Chinese Roads Lead to Rome: How Could This Have Happened?
Edward Yuan, Print Staff Writer
September 7 2020
All roads lead to Rome. As Italy draws closer to China, it seems as China's Belt and Road will be no different. With Italy's commitment to the Initiative, that marks the first G7 economy to sign onto China's BRI, the 16th EU member state. Of course this is old news, with Italy's participation formally beginning in March of last year. But In the wake of the coronavirus, China's influence in Europe is once again at the forefront of discussion. Questions regarding the long-term impact of growing Chinese influence have again arisen as many European states have become increasingly dependent on Chinese assistance in fighting this ongoing pandemic.
But the growing shadow of Chinese influence, and it's major consequences and the debate surrounding it are not the point of this article. Rather the focus of this article is on a single Important question: how is it possible that the Italian announcement to join the Belt and Road Initiative came only two months after the EU labeled China “an economic competitor in pursuit of technological leadership and a systemic rival promoting alternative models of governance”? What could have driven a firm member of the western Democratic community to say yes to the kind of authoritarian regime that regularly oppresses its people and arrests not only foreign journalists, but also it’s only citizens?
It began with the global financial crisis of 2008. The collapse of various banks as a result of the Crisis and the Great Recession that followed triggered the European debt crisis at the end of 2009. The Eurozone had previously incentivized the more wealthy northern European members to lend to the European south, creating an unsustainable relationship of perpetual lender and perpetual borrower inside the Eurozone, with the borrowers raking up enormous deficits, only to cover them though further borrowing, resulted in unmanageable levels of debt in the borrower states. But when the global financial crisis hit, they found themselves unable to borrow as they had done for decades, as the European financial sector was itself in crisis. To prevent collapse, these states activated bailout programs provided by the European Commission, the International Monetary Fund, and the European Central Bank. And through the Troika, as the three institutions would become known, prevented economic meltdown, they in exchange required harsh restrictions on governments spending, strict austerity measures and forced sale of government assets pressuring many struggling states into difficult situations as in many cases, assets though eagerly sold were not so eagerly purchased.
It is in this context that China made its breakthrough into Europe, providing investment and economic opportunity where the EU had instead just forced austerity. The greatest example of which is the Port of Piraeus. Originally owned by the Greek government, it was an assets to be sold off as part of the bailout agreement. But the notoriously inefficient and protest stricken port, barely functioning even before the crisis, found no buyers in Europe. It was instead purchased by the Chinese and over the next decade transformed into a bustling trade hub. Piraeus, which was insignificant before the crisis, would by 2018 become the 6th largest port in Europe. This same transformation would happen over Europe in countries devastated by the debt crisis as China stepped in. Time and time again, as other European countries and corporations refused to step up, Chinese investment would arrive to fill the gap. And while Italy and Greece would from the end of 2013 spend three years continually calling on the EU for pan-European investment programmes, such proposals would be ignored or rejected outright by major eurozone members. All the while struggling states continued to turn to Chinese investment, seeking the kind of results produced in the port of Piraeus.
This abandonment of European Unity that allowed China to gain a foothold in Europe is best exemplified in the response of the major Eurozone members when discussing their response in the face of the pandemic. The "Coronabond", a proposed debt instrument backed by Eurozone members, would lower borrowing cost for the hardest hit, and in the majority of cases the most indebted, states. The goal being to prevent another debt crisis in the face of the pandemic and free up the resources necessary for recovery, both in the economy and public health. The reply was outright rejection by Germany, the Netherlands, Austria and Finland, dubbed the Eurozone's fungal four. They argued that It could only serve to punish those countries that had practiced proper preparation and financial responsibility, while encouraging further fiscal mismanagement, in those that had not. Moral hazard, they argue, would be the only result of European solidarity. The Dutch Minister of finance even went as far as to call on the EU to investigate the reason as to why many Eurozone states had failed to properly sort out their finances in the run up to the pandemic. As a result of this fiscal moralist mentality even in the midst of the Coronavirus, that has driven several, western, developed, NATO member States to declare openly their intention to join the Belt and Road Initiative, to seek aid from not the EU itself, but China. So it’s not a matter of Italy, Greece etc. having abandoned Europe, but a very clear case of Europe leaving them behind.
Now of course all of this might seem preposterous, inane, and maybe a little asinine, but this is the current state of the world. As the EU loses its ability to stand as a united front, the possibility of a European bloc with its own sphere of influence becomes nothing more than a fleeting dream. Europe, is in this age the next political frontier, is once again a battlefield of opposing political forces, with Italy once again a border region of this new cold war. These shifts though have been in the wind for a long time, only to be accelerated and made more visible by the ongoing pandemic, the failure to foresee these changes would be laughable if not so concerning. As always, hindsight is 20/20.