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Foreign policy: a lever for economic development

    An hour with Luigi Di Maio, Minister of Foreign Affairs and International Cooperation
    • Meeting in digital format
    • 8 July 2021

          Today’s international scenario is distinguished by a strong interdependence of foreign policy and domestic priorities, particularly as a lever for economic development. The pandemic has once again confirmed the need for broad multilateral cooperation in the spirit of “build back better”. This in terms of sustainable transition (production as well as consumption) and fairness, along with the management of regional and global conflicts and tensions.

          The classic spheres of Italy’s outward projection remain valid, and include multilateral globalism, the European Union and the “enlarged Mediterranean”, three levels essential to fostering Italy’s economic competitiveness and that of its businesses.

          At the wider multilateral level, the Italian G20 presidency is strongly focused on the energy transition and climate change; indeed, NATO itself has acknowledged the urgency of the climate question as directly affecting security. The COP26 contains many problematic elements and, in any case, it is probable that more advanced nations will be forced to take direct responsibility for encouraging the active collaboration of major emerging economies as these continue to safeguard their own growth prospects.

          At European level, the new set of budgetary rules and the volume of investments now available offer an opportunity to reboot, and to launch the “twin transitions” – i.e. green and digital. Italy, therefore, is a component in a European framework aiming for strategic autonomy and resilience, giving more flexibility to instruments already activated by Brussels. As is more than obvious in the tourism sector, without solid European coordination it is not going to be possible to pursue sound, balanced growth objectives. In the broader sense, European politics and equilibria are being rethought, partly for reasons contingent on the electoral cycles of France and Germany. Italian foreign policy is thus offered more room within which to steer the debate. 

          As concerns the Mediterranean, Italy’s approach focuses on the region’s inclusive recovery, with a view to the true common assets – natural resources, trade, cultural exchange – which can only be optimized cooperatively. In addition to Libya (which maintains its centrality among Italian national interests), efforts are ongoing to revive dialogue with other countries along the southern shores. It is essential to make the most of the complementarity between the various regions located around the Mediterranean, with additional outreach to the Sahel and Sub-Saharan Africa.

          Promoting Italian businesses inevitably involves innovation and the ability to access global markets (recalling that exports account for over 30% of GDP). The internationalization of the enterprise system – which now falls within the remit of the Ministry of Foreign Affairs, with greater prospects for efficiency – must also foster the attraction of foreign investments in a delicate phase of manufacturing contraction.

          One of the specificities of Italian production is a preponderance of small and medium-sized enterprises; these naturally have special concerns vis-à-vis risk when considering international projection, and therefore need the support of both diplomacy and the credit system. In order to boost the capacity to attract capital, it is essential to facilitate access, ensure visibility and improve infrastructure conditions.

          China poses an unprecedented challenge to Italy, and the West as a whole, resulting in the need to combine a firmness of values (in terms also of some geopolitical questions) and cooperation on global issues such as climate change. The China question is undoubtedly delicate from both the transatlantic standpoint and that of Europe where, moreover, intra-European competition is an added factor, particularly in light of French and German trade dynamism.

          The energy sector offers considerable opportunities directly linked with the green transition, and these affect all value chains. Nevertheless, there is deep concern over new regulations that threaten to penalize Italian and European competitiveness on global markets; current rising fossil fuel prices confirm an at least temporary barrier to making the transition to renewables. At the same time, there are concrete advantages for all the Mediterranean countries involved in implementing the new energy and infrastructure regulations, since the region’s geographical location could give it a more strategic role than it already has.

          In this, as in other sectors, public/private partnerships are going to be decisive for generating sustainable innovation and, in that sense, it becomes urgent to render the nation’s administrative machine more efficient. An emblematic case is that of electrical power production, which, due to authorization impediments, has still not managed to participate in new installation tender opportunities. This shows how the entire ecological transition must be pursued systemically and according to realistic timetables in order to avoid a negative shock to the economic fabric; seizing new opportunities hinges directly on improving efficiency.