The Italian government is walking on a tightrope as tensions simmer between China and the US and both countries crank up the pressure on Rome.
Italy’s recent decisions to heavily limit the adoption of Chinese tech in 5G networks appeared to align the Italians and the Americans. However, a deal between the Italian telecoms company TIM and American private equity firm KKR was stopped short by ministers while the board meeting to decide on the matter was underway.
Both the 5G and the TIM-KKR decisions became reality by means of State interventions in the private sector. Most of all, the events hint at the government’s willingness to steer the industry as well as its lack of a compass.
An upcoming ministerial discussion will revise the decision to hinder Chinese tech companies’ market access. Meanwhile, the Italian daily La Verità reported that the government, despite previous decisions, ended up greenlighting the installation of Huawei’s tech for 9 regions out of 20 (although we were unable to verify this report).
This U-turn could sour Italy’s relationship with the US at a juncture where the blocks in this “digital Cold War” are being defined as more countries are picking a side. Rome might soon find out that the US will not go easy on what it deems to be a security threat – Chinese tech – and on allied countries that make use of it.
Formiche.net reached out to Claudio Sapelli, an authoritative economist, historian and writer from Milan’s State University. He argued that the (temporary) rejection of American funds could be a “vassal” favour to China.
As for the first case, Mr Sapelli conceded that mistakes have been made from the get-go. “In Europe […] we conceived an antitrust hinged entirely on the consumer, not the producer”m
Regardless, this episode (as well as similar ones occurred during this government’s tenure) risks scaring off foreign investors, said the expert, who also maintained that the intervention should at least have happened through regular channels, namely, State lender CDP.
Italy’s economic vassalage to China was derived by Mr Sapelli from Mr Sapelli from what he perceived to be an “anti-American funds push.” He also argued that the two ruling parties, in “distancing themselves from their social classes of reference,” have basically invited foreign interference to enter Italy through the vacuum left by the vanishing equilibrium between politics and economy.
While the Democratic Party has always been close to the US, the anti-establishment Five Star Movement has eyed the strengthening of Sino-Italian ties with favour – although they appear less convinced of late.
Regardless, they were responsible for the signing of a memorandum of understanding with Beijing for Italy to take part in the massive Belt and Road Initiative (BRI), a preferential commercial corridor which would vastly extend the Chinese economic reach in Italy, and consequently, Europe.
The parties’ differing views on geopolitical alignment could well be the reason behind Italy’s wobbly position on crucial matters such as 5G. However, the times are now calling for a clearer stance. The government’s future choices will likely outline what they think Rome’s relationship with Washington – and Beijing – should look like, if they ever manage to convene on the matter.
