02/04/2019

China and Europe: Divorce Italian Style?

The Cross-Analysis of François Godement and Marc Lazar

Asia Europe

China and Europe: Divorce Italian Style?

François Godement

Special Advisor and Resident Senior Fellow - U.S. and Asia

Marc Lazar

Senior Fellow - Italy, Democracy and Populism

The Italian and Chinese governments signed an agreement on 23 March sealing Italy's entry into the New Silk Road project, despite Brussels' reluctance. François Godement, senior advisor for Asia to Institut Montaigne and Marc Lazar, contributor on French and European political and institutional issues, jointly analyze the situation.

Do you think that the signing of a memorandum of understanding on the Silk Road signals Italy’s submission to China? #ViadellaSottomissione

FRANÇOIS GODEMENT

Yes and no.

Let’s start with no. The fact that the Silk Road myth strikes again in Italy isn’t a surprise to anyone: this narrative has been existing since Matteo Ricci. With this agreement, the current government is thus only adding the final touch to a rhetoric already widely used by its predecessors.

But also yes, of course, because Italy is the first major Western economy to break ranks. Last year, at the Belt and Road Forum in Beijing, almost all of the European attendees refused to sign an agreement, because they felt that there was no guarantee that China would comply with international rules and standards.

Yes, also because members of the Italian government have explicitly presented the signing of a BRI agreement as designed to increase Italian sales to China. It is worth emphasizing that the breakthrough of China's presence in Italy is older than this. Moreover, when Italian polemics attack Germany's hypocrisy, they forget how active China has been in Italy, through major purchases such as Pirelli, as well as in the telecoms and energy sectors, and in the many stakes the country has taken in a wide range of Italian companies.

Meanwhile, the fact that Italy has not entirely yielded to China in the agreement is striking. It has signed a revocable memorandum, and has included European standards, which are mandatory for public procurement in Europe anyway. While China hoped to include 5G, the Huawei controversy pushed Italy to remove 5G from the agreement, and to place it directly under the "golden power", i.e. under the government’s control, with veto power. Finally, the open controversy between the government’s two parties, the Five Star Movement and the League, makes this Chinese victory rather fragile.

MARC LAZAR

The question is brutal. Italy has always had a fairly open attitude towards China in recent years, including with the previous government. Yet what we are witnessing here is a clash between the European Union’s document, which explained that China is no longer a trading partner but a systemic rival, and Italy, which announces an agreement with China at almost exactly the same time. This has created tensions both in Italy and in Europe. Luigi Di Maio is the one who pushed for the drafting of a memorandum of 29 agreements, instead of the 50 initially planned. Italy is becoming an important partner for China, with a series of collaborations in startups, the agri-food sector, e-commerce, archaeology and information. In addition to this, agreements with companies concerning the ports of Genoa and Trieste have also been made.

Is it really submission? We will have to assess the way these agreements are implemented, but for now, it seems fair to say that Italy stands out.

Is submission the right way to describe this relationship? Italy attracted a lot of attention with this signature. It is the first country among the European Union founders and among the G7 to sign such an agreement. It has aroused American anger and caused disagreements in Brussels. Italy has isolated itself once more.

It should also be noted that this agreement has sparked significant tensions within the country. Di Maio presented the agreement, supported by the President of the Council Giuseppe Conte. Yet the League was against it, and Salvini attended neither the official ceremony, nor the signing. The League has thus clearly expressed its disagreement. President Mattarella tried to ease tensions with the United States and the European Union, by affirming that this agreement in no way weakens the strength of Italy’s relationships with the latter. This shows that the Italians are playing it by ear when it comes to their international policy, which leads the government to contradict itself, and demonstrates the country’s isolation. Is it really submission? We will have to assess the way these agreements are implemented, but for now, it seems fair to say that Italy stands out.

In Paris, President Xi Jinping met with Emmanuel Macron, Angela Merkel and Jean-Claude Juncker. Did this meeting advance the cause of European unity towards China?

FRANÇOIS GODEMENT

It is in any case an unprecedented response to what can be called China's systems of bilateral visits in Europe. While Xi Jinping approaches each country one after the other, up to the smallest ones - including Monaco -, Macron responds by associating the German Chancellor and the President of the European Commission with the latter’s state visit to France, the European lens thus being present the whole way through. This highlights the contrast between the two visions. What is most interesting is that France does not seem to have suffered commercially or economically, because the outcome of the visit is rather positive, compared to the mixed results of the visit to Italy. In the end, Xi Jinping graciously played along.

It yet again becomes clear that, in its relations, China seduces with words on the one hand, but on the other gauges its interlocutors according to their real power. By associating Europe, Macron has not lost, but has rather gained in negotiating capacity, at least in the short term.

By associating Europe, Macron has not lost, but has rather gained in negotiating capacity, at least in the short term.

MARC LAZAR

The symbolic gesture was very strong, since Emmanuel Macron went beyond bilateralism, and chose to organize this meeting with the German Chancellor and the President of the European Commission, in order to try to show China that Europe has a coherent and unified strategy. Yet reality is more complicated.

Indeed, Italy has made a different choice, as have Portugal and Greece. Moreover, these countries are all in a difficult situation and maintain bilateral relations with China, which might lead us to wonder whether this trio really represents European unity. We can add that Juncker is reaching the end of his term, and that he is the President of a European Commission that will exist until Fall, but which will not be renewed. Merkel is leaving, Macron is weakened by his domestic policy, and his plans of a European recovery have not materialized. It is, once again, all about France and Germany. While this strong Franco-German relationship is necessary for the European Union, it irritaties countries in Central and Eastern Europe, which might see it as two countries dictating a European policy to the rest.

On the other hand, the Chinese President’s statements, which insisted on multilateralism, can be understood in two ways. Either as purely diplomatic and inconsequential statements. Or, given the United States’ attitude, as the expression of China’s hopes that Europe become stronger and more unified, and that the current two-way game turn into a tripartite one.

Despite the Italian support to the Silk Road, more trade agreements have been signed in Paris than in Rome. Has Chinese diplomacy used these agreements for political purposes or are we making an effort to separate business from politics?

FRANÇOIS GODEMENT

OThe main outcome of Xi Jinping’s visit to France is the sale of the 300 Airbus, a figure that might be constrained by natural limits in a short amount of time, when we know the real capacity of the production lines and the abundance of international orders in this A320 segment. This is what differentiates France from Italy, of course - and, of course, the Airbus activity is shared between several European countries. The other very important issue, namely the creation of a nuclear waste treatment center in China, has been under discussion for years. EDF, Fives and Schneider Electric win important contracts in the energy sector in China and with the Middle East. An investment fund is created for medium-sized companies in China. Excluding Airbus, we are at around 10 billion, compared to 2.5 billion in Italy. The lifting of the poultry ban, after that of the beef ban last year, is positive, but may not be a strategic step forward! Conversely, a French company buys 10 large container ships from China. The main point is that the French President was indeed able to make a firm political speech on Europe and reciprocity, as well as on human rights, albeit less noticeably. And yet business goes on as usual.

Copyright : Alberto PIZZOLI / AFP