Using Italy's discontent with its membership in the EU, Moscow tries to widen its relations with Rome to acquire reliable ally in Europe during and after the EU crisis. Italian authorities don't mind - they have elections to worry about.
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| Vladimir Putin and Silvio Berlusconi |
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Russian - Italian relations were always very intensive. The close relations between the states were cemented not only by the personal friendship between Italian President Silvio Berlusconi and Russian President Vladimir Putin. Even before Putin`s coming to power, between 1995 (after the signing "Friendship and Cooperation Treaty") and 2000 Italy was Russia's seventh largest investor. But when Putin turned to be the President the relations began skyrocketing - the $170 million invested in 2001 rose to $283 million in 2002 (mostly in the sectors of appliances, steel and ceramics). Italian-Russian Joint Declaration was signed during Prime Minister Berlusconi's visit to Moscow in April 2002, creating a system of "Enlarged Summits" (Heads of Government with a series of ministers) which are held annually, rotating between in Italy and Russia. Total trade exchange between Italy and Russia in 2003 amounted more then $12.1 billion. In 2004, according to the Russian Chamber of Commerce, it reached $15,3 billion. It's important to note that on May 24, 2005 the Chamber held a special seminar on Russian-Italian economic connections, attended by high-ranking Italian officials. During the seminar it was noted that just in one year Italy jumped from the forth to the second place in the ranks of the countries with the biggest commodity exchange with Russia, being second only to Germany. In 2004 comparing with 2003 the level of Russian export to Italy jumped up 43 percents, and the import - 34. In 2005 Russians hope to exceed these numbers. On June 22, during the session of the Joint Russian-Italian economic cooperation Council the parties will discuss how it may be done. Today Italy is one of the major consumers of the Russian energy carriers - mostly natural gas. The country started buying more gas from Russia during Berlusconi's stay at power. Moscow, in its turn, offered certain advantages and preferences for Italian companies working in Russia.
In terms of credit and financial cooperation, Italy is the Russian Federation's second largest creditor in the Paris Club with a debt of about $5 billion. Aligning its position with that of the OECD, the Italian Institute for Foreign Trade Insurance (SACE), promoted the Russian Federation to the fifth category of insurance risk. In 2002, the sum total of Russia's debt with Italy came to approximately US $9.8 billion.
Besides economy, there is a close political link between both states - Russia turned into some kind of protege of Italy. Analysts note, that such a relations are based on Putin's personal friendship with Berlusconi. The latter repeatedly supported Putin during critical times. When Yukos's CEO, Mikhail Khodorkovsky, was arrested in November 2003, Silvio Berlusconi stated that everything was happening within the scope of the Russian law, because Vladimir Putin was a… very good legal expert. Berlusconi is also considered an initiator and promoter of the idea of letting Russia into the EU. The same may be said about the WTO into which the Italian leader tries to squeeze Russians.
But today Silvio Berlusconi is in trouble - analysts predict his possible fall at the upcoming in mid-2006 elections. His prospects of winning a third term of office are gloomy. The billionaire former media magnate suffered a humiliating defeat in regional elections in April and lags behind a coalition of center-left parties in opinion polls. Italy is the only big E.U. country with an economy in recession since 2005. In the first quarter of this year, the Italian G.D.P. scored a poor display, with the G.D.P. falling by 0.5 percent, against 1.1 percent G.D.P. growth in Germany, and 1.7 percent growth in France. Local experts blame it all on the EU, because Italy became bound and dependent on its economic policy. The introduction of a common European currency, the Euro, denied the Italian small -medium enterprise the use of the strategic devaluation. At a time of intense competition with the Chinese textile, food processing and similar sectors, this fact largely explains the entrepreneurs' rage against the Euro, local analysts claim. Italian Welfare Minister Roberto Maroni of the Northern League party recently even proposed quitting the Euro and linking revived lira to the U.S. dollar. Mr. Berlusconi himself is also fond of the idea "blame it on the Euro".
