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Workers take down a Belt and Road Forum panel in Beijing, on April 27, 2019.GREG BAKER/AFP/Getty Images

Giorgia Meloni, the leader of the far-right Brothers of Italy party, made more than a few European politicians cringe when she was elected Prime Minister last October. She would lead a state, and a coalition government, with Euroskeptic, pro-Russia leanings. Would she become a headache for the pro-West, European Union countries?

On the contrary. Ms. Meloni moved fast to prove she would not go rogue – that Italy, stuffed with U.S. military bases, would affirm its transatlantic alliance credentials. She condemned Russia’s invasion of Ukraine, sent weapons to the besieged country and gave no hint that she would distance Italy from the EU.

Still, everyone knew that Italy was not fully inside the Western tent. That’s because Italy, alone among G7 countries, was a member of China’s Belt and Road Initiative (BRI). With great fanfare, Italy had joined Chinese President Xi Jinping’s global infrastructure and investment club in 2019, delivering a huge political win to Beijing and creating suspicions in the West that China would use the EU’s third-largest economy as a Trojan horse to infiltrate Europe.

Today, Ms. Meloni has a dilemma: abandon BRI or stay put? The United States and NATO would love to see Italy ditch the BRI, all the more so since China has turned into a Russian ally, even if there is no evidence that Beijing is sending lethal weapons to Moscow to bolster President Vladimir Putin’s sputtering war machine in Ukraine.

Rome must decide by the end of the year whether to withdraw formally from the BRI. Waffling to buy time would backfire. In the absence of a hit-the-road decision, Italy’s BRI membership will automatically renew in March, 2024, for five years. The deadline puts Italy at the forefront of the effort among EU countries to redefine their relationship with China as tensions between it and the West intensify. If Italy finds the right formula, other countries might be inspired to copy it.

In the broad economic sense, Italy cannot lose. The BRI, in Italy’s case anyway, has been mostly irrelevant, economically and financially speaking. So far, it has failed to deliver a gusher of investment.

When Italy, then under the populist government of Giuseppe Conte’s Five Star Movement, and China signed the BRI partnership four years ago, it did not come with a commitment from either country to ramp up their two-way investments or trade, even if it was assumed that China coveted a few Italian ports – notably Trieste, in the northern Adriatic, one of the gateways to Europe’s industrial heartland. (China had redeveloped the Greek container port of Piraeus, turning it into one of the biggest and most competitive logistics hubs in the Mediterranean.) Chinese investment in Italy has actually plummeted in recent years, according to New York’s Rhodium Group, reaching an insignificant US$33-million in 2021.

The point being, that Italy waving arrivederci to BRI seems unlikely to mean much. France and Germany, the two largest EU economies – neither of them BRI members – trade far more with China than Italy does. And Italy’s trade with China has recently soared even though it has made no secret of its plan to review its BRI membership and possibly end it.

According to Italian government figures, Italian exports to China rose 92.5 per cent in the first quarter, to €7.1-billion, over the same period in 2022. A surge in exports of Italian-made pharmaceuticals was behind the climb, leading to speculation that China boosted the purchases to try to convince Ms. Meloni to stay in the BRI.

What will Ms. Meloni do? My guess is that she will gamble that China will not punish Italy if it withdraws from the BRI, which was always more of an exercise in diplomatic PR than an investment lubricator. Yes, the exit of a European G7 economy would bruise Mr. Xi’s ego, even as it would flatter U.S. President Joe Biden’s. But would Mr. Xi really erect a wall between the two countries? China needs European trade, and retaliating against Italy would not improve its standing with the EU. “China does not want to lose Europe,” said George Tzogopoulos, a lecturer at the European Institute and the author of the 2021 book The Miracle of China: The New Symbiosis with the World. “The question is not whether Italy leaves BRI; it’s whether Italy can find a way to protect its European interests without alienating China.”

What Italy and other EU countries are trying to do is redefine their relationship with China so that they are not forced to choose between it and the United States. The Meloni government is making its mark on that front even before it decides whether to leave the BRI. In recent weeks, it has taken measures to prevent China from controlling the future of Pirelli, the Italian tire maker, sole supplier of racing rubber to Formula One and source of national pride. Evoking its “Golden Power,” Rome has imposed restrictions that would protect the autonomy and Italian identity of Pirelli even though a Chinese company, Sinochem, owns 37 per cent of the shares.

The Chinese media complained but they had no right to, given the fact that no European company would be allowed to control a Chinese equivalent of Pirelli or any other industry deemed “strategic.” Italy will survive leaving the BRI. Non-BRI countries in the EU are thriving by trading with China. It just took Rome a few years to realize that the BRI was more talk than action and that Italy can protect its economic sovereignty just as China does.

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