How (and why) French influence is extending over Italy

In the last weeks, Italy has been preoccupied with the sprawling network of local French operations, which worried some in Rome’s hallways of power. Telecoms, media, insurance, banks: French investors are scattered across key strategic industries, and one-sixth of Italian companies controlled by foreign entities is in French hands.

One could argue that Paris is engaging in a campaign of economic deals and diplomacy to strengthen its influence over Italy. The sheer number of intricate dealings makes it hard to grasp the whole picture, but this reading is far from implausible. Here’s why.

First, diplomacy. On Wednesday, the French economy minister Bruno Le Maire made his way to Rome for a string of high-level meetings with Italian officials. He met with his Italian counterpart, Roberto Gualtieri, as well as the minister for economic development Stefano Patuanelli and the undersecretary to the PM Riccardo Fraccaro. All meeting yielded mutual understandings.

Additionally, the French and Italian ministers for European affairs met virtually during an Aspen Institute webinar on Thursday evening.

In a presser he held beforehand, Mr Le Maire offered his cautious take on a few European matters. He urged Italy to vote in favour of reforming the eurozone bailout fund – as Italian MEPs have vetoed it in the European Parliament – to avoid that “stigma effect” that worries those who oppose it.

Then he openly called for Italian companies to join the Franco-German axis through a “technological alliance.” He focussed on battery production, hydrogen, and space – all strategic dossiers intended to reinforce the EU’s autonomy and future economic sovereignty.

“Every lost day is a concession to the US and China,” he quipped, arguing how European collaboration is imperative to advance the EU’s interests in competition matters, such as the Airbus-Boeing dispute and – crucially – digital taxation.

How can one explain this level of activism? For starters, it’s about power. With the UK out and the Biden administration and Europe’s economic recovery ahead, the Elysée is eyeing a bigger role for itself, and it would be amiss not to consider the third biggest economy in the eurozone.

Italy’s financial health is in bad shape, and “if Italy goes belly-up, the plan of [the French President Emmanuel] Macron goes down too,” argued Lucio Caracciolo, director of the authoritative geopolitical paper Limes.

Mr Caracciolo also noted that the French state always moves together with the financial, industrial and political systems.

What’s more, the US’ next Secretary of State Anthony Blinken has already identified Germany as America’s “most important” European ally. Also, Berlin has shown it cares more about the importance of transatlantic ties than Paris.

Faithful to France’s history and his personal model, the French political monolith that is Charles de Gaulle, Mr Macron engages in a counterbalancing act every time Germany takes an assertive step, noted Mr Caracciolo.

That’s why influence over Italy is important to Paris: to strengthen its own position and eventually enforce its hand in pushing forward its international agenda. Which is understandable, until the French expansionism clashes with Italy’s strategic autonomy.

Here’s where it comes down to business. Rome is growing frustrated with the French’s aggressive economic operations, and that’s detrimental to Paris’ intentions for Italian assets – especially as the Italian government tends to engage in protectionism when it feels the heat of a strategic threat.

Recently, the Italian parliamentary security committee (Copasir) sounded the alarm regarding the high volume of Italian debt owned by the French (with the strategic risk that entails, which the French paper Le Figaro called “speculations”).

Copasir also warned against rumoured operations that would see two top-tier Italian companies – UniCredit, a banking group, and Generali, an insurance company – ceding key assets to French multinationals.

On the other hand, the Italian government has been frustrating the attempts of Vivendi, a French media company, to exert voting rights within the Italian media firm Mediaset (of which it owns roughly 29%). The two have been locked in a legal quarrel since 2016.

Just last week, the Italian government protected Mediaset from Vivendi’s attempted power grab, flying in the face of a EU Court of Justice ruling against an Italian law shielding it from acquisition. And Copasir is readying another six-months extension of its power to do exactly that.

Commentators have linked Vivendi’s frustration to the pressure the company is exerting on another Italian firm, telecoms giant TIM, where it also has a major stake (24%).

Seeing as TIM is crucial for Italy’s future unitary broadband network – which is in turn necessary to activate the NextGenEU funds for digitalisation –, the Italians became jumpy. A few days ago, Mr Gualtieri called Vivendi’s CEO, Arnaud de Putyfontaine, to ask him not to intervene in those plans; the outcome of that conversation is unclear.

Aware of the touchiness of these issues, Mr Le Maire took advantage of the presser to state that the Vivendi-Mediaset dispute is a “private matter.”

Still, all in all, the emerging pattern is that of France vying to control stakes of strategic assets, which may well be converted into political power in the future.

Digital taxes, for instance, are likely to be the most contentious dossier between the EU and the US. Seeing as OECD negotiations to regulate Big Tech did not provide progress, and considering the amount of money lost to fiscal paradises (some of which are European), France is charging ahead with imposing a 3% tax on the biggest tech companies.

This has angered the Trump administration, who is mulling tariffs on some French goods. Regardless, many other nations – including the UK, Italy, Austria, Brazil and Indonesia – will take similar actions in the coming months.

This move has been described as “unwise” by Anthony Gardner, the former US ambassador to the EU who Politico dubbed “Obama’s oracle”. And yet, the Elysée is leading the way while pushing for a EU-wide digital tax law.

That France did it first first only goes to show that it is growing more assertive, and the economic ventures it’s engaging in reveal the avenues through which Paris might channel its influence.

That’s why Mr De Maire’s bid for an alliance of game-changing tech industries is not merely circumstantial. France is vying for a more integrated, independent Europe – and perhaps one where it’s the main power broker.