Updated: Feb 22
President Xi Jinping and President Sergio Mattarella ©Presidenza della Repubblica / Public domain/ Wikimedia Commons
“If you want to get rich, build a road first”, (要想富先修路). People could use this ancient Chinese proverb to explain in a few words the dizzying economic growth experienced by China over the last thirty years. As a matter of fact, the assimilation of Keynesian concepts has led Chinese government authorities to resort to massive doses of public investment to build roads, highways, railways and large infrastructure to boost the country’s GDP. But Beijing's strategies have certainly not stopped at national level initiatives as in 2013 President Xi Jinping launched one of the largest economic development plan in the world history: the Belt and Road Initiative, BRI (一带一路). This China-led international project aims to envelop the entire planet in a dense network of infrastructures that will make trade on the New Silk Road faster and more functional.
In order to seize growth opportunities for Italian enterprises and to take a first step towards the improvement of the two countries’ relations, the Italian government signed a Memorandum of Understanding with the People's Republic of China, aiming at manifesting its adhesion to the BRI, in March 2019.
What is interesting to underline is that among the understandings reached in palazzo Madama there are also two cooperation agreements, both inked between the State-owned enterprise China Communication Construction Company (CCCC) and two Port System Authorities (AdSP), the Italian public body responsible for administering a system of one or more national ports.
Apart from the most romantic explanation evoked by pure reasons of historical continuity, Chinese authorities have focused on Italian harbours because of a series of advantages that should not be underestimated.
Located in the heart of the busy Mediterranean Sea, Italian marine terminals can easily configure themselves as strategic outlets for connecting maritime trade from the Far East via the Suez Canal with Switzerland, Austria, Germany, Slovenia and Hungary, making all its ports a viable alternative to the Northern Range terminals. What is more, the proximity to the port of Piraeus, which is Beijing’s major hub into the Mediterranean, does nothing but reinforcing the hypothesis of the emergence of a thick web of strategic harbours connections, which would give rise to new sea routes and low cost alternatives to dispatch products to the centre of Europe. With time, the port of Trieste began to acquire more and more significance in Dragon’s eyes. Once through the Suez Canal, Chinese ships carrying materials from their home country, or their wide network of interests in Africa and Middle East, can easily rely on Trieste shores to get products into the heart of Europe. Apart from being a quick and low-cost solution for BRI patterns, the choice of Trieste meets all the necessary requirements to accommodate those vessels. The city port is able to boast an 18-metres-deep seabed and a distance of about 1300 miles from the African Canal. Moreover, by virtue of the principle of extraterritoriality, it can offer significant fiscal privileges to Chinese operators loading their goods there.
The agreement signed in March 2019 between the Trieste Port Authority President, Zeno D’Agostino, and the Head of China Communication Construction Company, Song Hailang, laid the foundation for general partnerships in different areas of infrastructure development, in Italy as well as in other countries. As regards part relating to Italian territory, the agreement essentially concerns the possibility of collaborations for some of the railway infrastructure plans included in the so-called “Trihub” project. At the centre of discussion held with CCCC, the Trihub project was an investment plan for the carrying out of a series of interventions aimed at improving Trieste’s backport rail network. The part of the project in which the Chinese company should have been involved concerned the reopening of Servola and Aquilina stations, which both need massive redevelopment. Metaphorically speaking, Xi Jinping’s visit to Italy for the signing of the Memorandum seemed to act as a fertiliser for those already planted “seeds of collaboration”, even in private business circles. In parallel with the evolution of talks on Trihub, another Chinese port operator called “China Merchant Port Holdings”, CMPH, manifested its interests to invest in a new intermodal logistic platform, Piattaforma Logistica Trieste, PLT, at that time nearing completion.
The combination of all these moves quickly turned the international spotlight on Italy, the first NATO and G7 country to have signed an agreement as cumbersome as the Memorandum with China. The signing of these agreements has immediately raised a number of harsh criticism and concerns, both at national and European level.
Among the first national dissenters was Giulio Camber, a veteran lawmaker “considered by many the political boss of Trieste” (Horowitz, 2019), who questioned the transparency in the arrangements between the port authority and the CCCC. Camber’s solo voice was later joined by other representatives of national moderate right parties, as well as by a few Trieste personalities from the democrats. But national alarms were soon followed by EU reproaches.