Presently Italy's high-tech and the primary industrial sectors are serious decline. The country's industrial decline has reached unprecedented levels. F.I.A.T. is progressively abandoning its principal market in automobiles; food-processing giants like Cirio and Parmalat underwent disastrous frauds and financial cracks. Italians claim that the main reason for all this are the financial and fiscal changes the country had to undergo for the sake of intertwining with the EU.
The experts note that if Italy cannot receive the necessary freedom to effectively finance its own national ambitious programs in the field of information and communication technology, defense technology, education, public works and infrastructure, it will be impossible to escape the economic crisis. For the government it means losing the elections.
And this would be another harsh blow for a new Russian policy in Europe. After all, other Russian European half-allies half-partners - France and Germany's leaderships are experiencing problems. The results of the referendum in France, which turned down the European Constitution, will become an uneasy political test for French President Jacques Chirac. France is to hold the presidential election in 2007, although current requirements to dismiss French Prime Minister Jean-Pierre Raffarin might shake Chirac's political positions as well. Another Putin's friend, German Chancellor Gerhard Schroeder, might lose his position already in autumn of this year at the early parliamentary elections in Germany. It is an open secret that Europe's support of Russia is based on the Germany and France's dependence on Russian energy carriers - natural gas foremost. But for the Russians the situation with Italy is different - first of all, the relations between Moscow and Rome is not of "seller-buyer" type, as they are with Berlin and Paris. Secondly, in the current situation with the European referendum crisis, Italy, the only major country, has an opportunity to gain very high influence level among the European states as a first "rebel" in the structure of the EU, leading to some "revolutionary changes", wished by most of the Union's citizens, disappointed by the failure to provide them with promised boost of economy growth, jobs creation, e.t.c. Berlusconi fits to be a leader of such "rebellion" far better than Schroeder or Shirac. But if Berlusconi loses the elections, former European Commission President Romano Prodi is expected to become Italian Prime Minister for the second time, and then Russians will have to abandon all hopes, for he is not as friendly as present Italian leader.
That is why for the last months Moscow was beefing up its activity on Rome's or, better to say, Silvio's direction. The 2005 was not proclaimed "The Year of Italy in Russia" for no reason. Many cooperation issues, namely above-mentioned, which may remove the major economical crisis threat on Italy, were discussed throughout numerous meetings between Russian and Italian officials since the beginning of this year and, in particular, after new Berlusconi's government was sworn at the end of April. The visit of the Russian Foreign Minister Sergey Lavrov to Italy at the beginning of June, became an apogee of these discussions. Lavrov himself noted that the main cooperation issues at the agenda of his meetings with his counterpart Gianfranco Fini were joint high-tech, information and communication, defense technology projects. As to the Italian sources, they note that the sides started to discuss these issues during the last visit of Fini to Moscow in February, 2005 and they will continue their dialog at the ministerial meeting in London, scheduled to June 23 and the G8 summit in Gleneagles on July 5-6.
Besides that, Chief of the Russian General Staff Yury Baluyevsky met today (June 14, 2005) with his Italian counterpart Gianpaolo Di Paola in Moscow to discuss military cooperation between the countries. The sides also conversed on a wide range of issues, including relations between Russia, NATO and the European Union. It is important to note, that in September, 2004 first large-scale joint Italian-Russian naval exercises were held in the Tyrrhennian Sea. The sides may have discussed today in Moscow holding another maneuvers of such kind.
Several additional high-level meetings between Russian and Italian officials are planed till the end of this year. Thus Moscow harnessed itself into the present Italian government pre-election campaign, seeking to reach its own goals. If Russians succeed in improving Berlusconi`s internal political record by economical and defensive cooperation, their status in the relations with Italy is going to be upgraded from "protege" to "partner". And Rome, leaning on Moscow's support will be able to conduct more active, even blunt policy inside the EU during its current crisis and after it, irrespective of how it ends.
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