EXCLUSIVE: Leaked memo reveals China’s detailed plans in Italy

China plans to cooperate with Italy in the development of “roads, railways, bridges, civil aviation, ports, energy, and telecommunications” as part of Beijing’s Belt and Road Initiative, a confidential ‘memorandum of understanding’ obtained exclusively by EURACTIV reveals.

The document also states that China is seeking to cooperate in EU investment plans “by supporting synergies between the Belt and Road Initiative and priorities identified in the Investment Plan for Europe and Trans-European Networks”.

The Belt and Road Initiative is China’s landmark development plan involving infrastructure and investments stretching across more than 80 countries in Europe, Asia and Africa, making it the largest infrastructure project in history.

The memo, which was initially drafted in September, says that China and Italy “will promote synergies and strengthen communication and coordination,” as well as “enhance policy dialogue” on “technical and regulatory standards.”

Rumours have been circulating about the existence of such a memorandum following reports in the Financial Times on Wednesday (6 March), in which Michele Geraci, undersecretary in Italy’s ministry of economic development, revealed that negotiations on the wording of the text are still to be negotiated.

Italy’s government at loggerheads

On 8 September, Italy’s Ministry of Economic Development, headed by Five Star’s Luigi Di Maio, made an announcement on its website, still online, of an understanding reached on the memorandum, following a state mission to China led by Geraci.

A source speaking on the condition of anonymity told EURACTIV that the announcement surprised the foreign affairs ministry, which was sidelined despite being formally in charge of negotiating international cooperation agreements.

Since then, tensions have been running high between Italy’s ministry of economic development and the ministry of foreign affairs, recently culminating in a clash over Huawei contracts to build 5G networks in Italy.

Italian government divided over Huawei, amid US pressure

The Italian Ministry of Economic Development refuted claims made by “government officials” on Thursday (7 January), following allegations that the country is set to ban Chinese firms Huawei and ZTE from taking part in the implementation of Italy’s 5G infrastructure.

But it seems that all resistance to the Italy-China agreement have since been wearing down and that the memorandum could be signed in the coming weeks.

China’s President Xi is due to visit Rome on March 22, by which time the talks are likely to have been concluded.

In some preparatory documents for Xi’s visit that have been circulating, a signing ceremony of the memorandum is scheduled, with the involvement of Italy’s Prime Minister Giuseppe Conte and deputy Prime Minister Luigi Di Maio.

A source revealed late on Thursday evening that the text currently in the hands of EURACTIV concerns proposals put forward by the Chinese state. However, as yet no changes to the text have been made by the Italian government.

China’s gate to Europe

The leaked memorandum sets the framework for minor specific cooperation and commercial agreements, including new investments of Chinese companies in the Trieste port.

Trieste’s maritime hub is one of the biggest in the Mediterranean, having moved 62.7 million tons of goods in 2018. it has also railway connections with central and northern Europe.

Michele Geraci and infrastructure undersecretary Edoardo Rixi visited Trieste last month to promote the port as the Chinese gateway for Europe in the New Silk Road.

EURACTIV was informed that among the other agreement signings scheduled for Xi’s visit, there is one that will further collaboration between two national electricity operators, the State Grid Corporation of China and Italy’s Terna. The former currently owns 35% of shares in CDP Reti, a company that controls 29.8% of Terna.

More controversial trade agreements and joint ventures could be established also between Chinese companies and Italy’s defence champion Leonardo.

In addition, another proposal for a memorandum of understanding on e-commerce made by the ministry of commerce of People’s Republic of China (MOFCOM) is under examination by Italy’s negotiators.

More generally, the memorandum also reveals that further alignments could be agreed upon in the transport sector, with the disclosure that “both parties share a common vision about the improvement of accessible, safe, inclusive and sustainable transport.

EURACTIV understands that all of the above plans are initiatives proposed by China.

Italy to join China’s New Silk Road infrastructure plan

Italy is set to become the first member of the ‘Group of Seven’ most powerful nations to join China’s  infrastructure plan “One Belt, One Road” (OBOR), despite the heightened scrutiny of Beijing’s investment in Europe.

Soft power

Should all go according to plan, Italy would be the first G7 country to back China’s Belt and Road Initiative.

However, it has not only divided the Italian government but many across the EU as well, who are worried about the occurrence of ‘debt traps,’ where economically struggling states are unable to pay off investment loans.

On Wednesday, the European Commission responded to concerns surrounding any potential agreement between Italy and China, making clear that any cooperation with China in the Belt and Road Initiative should adhere to “market rules, EU and international requirements and standards.”

“Neither the European Union nor any of the member states can effectively achieve their aims with China without full unity,” EU Commission spokesperson Maja Kocijancic said on Wednesday.

Kocijancic added that under any such agreements there must be the responsibility to “ensure consistency with EU law rules and policies” as well as the respect for “EU unity in implementing new policies.”

[Edited by Zoran Radosavljevic]

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