Italy has signaled to the US that it intends to pull out of a controversial investment pact with China before the end of the year.
Italian Prime Minister Giorgia Meloni reassured US House Speaker Kevin McCarthy during a meeting in Rome last week that while a final decision hasn’t been taken, her government is favoring an exit from its role in China’s massive Belt and Road Initiative, according to people present at the talks.
Italy signed onto the infrastructure initiative in 2019 when Giuseppe Conte was premier, becoming the only Group of Seven country to become part of the deal. Participation will automatically renew in 2024 unless Rome actively exits the agreement.
Italy, like much of Europe, has been caught between escalating tensions between Washington and Beijing, which have compounded in light of Beijing’s continued support for Russia. European countries are struggling to balance a desire to engage with China on trade and investment while pushing back against claims of economic coercion.
A spokesperson for Meloni declined to comment. McCarthy’s office didn’t respond to requests for comment.
China’s Ministry of Foreign Affairs stressed that the two countries have seen “fruitful cooperation” in trade, manufacturing and clean energy since signing the agreement.
“The two sides should tap further into potential in BRI cooperation and step up mutually beneficial cooperation across the board,” foreign ministry spokesman Wang Wenbin told reporters at a regular press briefing on Wednesday.
The US has actively pressured Rome to take a public stance on the issue, and ditch the pact, said the people, who asked not to be identified because the discussions are private.
Meloni’s diplomatic advisers are still discussing the details and timing of a decision, fearing economic retaliation from China, and nothing will likely be made public before the start of the G-7 leaders summit in Hiroshima, Japan, on May 19, according to the people.
The potential move is closely linked to Meloni’s stance on Chinese investments in Italy and in particular on an upcoming choice on whether to use executive power to curtail the influence of China’s Sinochem Holdings Corp., the largest shareholder in tire maker Pirelli & C. SpA, the people said. That decision has been delayed to the end of May.
Bloomberg reported last month that Italian officials are discussing a range of options as part of talks with Pirelli investors over the company’s ownership structure. The government could take a more neutral stance on Sinochem’s role as part of the overall decision on Belt and Road exit, one of the people added.
China’s Belt and Road Initiative has funded $900 billion in infrastructure projects globally.