European Central: Italy Limits Chinese Influence In Pirelli
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The Italian government stopped growing Chinese influence in the prestigious tire brand Pirelli. This is a result of Sinochem, Pirelli’s largest investor with 37 percent of shares, attempting to revise the shareholder pact to allow itself to choose nine of fifteen board members. This new pact was revealed in late May and Pirelli’s new board would be appointed on July 31, giving little time for the Italian government to intervene. Prime Minister’s Meloni ruling coalition did intervene however thanks to the “Golden Powers” rules.
These rules allow the Italian government to protect the ownership of companies in sectors which are determined by the government to be of national and strategic interest. Pirelli currently dominates the tire market for luxury vehicles and produces 50 percent of tires for cars in the prestige car sector. Currently all cars in Formula 1 use Pirelli tires as well. Pirelli has been more willing than other tire manufacturers to produce quicker deteriorating tires which add to the excitement of the race. In June, Italy used the “Golden Powers” rules to grant Camfin the competency to choose Pirelli’s CEO. Currently Camfin is the second largest investor in Pirelli with ownership of 14.1 percent of Pirelli’s shares. There is no sign yet of Sinochem pulling out or reducing its shares in Pirelli as a result of this decision by the Italian government. This may partially be because of the difficulty of finding an investor to buy out Sinochem’s stake in Pirelli. Sinochem’s shares are worth $1.9 billion (1.7 billion euros). Besides having the financial means, the new investor would also have to abide by Italy’s “golden powers” rules along with Italian antitrust requirements.
Italy Yet To Renew Belt And Road Initiative
Back in 2019 Italy joined China’s Belt and Road Initiative and was the only G7 to date which has done so. Former Prime Minister Conte thought the deal could help stimulate Italy’s economy. With the Belt and Road Initiative China aims to connect itself with Asia, Europe and elsewhere with an expanded version of the ancient Silk Road. China plans to do this through large scale infrastructure projects aimed at making trade easier. Italy’s current deal with the Belt and Road Initiative expires early next year yet it appears Italy will most likely not renew the deal. Prime Minister Meloni recently discussed in an interview how it is still possible to maintain a good relationship with China outside the Belt and Road Initiative. Even before Meloni, Prime Minister Draghi also distanced Italy from China and was not as open to developing a close relationship with China as Conte was.
The deal between China and Italy expires in March 2024. Three months before the deal expires, China and Italy need to inform the other nation that they are pulling out of the deal otherwise the deal will automatically be renewed. Giorgia Meloni, Italy’s first female prime minister has made it clear before she was elected that she did not approve of Italy becoming part of the Belt and Road Initiative, making it likely that Italy will pull out before the deal is automatically renewed. Many nations are cautious about the deal as it allegedly gives China access to vital infrastructure and sensitive technologies.
While not renewing the deal may be partially due to mistrust of giving too much information regarding infrastructure to the Chinese government, it is also partially because Italy is wary about becoming too economically dependent on one nation. Italy and other European Union nations had to rush to free themselves of energy dependence from Russia after President Putin began his second invasion of Ukraine on February 24th, 2022. Germany’s economy is also currently suffering as Chinese manufacturing continues to develop and compete with German manufacturers instead of helping the German economy grow as in the past. This is further evidence that Italy cannot let itself become economically independent on one nation.
Chinese Police Stations In Italy
China does have some concern for foreign interference from China. Currently Italy has the highest number of unofficial Chinese police stations. These stations offer administrative services to Chinese citizens and evidence suggests that the Italian government cooperated with the establishment of these stations back in 2016, however the stations are now accused of illegal practices. There is nothing wrong with these stations giving Chinese citizens the opportunity to renew their Chinese drivers license without having to return to China, but the problem is that these stations are also used for the Chinese government to crack down on Chinese dissidents. Besides Italy, Chinese police stations are also located in 52 other nations.
The Chinese government claims that police stations are not police stations but are actually centers that are volunteer ran that solely help people renew their documents. It is yet to be seen whether or not these centers will be shut down if this is found to be inaccurate by the Italian or other national governments. While Italy does not seem as concerned currently about investigating the police stations, the United Kingdom, the Netherlands, Germany and Canada have all opened police investigations into the matter.
Conclusion
The Italian government took steps to limit Chinese influence in Pirelli, but it is clear that curbing China’s role in Italy will not stop here. The only G7 nation to be part of the Belt and Road Initiative will likely not renew the deal as well. This not just a result of concerns specific to China but Italy’s realizations after Russia invaded Ukraine again that Italy cannot become too economically dependent on one nation. Regardless of how a nation may seem presently, it has the potential to become unstable the next which can damage Italy’s economy.
