New Delhi: Italy’s withdrawal will deal another blow to the Belt and Road Initiative (BRI). Chinese banks want to reduce the risk of risky loans. David Sachs writes in the Council for Foreign Relations that China is grappling with growing domestic economic challenges. David Sachs is an Asia Studies Fellow at the Council on Foreign Relations (CFR). Sachs said European countries are increasingly focused on “de-risking” their economies and will be reluctant to increase economic dependence on China, making it unlikely that any major economies will join the BRI anytime soon. Italy appears poised to withdraw from the BRI, a reflection of its disappointment with the initiative’s unfulfilled promises and the country’s strategic realignment towards China. Italy’s withdrawal from the Belt and Road Initiative will reflect frustration with the lack of economic benefits and China’s more fundamental strategic rethink. Sachs said that during Chinese President Xi Jinping’s visit to Rome in 2019, Italy surprised the United States and Europe by becoming the first Group of Seven (G7) countries to join China’s Belt and Road Initiative (BRI). The BRI is the largest global infrastructure undertaking ever undertaken. It is not difficult to understand why the BRI appealed to Italy. After suffering three recessions within a decade, Italy was looking to attract investment and expand the reach of Italian exports to China’s huge market. At that time many Italians felt abandoned by Europe. Whereas, the populist government was suspicious of the European Union (EU) and was willing to turn to China to meet its investment needs. Italy saw an opportunity to leverage its political weight to sign the BRI in hopes of outdoing others for Chinese attention and investment. More fundamentally, Italy’s withdrawal from the BRI would reflect growing trans-Atlantic convergence on the challenge of China, Sachs said. European countries view China as a rival rather than a partner or competitor. Whereas, European Commission President Ursula von der Leyen recently argued “the Chinese Communist Party’s explicit goal is a systemic change in the international order with China.” Beijing’s support for Russia in the war against Ukraine has prompted many European governments, including Italy, to shed their misgivings about China. As it became clear that the BRI would not be an economic panacea, the Italian government began to reevaluate whether it should continue its membership. Sachs said that over the past year, Italian Prime Minister Giorgia Meloni has indicated that joining the BRI was a “big mistake” that she wanted to correct by withdrawing from the initiative. Meloni cited the lack of benefits Italy would receive after joining the BRI, saying that “Italy is the only G-7 member that has signed the Silk Road Memorandum of Accession, but it is the country with the strongest economic ties and ties to China.” There is no European or Western country that continues trade flows with us.” Russian President Vladimir Putin’s invasion of Ukraine and Beijing’s alliance with Moscow have also restored geopolitics to a dominant position and European countries are more suspicious of Beijing’s intentions. Putin’s plan to attend Beijing’s upcoming Belt and Road Forum has also made clear the geopolitical nature of the BRI. Sachs said Italy’s pushback on the BRI should be seen as motivated less by economic considerations and more by the new geopolitical reality facing Europe.
