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Italy Withdraws from China’s Belt and Road Initiative (BRI)


Italy has officially pulled out of China’s Belt and Road Initiative (BRI), marking a significant shift more than four years after being the sole G7 nation to join. The decision reflects a complex evaluation of economic, geopolitical, and strategic considerations prompting Italy to reconsider its participation in the BRI.


GS II: International Relations

Dimensions of the Article:

  1. Reasons Behind Italy’s Exit from BRI
  2. The Belt and Road Initiative (BRI)
  3. India’s Stance on the Belt and Road Initiative (BRI)
  4. Issues Concerning the Belt and Road Initiative (BRI)

Reasons Behind Italy’s Exit from BRI

Disappointing Economic Outcomes:

  • Italy, seeking investment and infrastructure development, joined BRI in 2019 amid economic challenges.
  • However, expected economic benefits did not materialize, with Chinese FDI dropping significantly from USD 650 million in 2019 to USD 33 million in 2021.

Trade Imbalance and Limited Gains:

  • Italy’s trade statistics with China did not see substantial improvements since joining BRI.
  • Italian exports to China increased modestly, while Chinese exports to Italy expanded significantly, raising concerns over trade imbalances.

Global Geopolitical Shifts:

  • Italy’s reconsideration aligns with a broader trend in Europe, reflecting concerns over China’s growing influence and geopolitical alignments.
  • Events like the Russia-Ukraine conflict and the collapse of the EU-China Comprehensive Agreement on Investment have prompted nations to reassess ties with China.

Alignment with Western Allies:

  • Italy may be inclined to strengthen ties with its Western allies, especially in the G7, as it approaches the G7 presidency.
  • Exiting BRI could be seen as a gesture of solidarity with Western partners.

Global Criticisms of BRI:

  • Worldwide criticism of BRI’s potential debt traps and lack of financial transparency has influenced Italy’s decision.
  • Reports of other countries facing substantial debt burdens due to BRI participation contribute to Italy’s withdrawal.

The Belt and Road Initiative (BRI)

  • The Belt and Road Initiative (BRI) is a comprehensive development strategy launched in 2013 with the goal of enhancing global connectivity and cooperation.
  • Initially named ‘One Belt, One Road,’ it was later rebranded as the BRI to emphasize inclusivity and openness rather than Chinese dominance.
Components of BRI:
  • The BRI consists of two primary components:
    • Silk Road Economic Belt: This focuses on improving overland transportation routes, infrastructure, and trade links across Eurasia.
    • Maritime Silk Road: Emphasizes maritime connections, including ports, shipping routes, and maritime infrastructure projects, extending from the South China Sea through Indo-China, Southeast Asia, the Indian Ocean, and reaching Africa and Europe.
  • The primary objective of the BRI is to enhance international connectivity by improving infrastructure, trade, and economic cooperation.
  • It encompasses a wide range of projects, including the development of railways, ports, highways, and energy infrastructure.
Geographic Corridors:
  • The land-based Silk Road Economic Belt includes six key development corridors:
    • China-Pakistan Economic Corridor (CPEC)
    • New Eurasian Land Bridge Economic Corridor
    • China-Indochina Peninsula Economic Corridor
    • China-Mongolia-Russia Economic Corridor
    • China-Central Asia-West Asia Economic Corridor
    • China-Myanmar Economic Corridor
Economic Impact:
  • Participation in the BRI has led to increased trade and investments with China for the involved countries.
  • Trade with BRI partners experienced an annual growth rate of 6.4%, reaching USD 19.1 trillion between 2013 and 2022.

India’s Stance on the Belt and Road Initiative (BRI)

Opposition Based on Sovereignty and Transparency:

  • India opposes the BRI project primarily due to concerns related to sovereignty and transparency.
  • India chose to boycott BRI summits organized by China in 2017 and 2019 and refrained from endorsing BRI joint statements issued by the Shanghai Cooperation Organisation (SCO).

Objection to CPEC and PoK:

  • India’s primary objection to the BRI is the inclusion of the China-Pakistan Economic Corridor (CPEC), which traverses through Pakistan-occupied Kashmir (PoK), a territory claimed by India.
  • India asserts that PoK is an integral part of its territory.

Call for International Norms and Financial Sustainability:

  • India emphasizes the need for BRI projects to adhere to international norms, uphold the rule of law, and ensure financial sustainability.
  • India is concerned about the potential creation of debt traps, as well as environmental and social risks for the countries hosting BRI projects.

Promotion of Alternative Initiatives:

  • Instead of participating in the BRI, India has been actively promoting alternative connectivity initiatives.
  • One such initiative is the Partnership for Global Infrastructure and Investment (PGII), a G7 effort aimed at funding infrastructure projects in developing nations.

Issues Concerning the Belt and Road Initiative (BRI)

Debt Sustainability and Transparency:

  • One of the primary issues associated with the BRI is the debt sustainability and transparency of its projects, especially in countries with weak governance, high corruption, and low credit ratings.
  • Accusations of “debt-trap diplomacy” have arisen, with critics suggesting that countries like Sri Lanka and Zambia, unable to repay BRI-related loans, have faced pressure to surrender strategic assets or make political concessions.

Decentralized and Bilateral Nature:

  • The BRI consists of primarily bilateral projects rather than a centralized, multilateral initiative. This decentralized approach can lead to coordination and governance challenges.
  • Unlike initiatives like the Asian Infrastructure Investment Bank (AIIB), the BRI lacks a centralized governing structure, making collective issue resolution challenging.

Geopolitical Rivalries and Disputes:

  • Geopolitical rivalries and disputes, such as the India-China border dispute, have had repercussions on the implementation of BRI projects in certain regions.
  • Political tensions can undermine the progress of the initiative, affecting project timelines and outcomes.

Environmental and Social Impacts:

  • BRI infrastructure development projects have faced criticism regarding their potential environmental and social impacts.
  • The challenge is to ensure that BRI projects prioritize environmental sustainability and consider the well-being of local communities.

Geopolitical Concerns and Influence:

  • The BRI has raised geopolitical concerns, especially regarding China’s growing influence and control over critical infrastructure in partner countries.
  • These concerns have led some countries to reevaluate their participation in the initiative and seek to balance their interests.

-Source: Indian Express

February 2024