Italy’s Investment in Africa is Not a Passing Fancy

EU migrant crisis, future of the European Union, Italy, East Africa, emerging markets, foreign investment in Africa, Italy economic crisis, Horn of Africa, World news analysis, Africa this month

Horn of Africa © naruedom

September 20, 2016 15:03 EDT

In the second of a three-part series, Fasil Amdetsion looks at the evolution of Italy’s relationship with its former colonies in the Horn of Africa. Read part 1 here.

Italy’s postcolonial relations with the Horn of Africa can be summed up as undulant: occasionally on the rise, propelled toward a crest by sporadic government officials’ visits or business deals but, just as often, on the low.

Government policies that belied pride in Italy’s colonial legacy, rather than regret, certainly damaged relations. So did the fact that Rome had other priorities during most of the Cold War: a commitment to building the European Union (EU), preservation of the transatlantic partnership and the cultivation of ties with Latin American countries with large Italian expatriate communities. The relationship with Africa was woefully neglected.

Besides, even if Rome had made Africa a priority, one wonders how much it would have been able to implement any long-term “redirect” in its focus given its frequent changes in government. Of course, poor leadership in the Horn of Africa, coupled with civil wars engulfing most of the region, played a significant role in precluding closer ties as well.

Turning to Africa

Laudable as it is, the Renzi administration’s announcement of an intention to re-engage with Africa is not unprecedented.

Previous Italian leaders have, from time to time, spoken of a similar reset. Aldo Moro, a Christian Democrat who served as foreign minister before being kidnapped and murdered by the Red Brigades, defied expectations when, as Italy’s diplomat-in-chief, he sought to revive ties with the countries of the Horn. In doing so, he surprised observers who had reputed him as too lazy and too immersed in domestic politics to be an incisive foreign minister. Indeed, on an official visit to Ethiopia, informed that the umpteenth political crisis in Rome had led to the collapse of the government of which he was a cabinet member, he refrained from interrupting his trip and continued his visit, desirous as he was of avoiding any misunderstanding or causing offense.

Another Italian leader who articulated a pro-Africa policy was Bettino Craxi, Italy’s influential socialist prime minister of the 1980s. While speaking at the Constitutive Congress of the International African Socialist in Tunis, Craxi declared: “In every field, when it comes to Africa, we Italians are seriously behind others. Greeted everywhere with affection and respect, we have been late to organize a more effective policy, a more active and widespread presence.” Those words still ring true today, 35 years after they were spoken.

Previous efforts and appeals to re-engage with Africa were seldom met with any follow-through. What reason, then, to treat Prime Minister Matteo Renzi’s pronouncements differently?

In this instance, Italy has followed rhetoric with some visible action. Beyond the convening of the first Italy-Africa Ministerial Conference, Renzi has visited Congo-Brazzaville, Ethiopia, Kenya, Mozambique, Nigeria and Senegal. None of his predecessors had ever even made a trip south of the Sahara while in office.

It is also during Renzi’s tenure that Italy has participated in international fora dealing with issues of relevance to Africa at the highest level. At the 2015 United Nations Conference on Financing for Development in Addis Ababa, for example, only two donor states were represented at the head of government level: Sweden and Italy. Of course, it was no coincidence that these two states were also campaigning for a non-permanent United Nations Security Council seat. Whether these initial gestures will be followed by more sustained measures remains an open question.

Political Longevity

However, Renzi, as opposed to his predecessors, has had the political space to redirect some of his government’s focus to Africa. He has taken advantage of this opportunity.

Italy has had 63 governments over the last 70 years, and four already this decade. Recently, however, legislators have refrained from causing any fracas that would precipitate the collapse of the Renzi government and a call for elections.

The Renzi government has been in power for two and a half years, far above average by the warped standards of postwar Italy. Cynically—but not without reason—Italians typically point out that legislators’ reluctance to bring the government down is due to a revision of the laws governing certain emoluments or pension payments.

Previously, these would have been owed to members of parliament (MP) irrespective of length of service. Theoretically, under the old system, an MP who had taken up his seat after winning an election, served only one day in parliament before elections were called, and then failed to get reelected, would still be owed certain emoluments. In the early 1990s, the laws were changed to require service of 30 months before MPs were eligible for such emoluments. The laws have since been changed making eventual payment of pension-related emoluments conditional upon an MP serving one full term in parliament.

The Renzi government’s longevity is, of course, attributable to other, arguably more important factors, but it is undeniable that more time in office has given him space to leave his imprint on Italy-Africa relations. Future prime ministers will have the same opportunity if their time in office is similarly long-lived.

Convergence of Interests

As important as the longevity and stability of Italian governments to resuscitating Italy-Africa relations is a convergence of interests between the two sides.

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Italy’s economic indicators have been dismal for many years now. Workers’ economic productivity has decreased, while labor costs have remained steady. Unemployment stands at 12%, while youth unemployment remains stubbornly high at 35%. Mind-numbing amounts of red tape make Italy one of the most expensive places in the rich world to start a business. Taking stock of Italy’s sub-par economic performance, the International Monetary Fund (IMF) has forecast that unless policymakers aggressively tackle a slew of systemic issues, the Italian economy may not return to levels seen before the 2008 financial crisis until the mid-2020s, in effect noting that Italy faces two lost decades.