In March 2019, before the signing of the Rome Memorandum and the agreements with CCCC, an EU spokesman anticipated what Brussels’ position would be, by admonishing that all member states needed to “ensure consistency with EU law rules and policies and to respect EU unity in implementing EU policies. [..] Neither the European Union nor any of its Member States can achieve its goals with China without full unity” (European Commission Joint Communication, 2019). It was pretty clear that someone in high places did not appreciate the government's new partner choice, and lost no opportunities to make this stance manifest.
Strong was the voice of European Commissioner, Günther Oettinger, to join the chorus of dissidents. Specifically, he voiced his opposition to the fact that in Italy, as in other European countries, infrastructures of strategic importance such as ports are no longer in European hands, but in Chinese hands (Deutsche Welle, 2019).
But admonitions were not long in coming from overseas. The White House National Security Council Spokesman, Garrett Marquis, warned Italian government about the negative effects of “China’s infrastructure diplomacy”, while Trump administration officials met with national right-wing party leaders to clarify the dangers of deals with China (Ghiglione, Hornby, Peel, Sevastopulo, 2019).
When asked about the role of ports for China’s BRI, Robert Needham, US Consul General in Milan since October 2021, remembered that harbours of Genoa and Trieste are "key to economic relations" between Italy and USA, something not to be touched. "As allies in NATO, with troops present on Italian bases and with shared security and weapons systems, we hope that Italy will carefully assess potential economic and security risks in seeking partners for development projects at its ports", he concluded (Gallotti, 2021).
As months went by, Italian government enthusiasm for relations with China seemed waning, and even officials at the Ministry of Transport advised President D'Agostino not to encourage dialogue with Chinese counterparts (D’Amelio, 2020). What was going on in the halls of government? What was the reason for this quick turnaround in the negotiation with Chinese players?
From what we know, the year 2020 represents the tipping point for the development of the Italian-Chinese agreements. In August 2020, the U.S. Department of Commerce added China Communication Construction Company to its blacklist, the “Entity List” (a register including a wide range of Chinese companies that are, de facto, excluded from the United States market). Although this move has no direct impact on European governments’ decisions for their relations with China, the U.S. intervention was intended to act as a deterrent, prompting allied countries to reconsider their agreements with banned companies.
In September 2020, the American government officially entered the field when the U.S. Secretary of State, Mike Pompeo, set a date for his official visit to Italy. In a long conversation with Italian Minister of Foreign Affairs, Pompeo expressed his concern about the danger of the engagement with China, warning the Minister about the risks to the national security and the privacy of citizens presented by technology companies with ties to the Chinese Communist Party. Despite the urgency with which Pompeo rushed to brief Italian political leaders, the day before the arrival of the Secretary in Rome, Italy welcomed him with a reassuring news: thanks to a quick negotiation with Trieste logistic platform PLT, a Hamburg transport company named “HHLA” would have become the first platform shareholder by the beginning of 2021. Put simply, Chinese competition was practically won.
There is no doubt that the valuation of Parisi and the PLT company stemmed from the greater guarantees offered by HHLA. Nevertheless, it is also likely that their decision was the result of a geopolitical balances restoration, a realisation conceived gradually as international apprehensions increased. The reality is that if there was a Chinese plan aimed at expanding the transport network in Italy and Europe, it seems to be blocked by the growing awareness, widely shown by Brussels and the U.S., of the need to protect critical national and community infrastructures. As time goes by, geopolitical logics seemed to get the upper hand over transport matters in Trieste, whose authorities from the port sector found themselves alone in a game where the Italian government was slowly withdrawing due to the opening of an international debate. It is certainly fair to affirm that developments in relations between the two countries may have been directly or indirectly slowed by the Covid-19 pandemic outbreak. However, the change of government in September 2019 has also contributed to a return to Italy’s traditional alliance system. The great comeback under the aegis of the Atlantic pact has been furthermore sealed by the birth of a new coalition government in February 2021, which has in turn laid the foundation for a re-assessment in China’s Belt and Road project.
