Italy Joins BRI: Is EU facing a Doppler’s Effect?

 By Dr. Amrita Jash
0
54

Introduction

On 23 March, in the event of Chinese President Xi Jinping’s state visit to Rome, Italy signed a MoU with China to jointly advance the construction of the BRI. The objective, as stated by the Joint Communique is: “to strengthen the alignment of the BRI and Trans-European Transport Networks and deepen the cooperation on ports, logistics and maritime cooperation” and “join efforts under the Asian Infrastructure Investment Bank (AIIB) to advance connectivity in line with the AIIB’s mission and functions”.[i] Mainly called an economic deal, but the deal holds strategic relevance given our of the 29 agreements, two agreements are on port management deals between China Communications Construction and the ports of Trieste, situated in the northern Adriatic Sea, and Genoa[ii], that is, Italy’s biggest seaport. The port factor is one of the most significant aspect of China’s BRI as seen in case of Gwadar in Pakistan and Hambantota in Sri Lanka. Given this Italian tilt towards BRI, a significant query is to ask: Does this imply that the much resistant EU is soon to experience a Doppler’s effect to China’s BRI?

Italy in BRI: Boon to China’s Interests in EU

To note, although Italy is not the first EU country to join,[iii] however, unlike the other countries, Italy joining BRI makes a significant difference given its credentials. That is, it the first Group of Seven nation (G7), the first founding EU member as well as the first western European nation to join the initiative. In addition, Italy is also the fourth largest economy in EU and eight in the world. These credentials put Italy in a level ahead of other EU countries that have joined BRI- significantly adding to China-EU relations. In a larger perspective, China and EU are two of the biggest trading powers in the world. EU is China’s largest trading partner, and China is EU’s second largest after the United States. China’s exports to EU is € 375 billion, while EU’s exports to China is € 198 billion.[iv] In view of this, Italy joining BRI provides an impetus to China’s interests in EU. This can be explained under three points, which are as follows:

First, the EU factor, that is although there is no unified EU policy position towards BRI, however, there is a growing skepticism and apprehension over China’s intentions under BRI. As evident, on 12 March, the European Commission released a report titled “EU-China: A Strategic Outlook”, wherein, it labelled China as a “negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance”.[v] This exemplifies EU’s cautious attitude towards China.

EU’s opposition to BRI was further witnessed as in April 2018, 27 ambassadors of the 28 EU Member States (except for Hungary) in Beijing, issued a report stating that BRI “runs counter to the EU agenda for liberalising trade, and pushes the balance of power in favour of subsidised Chinese companies”.[vi] Furthermore, in September 2018, the European Commission issued its own grand plan under the “EU Strategy on Connecting Europe and Asia”[vii]–  an alternative approach by EU against China’s BRI. Besides, the report categorically mentions that: “EU seeks to expand the dialogue on sustainable connectivity with other partners including Afghanistan, India, Indonesia, Iran, Pakistan, Russia, Republic of Korea, Turkey, and countries of Central Asia, as well as Australia and the United States.[viii] This very classification reflects the exclusion of China from EU’s preferred list of nations, however, specific to China, there is a strong emphasis on “rely[ing] on international standards within initiatives on connectivity”.[ix] Given EU’s watchful outlook to China’s BRI, Italy’s tilt towards the Chinese initiative highlights a significant step forward against the dominant skeptical attitude of the EU.

Second, the Brexit factor, in the background of which the most pressing challenge for China has been to search for an alternative ally to Britain in order to push its interests in the EU, more specifically, championing the BRI. This is so, as Britain played a significant role in China-EU relations by acting as the gateway for China into the EU. With the gap created, there is a possibility of Italy becoming an alternative for China against Britain in EU, thus, further adding to the rational that Italy’s tilt towards BRI does make a difference for China-EU relations.

Third, the US factor, wherein, both China and EU are faced with challenges from US protectionism. That is, China is already engaged in a trade war under heavy tariffs, which has severely affected China’s development interests. In addition, EU too is witnessing a similar change in its dynamics with US. Thereby, the US factor in someway is bringing China and EU closer despite the differences at play. In view of this, Italy joining BRI is a testimony to the fact given Italy defied US warning. For the White House’s National Security Council issued a stern warning stating: “Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people”.[x] This also reflects the growing divide between US and the EU nations, Italy being one of them.

