countries achieved these goals without the need to enter into such an onerous pact,” he says. “In 2018, Germany exported €93 billion euros ($105 billion) of goods to China, and there are a dozen European ports where Beijing already holds a stake. So when the same results can be achieved using other strategies, the real question is, was it really necessary for Italy to jeopardize its bilateral relations with the US and EU?”