As President D'Agostino himself wanted to explain, it was the clash between China and the United States that determined the fate of the Trieste affair, with Italy and EU acting as spectators: “Until two or three years ago, dealing with China had no geopolitical implications, and the logic was purely transport-related. [..] In recent years, the opportunity to deal on this axis with the main player, China, has sparked controversy. Today in Rome, when it comes to Beijing, many people stand aside, whereas at the beginning of last year the majority was pushing in that direction. This is not surprising, also in the light of growing American pressure” (Di Muro, Caracciolo, 2020).
Timely investments from Germany HHLA into the Trieste harbour has in turn strengthened EU cooperation in relation to the control and management of strategic European infrastructures, reaffirming that it is possible to do business with non-European countries without losing the ownership of strategic assets. With regard to this new “Third way”, which is neither Chinese nor American, the words of Angela Titzrath, CEO of HHLA, sound quite symbolic: “Golden power was created to protect Italian interests, but we are Europeans and we share the same objectives and value system” (D’Amelio, 2020).
Criticisms and admonitions addressed to Italy in the aftermath of the signing of Chinese agreements sound a little misplaced, if one takes into account the total compliance with national and EU laws Italy followed in establishing dialogue with China and its state companies. In this regard, it would be appropriate to ask to what extent the European Union, or any other external country, can intervene in matters regulated by bilateral agreements between two sovereign nations, or can put pressure on individual governments and ministries to slow down the progress of negotiations with Beijing. After all, the same fate befell the Greek government in 2013, when the former Minister of the Economy, Gianīs Varoufakīs, was negotiating a deal to sell shares of the company managing the port of Piraeus, in exchange for a loan to support Greek public debt. At the close, the deal fell through, mainly because of the EU intervention, which considered the port a nerve centre of its own (Varoufakīs, 2017).
It sounds logical, instead, that in order to seize growth opportunities, the European Union should function as a kind of “balancer”, trying to weigh advantages and disadvantages, and pursue the only thing that matters: the protection of member countries’ interests. Very often it conversely seems that the interests of the member countries are subordinate to the wishes of the Union, which clips the wings of the economic upturn of sovereign states.
Brussels cannot, and must not, adopt an obstructive stance with respect to the wishes of a government, but should rather coordinate, mediate and negotiate with its Chinese counterpart as the representative of its member states’ interests. Following a practical example, if Chinese company had entered the management of Trieste’s harbour system, European Union should have ensured that for every established quantity of goods sold in Europe or Italy, along the reverse route leading from Trieste to China, it must transit at least a minimum percentage of Italian goods, in this way perfectly fulfilling the principle of reciprocity and win-win cooperation.
In conclusion, despite the high symbolic power the Memorandum has constituted for the development of new relations between Italy and China, the initiative has up to now had little impact on Italian maritime infrastructure (Ghiretti, 2021). Honestly speaking, I’m a bit doubtful whether this talked-about Chinese companies will ever enter the port of Trieste on a permanent basis, since power relations and European balances seem to have been re-established after U.S. intervention and HHLA moves.
No one can say for sure what the next steps will be, and Beijing does not leave its strategies out for public disposal. The Chinese government’s attitude seems, instead, to follow the lessons outlined in the ancient treatise of the Art of War, which states: “Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt”.
Giacomo Vincenti is a graduate in Language and Management for China at Ca' Foscari University. Prior to moving to Venice, He spent 4 years in Rome, studying for his bachelor's degree in oriental languages and civilizations at "La Sapienza" University. Giacomo believes that an all-embracing knowledge of the "Chinese world" (culture, economy, society,..) is necessary for the sake of interfacing correctly with this reality. Given this, he went to China twice: the first time for a six month study period at Beiwai University (北京外国语大学); the second time for an internship at the Cultural Office of the Italian Embassy in Beijing (意大利驻华大使馆文化处) during the Covid-19 pandemic in 2020. Giacomo enjoys writing and proposing something the reader perhaps does not know much about. Additionally, he is an attentive enthusiast of current affairs in society and what happens in the world, and always tries to keep a critical point of view in order not to be biassed. You can find him on LinkedIn.
The opinions expressed here are those of the writers and do not represent the views of European Guanxi.
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