Italy has called off its participation in China’s Belt and Road Initiative (BRI), more than four years after being the first and only G7 nation to join the initiative. This decision arises from a mix of economic, geopolitical, and strategic factors prompting Italy to reevaluate its involvement in the project.
Reasons Behind Italy’s Withdrawal
One of the main causes for Italy’s pullback from BRI is Economic Imbalance. Italy became part of BRI in 2019, seeking investment and infrastructure development during an economic downturn. However, it did not receive the expected level of financial benefits from the initiative. According to figures from the Council on Foreign Relations, Chinese FDI in Italy reduced significantly from USD 650 million in 2019 to a mere USD 33 million in 2021.
Another significant factor is Geopolitical Realignment, as Italy is reconsidering its relationship with China, mirroring a broader trend among European nations. Concerns about China’s growing influence on global geopolitics, especially in the context of events like the Russia-Ukraine conflict, have led to this reassessment.
Lastly, Alignment with Western Allies is a crucial aspect. Being part of the G7, Italy’s move may be seen as a symbolic alignment with its Western allies, even more so with the upcoming G7 presidency.
Negative Press and Debt Concerns
The BRI has faced international criticism for potential debt traps and lack of transparency in financial dealings. Reports of countries undergoing significant debt burdens due to their BRI involvement might have influenced Italy’s decision.
Historical India-Italy Relations
India and Italy have a rich history of bilateral relations dating back thousands of years. Prominent personalities like Rabindranath Tagore and Mahatma Gandhi played significant roles in maintaining these relations. However, incidents like the Italian Marines Case from 2012 and the AgustaWestland Allegations caused a strain in the diplomatic ties between the two countries.
Italy-India Relations Today
Efforts towards rebuilding ties began around 2018 through official visits, cultural exchanges, and high-level engagements. Bilateral agreements and strategic partnerships in defense, trade, and technology, established primarily during the Indian Prime Minister’s visit to Italy for the G20 summit in 2021, marked significant progress in enhancing these ties.
Economic Cooperation
Bilateral trade saw a significant increase, with Italy emerging as an important trading partner for India within the EU. Collaborations in defense and technology further strengthened this relationship.
Rethinking Engagement with China
Both India and Italy have reconsidered their involvement with China, especially with respect to the Belt and Road Initiative. Italy’s disappointment with the BRI due to economic imbalances aligns with India’s concerns over territorial issues.
Cooperation in Other Areas
The two nations have also agreed to cooperate in scientific research, counter-terrorism and security, and regional development. The establishment of Thematic Working Groups between the Italian Space Agency (ASI) and Indian Space Research Organisation (ISRO) and the agreement to collaborate on counter-terrorism efforts bear testimony to this growing cooperation.
Looking Ahead: Future Prospects of Italy-India Economic Collaboration
With Italy withdrawing from the BRI, new opportunities for enhanced economic collaboration between India and Italy present themselves. The countries can foster mutual growth through ventures in sectors like technology, manufacturing, renewable energy, pharmaceuticals, and infrastructure development. India and Italy can also elevate their strategic partnership through cooperation in defense, cybersecurity, counterterrorism, and maritime security.