Italy now fears Xi’s revenge over a fateful deal

Italy was the only G7 country to sign a memorandum of understanding with China envisaging future cooperation on Xi Jinping’s dream New Silk Road project. Since 2013, ruler Xi Jinping has been using the “New Silk Road” to buy political influence all over the world by investing in infrastructure projects such as ports or roads.

For a long time, Beijing was particularly successful with this in countries that could not borrow money in any other way. Since China stipulates in the contracts, which are not to be made public if it goes to Beijing, that it will be Chinese companies and workers who will implement the planned projects, Xi has also secured a lever for himself in addition to political influence generate more growth for the domestic economy.

“New Silk Road”: Beijing wanted to venture into the EU via Italy

European nations, on the other hand, whose creditworthiness is better than that of many Southeast Asian or African countries, did not have to choose this route to get fresh money. Until 2019, only Greece with the port of Piraeus was integrated into the New Silk Road. In addition, through engagement in Serbia, China had a foot in the door in the Balkans.

From Beijing’s point of view, Italy seemed ideal for venturing into the heart of the European Union, as Rome had repeatedly encountered difficulties in servicing its debts. Driven by the rating agencies and urged to be frugal by the north of Europe, Beijing’s nomenklatura was able to position itself as a promising way out for Italy and its misery. In this way, Beijing wanted to secure influence on what Brussels is doing.

Italy’s Prime Minister Georgia Meloni has now announced that she intends to make the decision to exit the controversial project by the end of December. And her Defense Minister Guido Crosetto confirmed in a newspaper interview that it is now necessary to reverse this “improvised and devastating act” from 2019 without damaging relations with the People’s Republic. But to do this would be like squaring the circle.

Should Italy now fear economic bullying from China?

In other cases, when countries have resisted Beijing’s influence or criticized the Chinese government, they have met with hard-hitting economic bullying. Australia can sing a song about it: export goods rotted in China’s ports, new tariffs were imposed after Canberra asked Beijing for information about the cause of the corona pandemic.

To this day, Beijing has resisted scientific research, further fueling the theory that the virus escaped from a laboratory in Wuhan through carelessness or on purpose.

In the old world, Sweden, Lithuania and the Czech Republic were already under massive pressure from Beijing. The reason for this was the devastating human rights situation, which Stockholm criticized, or the threat of war against democratic Taiwan, which has an ally in Lithuania and the Czech Republic.

Rome has now let it be known that since the signing, they have looked closely at how the People’s Republic is developing. The increasingly autocratic leadership of the People’s Republic, which is also repressive in international relations, led to the change of heart. In Europe, the signs are pointing to “de-risking” anyway, which means keeping Beijing out of critical infrastructure and security-related industries.

The Chancellery and Scholz are not as far along as Meloni

The Chancellery in Berlin still has a crucial lesson to learn here. On the sole decision of Chancellor Olaf Scholz, a Chinese state-owned company was allowed to invest in the critical infrastructure of the Port of Hamburg, although numerous experts in the field had warned the head of government. Since then, the question has not gone silent as to whether Olaf Scholz only agreed because Beijing had something against him, possibly from his time when he was the first mayor of the Hanseatic city.

For Xi Jinping things are not really going well when it comes to the New Silk Road. From Italy to the distant Solomon Islands, governments are rethinking their deals with Beijing. It has now become abundantly clear that investment is not about economics. But since the Chinese economy has not really recovered after the end of the Communist Party’s “zero Covid” policy, Beijing may indeed be hoping for positive economic effects for the economy at home from the construction contracts abroad.

Given these changing perspectives, an end to the New Silk Road in Italy may particularly hurt Beijing. However, Beijing will not threaten a G7 country and founding member of the EU as blatantly as it does smaller players in Asia or Africa.

So far, Xi has treated key members of the European Union better, driving a wedge between the Old World and the United States. If he were to subject Italy to economic bullying like he did to Australia, that would be a new escalation step in the relationship between Europe and the People’s Republic.

Jean Harris

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