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Italy joining China's Belt and Road project is 'geopolitically unwise,' former prime minister says

Key Points
  • Italy's government provoked fresh controversy as it officially agreed to join China's massive Belt and Road Initiative, becoming the first Group of 7 country to do so.
  • Chinese President Xi Jinping's visit to Rome saw a total of 29 deals signed, altogether worth $2.8 billion.
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Ex-Italian PM: Important to pay attention to Belt and Road initiative

Italy's former prime minister doesn't approve of the current government's newly inked partnership with China, calling the decision "unwise" during a conversation with CNBC Monday.

"Politically, geopolitically, I deem (it) really unwise from the Italian government to take such a decision without coordination with the European Union and our allies," Paolo Gentiloni, who served as prime minister from 2016 to 2018, told CNBC's "Squawk Box Europe."

"Europe is showing its divisions toward China, and this is not something that will strengthen our position even on trade."

The Italian government stirred up fresh controversy over the weekend as it officially agreed to join China's massive Belt and Road Initiative (BRI), becoming the first Group of 7 country to do so.

Chinese President Xi Jinping's visit to Rome saw a total of 29 deals signed, altogether worth 2.5 billion euros ($2.8 billion). They were focused on agricultural, finance and energy sectors, and opened up new access to the Chinese market for major Italian energy and engineering firms.

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Italy's Di Maio: Not looking to ask China for help with government bonds

Gentiloni, who himself visited China in 2017 to discuss the Belt and Road initiative with Beijing's leadership, echoed the analyses of many observers who described the deals signed as largely symbolic and not an economic paradigm shift for Italy.

"The agreements signed in Italy are not so relevant from an economic point of view," he said.

"We will not change the mood of our economy with these agreements, and my guess is that perhaps we will not even change the balance of trade between Italy and China, which is unfortunately a balance of deficit on the Italian side."

But politically, he stressed, "I am worried that we are not showing EU unity, and for this reason I think that the MOU (memorandum of understanding) that was signed from the Italian government was not a wise decision."

Gentiloni is a founding member of Italy's Democratic party, whose stances are largely described as a social democratic, center-left and Europeanist. Italy is currently led by a euroskeptic coalition whose largest parties are the anti-establishment Five-Star Movement and the right-wing Lega party.

'Italy is not an African country'

Western critics warn of Chinese debt traps and describe the initiative as a ploy to expand geopolitical and strategic influence, while Beijing pursues links to Europe and Africa via South Asia and the Middle East to expedite and increase the export of Chinese goods.

German foreign minister Heiko Maas criticized Italy's decision on Sunday, telling local media: "If some countries believe that they can do clever business with the Chinese, then they will be surprised when they wake up and find themselves dependent."

Still, in defense of his country, Gentiloni dismissed concerns that Italy would become economically beholden to China in the way that some African and South Asian nations have.

"Italy is not an African country … We will not have a Chinese invasion after these agreements," he said, pointing out that Italy has less Chinese inward investment than the U.K. or Germany.

"We have to be very cautious especially in issues connected to security, telecommunications, but I don't think these agreements economically will change much in the framework we have."

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What is the Belt and Road Initiative?

Indeed, Italy is not an African country — it has a higher debt-to-GDP ratio and far lower growth than most countries on the African continent. Its economy dipped into recession at the end of last year, and the deadly collapse of its Genoa Bridge last August cast a stark spotlight on its dire need for infrastructure investment.

China and 5G: Avoiding 'dangerous situations'

Gentiloni stressed caution toward China when it comes to sensitive sectors like telecommunications, an issue dominating headlines recently amid the U.S. government's global campaign against Chinese telecoms giant Huawei. Washington says Huawei's role in building 5G internet infrastructure around the world is a security threat and will allow the Chinese government to spy on users, a claim Beijing rejects.

"I think we have to be very cautious and careful, exactly in this subject," the former prime minister said.

"Strategic infrastructure and telecommunication infrastructure, and this means now 5G ... We have a very modern infrastructure for mobile phones in our country, we don't particularly need foreign investment, and in any case we have a law — the golden power law — that allows the Italian government to avoid any form of control in our telecoms infrastructure."

Italy's "golden power" legislation refers to state powers designed to protect strategic industries, which it says it plans to extend to 5G technologies. This would entail requiring Italian companies in both the private and public sectors to declare to the government any 5G technology purchased from non-European countries.

"I hope that the new government will use these means, these tools, to avoid dangerous situations," he added.

Correction: This story has been updated to more accurately reflect what countries have already signed up to China's Belt and Road Initiative.