In a major setback for China, Italy has formally withdrawn from China’s vast Belt and Road infrastructure initiative, more than four years after becoming the only G7 nation to sign up for the colossal project to reshape global trade and infrastructure development.
Three days ago, the eagerly awaited decision was conveyed to Beijing, as reported by the Italian newspaper Corriere della Sera. Yesterday, Italian Prime Minister Giorgia Meloni announced Italy’s exit from the Belt and Road Initiative (BRI), which the country had joined in March 2019.
In July this year, Italy’s Defence Minister Guido Crosetto said joining the BRI was an “improvised and atrocious” act by Italy.
“The decision to join the (new) Silk Road was an improvised and atrocious act that multiplied China’s exports to Italy but did not have the same effect on Italian exports to China,” Crosetto said.
Prime Minister Giorgia Meloni has long been opposed to Italy’s participation in an initiative viewed by many as an attempt by Beijing to buy political influence and whose benefits to Rome were limited. The deal was due to automatically renew in March 2024 unless Italy opted out by the end of this year, but Ms. Meloni and her hard-right government were also wary of provoking Beijing and risking retaliation against Italian companies.
Two trillion dollars:
In recent years, the BRI has attracted significant attention and investment intending to promote regional connectivity and integration and support economic growth in participating countries. However, the initiative has also faced several challenges, including concerns about debt sustainability and the impact of China’s economic slowdown.
One of the most significant criticisms of the BRI is that it is a debt trap, which involves China lending money to developing countries for infrastructure projects that they cannot afford to repay. Critics argue that this leads to countries becoming trapped in a cycle of debt and dependence on China, which can undermine their sovereignty and increase their vulnerability to economic and political pressure from China.
In this regard, the world has seen the example of Sri Lanka which was unable to repay its debt for the Hambantota Port project and was forced to hand over control of the port to China on a 99-year lease.
Djibouti’s struggle to repay Chinese loans has also generated criticism of the Chinese model of project financing for creating debt traps for developing countries.
Another example is Pakistan’s debt to China which has also been growing, with concerns raised about the financial sustainability of the projects and their impact on Pakistan’s economy with China investing billions of dollars in infrastructure projects under the China-Pakistan Economic Corridor (CPEC), a key component of the BRI apart from this China has invested heavily in infrastructure projects in Laos, however, the project has been criticized for its high cost and potential impact on the environment, and concerns have been raised about Laos’ ability to repay the loans from China.
According to China, it has inked over two trillion dollars in contracts around the world, from high-speed rail tracks crisscrossing South East Asia and massive transport, energy, and infrastructure works through Central Asia.
The concerns are particularly among Western nations, that China is seeking to rebuild the global world order to its advantage, while opposition voices in BRI countries have also decried what they see as increasing Chinese influence in local politics.
Also Read: COP28: PM Modi Arrives In Dubai To Attend World Climate Action Summit
Why did Italy leave BRI, is it the ‘Melodi’ effect?
Italy, a member of the European Union, the G7 grouping of advanced economies, and NATO signed up in 2019 under the government of then Prime Minister Giuseppe Conte.
Before taking office in October 2022, Ms. Meloni said that was a “mistake”. In addition, Italian Foreign Minister Antonio Tajani said in September that membership “has not produced the results we were hoping for”.
Good friends at COP28.#Melodi pic.twitter.com/g0W6R0RJJo
— Giorgia Meloni (@GiorgiaMeloni) December 1, 2023
Italy had joined the BRI at a time when it was desperate for investment and infrastructure building, having survived three recessions in 10 years. Its government at the time did not share warm relations with the EU and was happy to turn to China for the funds it could pump in.
Four years later, the agreement hasn’t done much for Italy. Apart from this, Italy too has been gradually hardening its stance against Beijing, especially after Meloni’s rightist government came to power. Recently, the West also has come out with its own initiative for funding infrastructure projects across the world, seen as a counter to the BRI, the Partnership for Global Infrastructure Investment (PGII).
Beijing’s support for Russia in its war against Ukraine has also led many European governments, including Italy’s, to shed their illusions about China. So, to the disappointment of our Netizens, it is not the ‘Melodi’ effect, it is the economic, political, and strategic reasons that worked behind the withdrawal of Italy from BRI.
[…] Also Read: Italy Shows The World How To Exit BRI: The Lone G7 Nation To Join China’s BRI Now Pulls Out Of Th… […]