One among several strategies that the Italian government is pursuing in order to promote economic growth is to encourage Italian companies to expand into emerging markets. The government’s interest in nudging Italian investment toward Africa does not appear to be a passing fancy. It is, in part, consistent with the implementation of recommendations contained in a voluminous report authored by the Italian Institute for the Study of International Politics, which was delivered to the Ministry of Foreign Affairs. The report urges Italian investment in Africa to alleviate Italy’s economic crisis.

As the world’s eighth largest economy, Italy can play an even larger role in trade and investment in sub-Saharan Africa. Both Italy and the African Union (AU) acknowledge that annual trade amounting to €38 billion is far below potential.

As the home to many large internationally competitive corporations, instantly recognizable high-end brands and many successful small and medium-scale enterprises, Italian companies can provide products that are in demand in African markets with the growing middle classes. But they can also use African countries as a base for production.

Ulterior Motive

An obvious ulterior motive for Italy’s engagement with Africa is migration. It is impossible for Italy to tackle the challenges posed by migration without cooperating with African governments and civil society. Of course, the challenges posed by migration bedevil Europe as a whole, and not only recently.

In 2010, for instance, word leaked of the fact that the EU was contemplating paying Libya’s Muammar Gadaffi €5 billion a year in order, as the late Libyan leader not-so-diplomatically put it, to prevent Europe from becoming “black.”

Italy, as a “frontline” state has been particularly active within the EU and international fora on the migration issue. Under plans jointly drawn up by the Italians and European partners, the EU would seek enhanced security at African borders and the right to repatriate migrants without the right to stay in Europe in higher numbers. In exchange, Europe would allow more legal migration. It would also pledge a larger sum than the €1.8 billion offered at the Valletta Summit on Migration. The funds being discussed amount to €10 billion. Predictably, the sticking point is the financing. The Italians have proposed issuance of EU-Africa bonds, but the Germans are resolutely opposed.

For African states, the benefits of enhanced cooperation with Italy are self-evident. Although foreign direct investment (FDI) flows last year were up globally by about 40%, they were down overall in Africa by 7% in 2015 when compared to 2014. West and Central Africa fared poorly (18% and 36% respective drops in FDI), East Africa less so (2% decrease in FDI), while southern and northern Africa experienced upticks (2% and 9% in FDI).

This decline in FDI is taking place in a context in which low commodity prices have adversely affected several African economies, who in the aggregate might be headed toward a 17-year low in gross domestic product (GDP) growth. Though not a panacea, Italy can be a source of increased FDI for the continent.

Jostling for Influence

Africa can also reap other strategic dividends in the near and medium term. Consider the European Union’s current state. The EU remains as divided as it ever was post-Maastricht over a plethora of issues, some existential. To mention just a few well-known examples: dissension over how to galvanize a still-anemic continental economy and how best to confront reduced, but still significant, migratory flows.

EU member states also remain unable to achieve the sort of cohesion necessary to formulate truly common foreign and defense policies. With Brussels failing to muster a common voice on these and many other issues, one is reminded of Henry Kissinger’s apocryphal remark: “Who do I call if I want to speak to Europe?”

Given Europe’s current discombobulated state, Africa stands to gain from having as many interlocutors as possible with Brussels. Italy can serve as one such partner. By forging a relationship based on mutual interests, Italy can advocate in favor of more Africa-friendly positions in Brussels. This would not be a negligible contribution to Africa’s interests. After all, EU institutions and EU member states are Africa’s most important source of development assistance.

Beyond Brussels, Italy can help facilitate political dialogue with other countries in the wider Mediterranean, including the Balkans. A more stable Italy—with fewer transient governments—will wield greater political influence commensurate with its economic heft. It can exert such influence with its neighbors and within European institutions.

It is one of those ironies of politics that former colonizers continue to exert undue influence in their now independent former colonies in amounts disproportionate to the influence they wield in the world at large.

In many ways, it has already started to do so. For instance, Italy, together with the US, is taking the lead in conflict resolution in Libya. In the EU, where Italy’s “decision-making power is typically regarded as ‘that of a medium-sized power, not of a big country,’” Renzi successfully flexed his muscles to have Federica Mogherini appointed to the post of EU commissioner for foreign affairs.

Predictably, Italy will seek to leverage greater stability in other geographic areas as well, Africa included. For historical reasons, perhaps, nowhere more so than in the Horn of Africa. In prior years, Italy offered its good offices in order to mediate the Ethiopian-Eritrean border dispute and Egypt and Ethiopia’s altercation over the latter’s construction of a dam on the Blue Nile. Italy’s efforts to secure an important mediatory role in both cases came to naught.

Italy has also constantly sought to position itself as a player of importance in the Somali peace processes. Here, it has attained more success as reflected, for example, in its selection as chair of the the Inter-Governmental Authority on Development (IGAD) Partners Forum—a regional organization comprising Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan and Uganda.

Italy’s jostling for influence in the Horn of Africa bears more than just a tinge of neocolonialism. It is one of those ironies of politics that former colonizers continue to exert undue influence in their now independent former colonies in amounts disproportionate to the influence they wield in the world at large.

Ultimately, political gestures must almost always be reciprocated with a quid pro quo. If African states see value in Italy interceding on their behalf in Brussels, Rome can reasonably expect to play a larger role in Africa. A more prominent continental role by Italy could be acceptable to African states so long as Rome is neither biased nor overbearing in its mediation efforts.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: naruedom

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