China’s BRI: A Fissure in EU

Although the above factors reflect the impediments faced by China’s BRI, however, it is necessary to note that despite facing opposition, BRI has succeeded in making its inroads into EU. Of which, China’s influence is mainly visible in Western Europe, however, there has been an uptick in BRI-related activities in Central, Eastern, and Southern Europe including the Western Balkans. The impetus to this has been provided by China’s “16+1initiative”[xi] – a seized opportunity by China amidst the euro crisis for massive takeovers in southern Europe. Under this frameowork, China has already initiated projects, such as the Peljesac Bridge.[xii] This project when completed will be the longest bridge in Croatia, with the second-longest span in Europe- joining a southern enclave in the Adriatic with the Croatian mainland. In addition, China’s growing clout in EU is also witnessed in its growing supporters- reflecting a divide within EU. This is witnessed in cases such as: in March 2017, Hungary refused to sign a joint letter ;in 2017, Greece blocked a EU statement at the United Nations that criticised China’s human rights record;[xiii] in March 2017, Hungary (another important destination of Chinese investment) derailed the EU’s consensus by refusing to sign a joint letter denouncing the reported torture of detained lawyers in China and;[xiv] in July 2016, both Hungary and Greece sought to block any direct reference to China in an EU statement about the ICJ’s ruling against China’s legal claims in the South China Sea. These incidents imply that China’s strategy has already began to yield major political dividends for Beijing, however, causing a damage to EU unity. Given this increasing political leverage of China through its infrastructure investment and financing scheme, the worrisome factor is that how long can EU be able to hold its unity in resisting China’s BRI.

Conclusion

In this regard, with Italy joining BRI, China has been able to disturb the statusquo in EU. That is, it has provided a significant boost to BRI, which also helps safeguard China’s interests in EU by building new partnerships. Furthermore, following suit to Italy, on 27 March, Luxembourg, on the sidelines of the Boao Forum for Asia, signed an accord with China on the BRI. Therefore, although at its nascent stage, but the way EU countries are shifting their position on BRI, it can be argued that China’s BRI-factor is causing a “Doppler’s effect” in EU.

 

References

[i]Cited in Zhang Jianfeng (2019), “China, Italy sign BRI MoU to advance connectivity”, CCTV.com, 24 March 2019, URL: http://english.cctv.com/2019/03/24/ARTI8O6beQs3ILQHcpyTdfC2190324.shtml (Accessed on 29 March 2019).
[ii] Glenoa port is strategically important for China as it offers a link from the Mediterranean to landlocked countries such as Austria, Hungary, the Czech Republic, Slovakia and Serbia, all of which are markets Beijing hopes to reach through its belt and road programme.
[iii]Other EU countries that have signed MoUs with BRI are: Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Poland, Portugal, Slovakia and Slovenia. In addition on 27 March, Luxembourg joined BRI.
[iv] Cars are the number 1 commodity that EU exports to China, while China’s top export to EU is telecom equipment. See, European Council, Council of the European Union (2018), “Infographic: The EU and China are Strategic Trading Partners”, URL: https://www.consilium.europa.eu/en/infographics/eu-china-trade/ (Accessed on 30 March 2019).
[v]European Commission (2019), “European Commission and HR/VP contribution to the European Council: EU-China- A Strategic Outlook”, 12 March 2019, p. 1, URL: https://ec.europa.eu/commission/sites/beta-political/files/communication-eu-china-a-strategic-outlook.pdf (Accessed on 30 March 2019).
[vi] Dana Heidi et al. (2018), “EU ambassadors band together against Silk Road”, Handelsblatt, 17 April 2018, URL: https://www.handelsblatt.com/today/politics/china-first-eu-ambassadors-band-together-against-silk-road/23581860.html?ticket=ST-1376632-Ao4ejxktvCl6UKNh7fay-ap3 (Accessed on 29 March 2019).
[vii]See, European Commission (2018), “JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK: Connecting Europe and Asia- Building Blocks for an EU Strategy”, 19 September 2018, Brussels, URL: https://eeas.europa.eu/sites/eeas/files/joint_communication_-_connecting_europe_and_asia_-_building_blocks_for_an_eu_strategy_2018-09-19.pdf (Accessed on 29 March 2019).
[viii] Ibid. p. 7.
[ix] Ibid.
[x] National Security Council, Twitter at https://twitter.com/WHNSC/status/1104402719568203776.
[xi] The 16+1 format is an initiative by the People’s Republic of China aimed at intensifying and expanding cooperation with 11 EU Member States and 5 Balkan countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia) in the fields of investments, transport, finance, science, education, and culture.
[xii] See, Vedran Obucina (2019), “Economic importance of Peljesac Bridge”, Central European Financial Observer, 25 january 2019, URL: https://financialobserver.eu/cse-and-cis/economic-importance-of-peljesac-bridge/ (Accessed on 30 March 2019).
[xiii]Robbin Emmott and Angeliki Koutantou (2017), “Greece blocks EU statement on China human rights at U.N.”, Reuters, 18 June 2017, URL: https://www.reuters.com/article/us-eu-un-rights/greece-blocks-eu-statement-on-china-human-rights-at-u-n-idUSKBN1990FP (Accessed on 29 March 2019).
[xiv] Thorsten Benner and Jan Weidenfeld (2018), “Europe, Don’t let China Divide and Conquer”, Global Public Policy Institute, 15 March 2018, URL: https://www.gppi.net/2018/03/15/europe-dont-let-china-divide-and-conquer (Accessed on 30 March 2019).