VIEWS FROM THE CAPITALS

Autumn 2007

by Serena Giusti

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One of the few things that Italian politicians agree on is the importance of Italy’s special entente with Russia. Such a show of unity is rare in a country justly famed for its fragmented and feuding political parties. The centre-left coalition government led by Romano Prodi and Silvio Berlusconi’s centre-right bloc have used almost identical tactics for dealing with Russia. They have employed diplomacy and political skill to earn lucrative energy contracts for Italian companies, and to expand cooperation into aviation and railways, mineral exploitation and nuclear power generation. It would seem that Italy harbours ambitions to become Russia’s trading gateway to Europe.

Both Berlusconi and Prodi are pragmatic in their approach towards Moscow; human rights are seldom mentioned. Their primary worry is Italy’s dependence on Russian energy as the country got 32% of its gas from Russia in 2005 and more than 17% of its oil, making it second only to Germany in terms of Russian imports. The economic importance of other commercial contacts is also on the rise, and trade between Italy and Russia last year jumped 19% to €21.2bn. Italy became Russia’s third largest trading partner, after Germany and China.

Italian industrial links with Moscow had already increased significantly during Berlusconi’s terms of office in 1994-1995 and 2001-2006, as did cultural and regional ties. Relations were further cemented by the personal rapport between the two country’s leaders and by Italian support for Russia in multilateral talks. Since Prodi took over again in May last year, he and Russia’s President Vladimir Putin have met four times, whereas so far Prodi has met US President George W. Bush just twice. These close contacts bore fruit for Rome last March when ten agreements were signed during Putin’s visit to Italy. They ranged from cooperation on culture, education and the protection of intellectual property rights to multi-million dollar industrial contracts. Italian defence giant Finmeccanica is to work with Russia’s Sukhoi to build a medium-range Superjet-100 civilian aircraft, and will also cooperate with the Russian railways to develop a new track along the eastern Black Sea coast. A $264m credit deal was finalized between Russia’s VTB and Italy’s Mediobanca and another $132m loan was signed between VTB and Intesa-Sanpaolo. The Russian Federal Atomic Energy Agency and the Italian fuel and energy company Enel plan to cooperate in the energy sector and over nuclear power generation.

Italian diplomats and politicians have also been working behind the scenes to win Moscow over to the idea of reciprocal trade deals. This tactic paid off last November when Gazprom formed a strategic partnership with Italy’s ENI that allowed it access to the Italian gas market in return for letting ENI help develop Russian mineral deposits. A further Gazprom-ENI partnership is for the construction of a new natural gas pipeline across the Black Sea from Russia to Europe. This South Stream pipeline will give Russia a supply route straight into central and southern Europe at a time other western countries, including France and Germany, are backing projects such as the Nabucco gas pipeline bypassing Russia and providing central Asia with direct access to Europe.

Italy’s commercial relations with Russia therefore extend far beyond the economic sphere and offer Rome an opportunity to bridge the political gap between Moscow and the European Union. Some Italian foreign policymakers believe that eastern European countries and Germany are too weighed down by the baggage of 20th century history to fulfil this role, while EU countries anxious not to weaken NATO tend to be cautious about close liaisons with Russia. Berlin’s recent rapprochement with Washington further opens the diplomatic door between Rome and Moscow.

But the Italian government also recognises, apparently, that there is a risk Russia may try to use this special entente against the EU to divide and rule. Rome therefore favours greater cooperation with Russia through the EU rather than by going it alone. It would seem that bringing Russia closer to Europe now presents Italian foreign policy with one of its greatest challenge.