Italy Signs Up for the Belt and Road Initiative
China’s Belt and Road Initiative has been making significant inroads in Europe despite repeated U.S. warnings to its European allies. On March 8, Italian Prime Minister Giuseppe Conte confirmed that Italy would become the 17th European country to join BRI. According to Conte, Italy will sign a memorandum of understanding during Chinese President Xi Jinping’s trip to Rome later this week. Italy’s ANSA news agency reported that Luxembourg is also in advanced negotiations with China to sign a similar agreement.
Washington was quick to respond to Conte’s remarks. The day after his announcement, the U.S. National Security Council took to Twitter to express its displeasure, warning that Italy’s participation in BRI would “bring no benefits to the Italian people.” The Italian government is also facing backlash from its own foreign policy establishment, at least some of which is aghast at the potential sale of the cornerstone of Italian strategy since 1945 – strong relations with the U.S. – for the low price of unspecified amounts of Chinese capital to build infrastructure.
MOUs are nonbinding and generally full of unrealistic aspirations rather than concrete plans. Still, the deeper problem is that Italy is counting on the U.S. to buy significant amounts of Italian debt in 2019. This is especially crucial for Italy since the European Central Bank concluded its bond-buying program in December. If the U.S. decided to voice its displeasure by, say, encouraging investors to eschew buying Italian debt, it could increase Italian borrowing costs at a time when the country is already in recession and its debt-to-gross domestic product ratio is at 133 percent. At least on the surface, Italy appears to be risking an awful lot for an awful little.
Why, then, would it be willing to make such a move? Thus far, U.S. warnings against cooperating with China have been more bark than bite. Stalwart U.S. allies such as Poland, New Zealand and Israel have also signed MOUs on BRI with little consequence. Even France and the European Commission have appeared open to cooperation with China on BRI projects in various joint declarations. Italy is debt-ridden and cash-starved, and if China is willing to throw some money its way, Italy has every reason to accept it. It’s taking a calculated risk, but considering U.S. reactions to other MOUs, it’s not an especially dangerous one.
For China, Italy’s participation in BRI is an insignificant though welcome step toward its much broader strategic ambitions. China’s success in this long-term endeavor will not be determined by the endorsement of a single country, even one as important as Italy. The broader project is to connect the entire Eurasian landmass via ports, roads and rail. Even if successful – and that’s a big if – it will be many decades before such infrastructure can be built let alone pay dividends. It will also take a lot more than MOUs for such a plan to work.
Many have described BRI as a Chinese version of the Marshall Plan. But it’s a faulty comparison because it misunderstands the scope and goals of both projects. The Marshall Plan’s aim was to rebuild Western Europe so it could hold the line against the Soviet Union. In trying to reorient Eurasia away from the Western Hemisphere and toward the Middle Kingdom, BRI is entirely different in scope. The United States would never have contemplated a Eurasian-wide Marshall Plan because it would have laid the groundwork for precisely the type of power the U.S. has been obsessed with thwarting for over two centuries.
As overly ambitious as China’s larger strategic goal may be, it is precisely that strategic aim that so irks the United States. While it doesn’t particularly care if China builds a port in Italy or high-speed rail in Poland, it does care about the potential emergence of a dominant power in Eurasia. Whether it’s China or some other power bridging the Eurasian landmass, the threat to the United States is the same. Being able to seamlessly connect markets from Shanghai to Lisbon would hamper the United States’ ability to prevent the rise of a Eurasian hegemon or a Eurasia less dependent on Washington’s support and approval.
There’s just one small problem with China’s plan: It would be nearly impossible to execute. China doesn’t possess the levels of financial and political capital needed to complete such a project. Even if it did, it would face tremendous political challenges in implementation. Many great powers have dreamed of ruling Eurasia. They have all been thwarted by Eurasia’s tremendous diversity. China’s vision of two continents stitched together by shared economic interests is wildly idealistic because not everything is about shared economic interests. Consider the European Union, and the level of discord in that multilateral organization despite its immense wealth. China has promoted the idea that Eurasian countries should cooperate to build a more prosperous and stable Eurasia. It’s a noble idea, but the promise of infrastructure spending will not be enough to encourage countries as varied as Italy, Iran and Uzbekistan to work together to build a Chinese-led Eurasian order.
Even if China’s ultimate aim to link Eurasia is more dream than reality, BRI is still potentially problematic because China’s ability to convince countries to sign MOUs undermines U.S. relationships throughout the world. The United States’ insistence that its allies reject BRI funds or Huawei 5G equipment falls on deaf ears because the United States hasn’t offered any compelling alternatives. The U.S. built and sustained a global world order based on maximum freedom and independence for all actors. Countries that agreed to play by U.S. rules gained unfettered access to trade and protection from potential adversaries. At its best, the system is largely non-coercive and works in the interests of its stakeholders. But it wasn’t envisioned as a kind of American empire, in which an American emperor could direct countries not to buy the best technology available because the U.S. didn’t like who was making it. Indeed, in 1945, the U.S. was interested in destroying empires, not building one of its own.
When the U.S. takes such a heavy-handed approach on issues like BRI and 5G, it plays directly into China’s hands because such is the behavior of an empire. The aspect of U.S. policy that is most attractive to most countries is precisely how hands-off U.S. foreign policy is. The U.S. has no desire to dominate Eurasia – it simply wants to make sure no one else does. China, with its authoritarian system and historical preference for social stability over the protection of individual rights, does have an interest in dominating Eurasia, not to mention a history of conquering vast swaths of it. That’s why, at a political level, even a country as distant as Italy can’t seriously contemplate an alliance with China. Accepting investment is one thing, but Italy isn’t about to seek to replace a system that has sustained it through the most united and profitable period in Italian history since the Roman Empire.
The only thing that could really push countries like Italy and Poland into China’s waiting arms is if the U.S. breaches the rules of its own system and, in doing so, harms the national interests of those who participate in it. The U.S. is insisting other countries ban Huawei technology or not sign BRI MOUs, without providing better, or at least comparable, alternatives. If the best the U.S. can do in these situations is threaten to impose tariffs or other economic penalties, it is indicative of the kind of sclerotic self-righteousness that often appears when global superpowers either take power for granted or fail to maintain their relative advantages. Six years after China announced the Belt and Road Initiative, the U.S. response is to send angry tweets. That is far more of a boon to Chinese strategy than any MOU could ever be.
Reprinted with permission from Geopolitical Futures.