Thursday, August 10, 2023

Oliver Hartwich: Italy has left China's Belt and Road initiative - Luxon should consider why

In the world of politics, timing is everything. And sometimes, the timing of events can create a curious contrast that cries out for a closer look.

Such is the case with recent developments involving China’s Belt and Road Initiative (BRI), a global infrastructure project that has been controversial since its inception in 2013.

Last week, opposition leader Christopher Luxon said that he would “absolutely” accept money from China to fund new roads. This came in the context of National’s $24 billion infrastructure plan. As Luxon argued, accepting private and foreign investment would mean more infrastructure sooner. Few would disagree, but the question is about the state-controlled dimension of BRI.

Luxon’s suggestion was instantly met with criticism from an unlikely coalition of the ACT Party and former Prime Minister Helen Clark. They all warned that New Zealand joining the BRI would be a risky move, and ACT quickly ruled it out should it be in government with National after 14 October. As David Seymour said, “We need to welcome foreign investment, but not at the cost of being bullied or cowed by a bigger nation looking to gain leverage.”

But it was the timing of Luxon’s suggestion which made it particularly interesting. It came in the same week that Italy, the only G7 country to have joined the BRI, announced its decision to withdraw from the Chinese initiative.

This curious coincidence warrants a closer examination of the BRI and the geopolitical implications of these contrasting decisions.

Sometimes called “The New Silk Road”, the initiative is a cornerstone of China’s foreign policy under President Xi Jinping. Its stated goal: to link China with Europe, Africa and Southeast Asia through a network of land and sea routes.

But the BRI is also, and perhaps predominantly, a means for China to assert its global influence.

Italy joined the BRI in 2019 when it was governed by a populist government led by the Five Star Movement and the Lega party.

At the time, the decision was seen as a significant victory for China and a challenge to Italy’s EU partners and the United States. And no wonder. Italy is not just a member of the EU and NATO but also a member of an elite club of the leading Western economies, the G7.

Luring such a country into its BRI club would put China one step further towards becoming the world’s new superpower.

However, the promised economic benefits of the BRI never materialised – a theme we have seen repeated across the globe. Meanwhile, China’s geopolitical behaviour has become more assertive (to put it mildly). Both developments have led to a reassessment of Italy’s relationship with China.

Under its relatively new Prime Minister Giorgia Meloni, Italy has sought to strengthen its ties with Western democratic countries while distancing itself from China. Thus, Meloni’s government has now signalled its intention to withdraw from the BRI by the end of the year, citing both unfulfilled promises and strategic considerations.

Italy’s decision also reflects a broader shift in global attitudes towards economic dependence on Beijing.

Over the past few years, the BRI has come under increasing scrutiny. For example, it has been criticised for its lack of transparency, likely environmental impact, and questionable labour practices.

In particular, the BRI’s critics point out that China’s initiative often results in “debt-trap diplomacy” and allows China to gain undue influence over other countries’ internal affairs. And indeed, the BRI played a role in Sri Lanka’s economic troubles as the country was struggling to service its large debt to China.

In Europe, the three Baltic states of Estonia, Latvia and Lithuania together with the Czech Republic have withdrawn from the “17+1 Initiative”. That programme, separate from BRI but linked to it, is a platform for cooperation between China and Central and Eastern Europe, aimed at promoting business and investment relations. Yet, in light of China’s tacit support for Putin’s war on Ukraine, Eastern European political leaders have become increasingly sceptical.

Against this backdrop, the suggestion by New Zealand’s opposition leader, Christopher Luxon, to accept Chinese funding for infrastructure projects is jarring.

New Zealand is a member of the Five Eyes intelligence alliance, which also includes the United States, the United Kingdom, Canada, and Australia.

These five countries are even more closely linked than the members of the G7. Where the G7 is mainly about economic cooperation, the Five Eyes is a close security partnership and its members have traditionally aligned with each other on major foreign policy issues. Accepting Chinese funding for infrastructure projects could put New Zealand at odds with its intelligence and security partners.

When Italy joined the BRI in 2019, it was driven by the hope of economic gain. The move was not thought to have major security implications.

As it turned out, the world does not work like that. It would be nice if countries could neatly separate economic from geopolitical and security concerns. But in today’s security environment, in which the neo-imperialist ambitions of China and Russia have become so clear, such an approach would be naïve.

Italy learnt this the hard way, and other countries should learn from its mistake.

Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank. This article was first published HERE.


Anonymous said...

Alliances and co-operation arrangements are extremely important - they go way beyond money alone.

Mr Luxon seems to be an avid globalist.......he needs to be prudent given the possible pitfalls involved.

Max Ritchie said...

This is an indictment of Luxon who gives no indication of thinking strategically eg ruled out any defence expenditure increase (“National has other priorities”), will ban cellphones in schools but no policy on teacher selection or training. Bootcamps too, 60 serious criminals sent off to the Army? There’s a pattern here - some lightweight idea becomes a policy with no apparent thought or detail. Seymour, OTOH, shows a balanced, thoughtful approach.

Anonymous said...

Another mechanism that's used to loot (wealth transfer) a sovereign nations assets is called Public Private Partnerships, where the public is the hapless taxpayer and the private are the unelected NGO's.

Ray said...

Dear Chris,
Your time to shine is fast approaching. As you are furiously peddling that pushbike down the fence line take note of all the little articles that are popping up, full of commonsense and ideas from a wider audience than you appear to be tuned into. Remember Chris, in your game you very rarely get a second go at the pie.

Anonymous said...

To Max
Right - provided ACT gets enough seats. Otherwise all the intended "real change" policies will be compromised in the coalition deal.

Getting out of the current mess is a real mine field.

Tony M said...

Aren't we conflating BRI with direct overseas investment?

My observation of BRI is that is, at least, an attempt to side-step the west's capability to interdict CCP maritime trade by using land bridges. The addition of relatively isolated additional actions such as the String of Pearls does not diminish its central strategic purpose. That is why Bagram airbase in AFG was so important: it could threaten CCP land routes. Not any more.

Also BRI (proper) comes with so many strings such as CCP labour to fully exploit CCP capital.

I don't necessarily see an ability to attract Chinese direct investment (money only) in the same light.

Anonymous said...

Thank you Oliver for bringing this to our attention and providing some sensible insight. I had deep concerns about it from the get go and your comments only underscore the need for ACT to be a significant 'steadying' influence. Mr Luxon is only really interested in one thing, and that is becoming PM. As the days tick by that's becoming increasingly obvious and we need to be very careful about who we choose as bedfellows - especially financial and/or security wise.

Anonymous said...

It's incredible to think that our National Security is left to such amateurs. Surely Opposition leaders and shadow ministers should be included in all potential security arrangements.
I suppose when governments change it is left to the secret agents of the NZ security organisations, of which there are many, to be the worm in the ear. Then we hear the announcements of policy re-writes to advise what was inevitable all along. Scary that it can all be so politicised but then everything is these days.
It's obvious Luxon has no idea about most things and will be led by the nose by his masters.