A marriage of convenience? The future of Italy–Russia relations

The end of the Cold War deprived Italy of its geopolitical importance as a heavily involved NATO member and US ally. Today, Italy is a peripheral EU member state, uncomfortably positioned between a distant German-centric Europe and a chaotic Mediterranean Sea that is all too close for comfort. Italy has its eyes firmly set to its south and the risks posed by the refugee crisis, so what happens in Russia and the eastern neighbourhood is of secondary or even tertiary concern for Rome – an attitude that will likely continue into the future.

In fact, Rome and Moscow have a relatively strong and deep-rooted partnership that is likely to stand the test of time, barring the worst-case scenario of a “hot war” between NATO and Russia. This peculiar partnership between a regional power and a former superpower works on the basis that neither Russia nor Italy interferes in the domestic affairs of the other, and they recognise their respective spheres of influence.

This means that Italy’s Russia policy does not fit well with the EU’s overall approach. It also helps to explain Rome’s reluctant support for EU sanctions against Russia. When it comes down to it, Italy’s only real interest in the eastern neighbourhood is to avoid the most dangerous scenario of NATO involvement in the Ukraine crisis – something that could have a disastrous impact on its relations with Russia.

Russia and Italy: Old friends

The distinctive partnership between Italy and Russia has a long history. In 1909, the parties signed the Racconigi Bargain in which Italy and Tsarist Russia promised to cooperate in preventing a single power from dominating Europe. During the Second World War, Mussolini’s and Stalin’s diplomats negotiated mutual recognition of spheres of influence in the Mediterranean (Rome) and Central/Eastern Europe (Moscow). During this period, fascist Italy and the Soviet Union almost signed a comprehensive alliance in order to counter-balance German supremacy in Europe.

The Second World War was followed by an era of good trade relations between the two countries, pushed forward by the Italian Communist Party. This relationship went beyond the economy and also covered political relations, despite the two countries being on opposing sides of the Warsaw Pact.

The last 15 years has seen the emergence of a new and intensified special relationship, usually ascribed to the personal friendship between former Prime Minister Silvio Berlusconi and President Vladimir Putin. But this relationship has outlived Berlusconi, showing how deeply ingrained it is. More than this, it shows that the relationship is not just based on personalities but shared political and economic interests. The likelihood of either Italy or Russia stepping on the other’s toes between now and 2030 is slim because the two countries operate in different geopolitical dimensions – Italy in the Mediterranean, and Russia in Eurasia.

The Italian political, economic, and cultural elite has always been well-disposed towards Russia. Russia’s supporters in Italian domestic politics range from the far right (Lega Nord) to the (Five Star Movement) to Berlusconi’s Forza Italia and other minor parliamentary factions. The ruling party is not overtly pro-Russia, but it is in favour of engagement with Russia on all key international dossiers, including energy and trade. Russia’s influence in Italy goes well beyond the political. The Italian national energy company ENI has been working with Moscow since the Cold War era. Russian public diplomacy and media outlets assiduously cultivate the most influential Italian opinion-makers.

Between a rock and a hard place

Since the annexation of Crimea and the Ukraine crisis, Italy has found itself stuck between a rock and a hard place. With Rome applying the EU’s economic sanctions against Russia in solidarity with fellow member states, the Italy–Russia special relationship has undoubtedly faltered. Rome feels hard done by. Italy is not as interested in the distant eastern neighbourhood as some other member states, and is more concerned with the problems in its own neighbourhood – the refugee crisis in the Mediterranean Sea, Islamist terrorism, and the chaos in Libya. Moreover, due to its long-term involvement in the Middle East and the Balkans, Moscow actually seems to be a more useful partner for Italy on these issues than the EU.

Italy has been openly sceptical of the EU’s sanctions on Russia, saying that what is needed is a political discussion, not just a mechanical extension of the sanctions every six months. It is unlikely to break ranks any time soon, in spite of economic losses, but this scepticism will only grow as time passes. We are already seeing the effects. For example, the local assembly of the Veneto region recently became the first to pass a resolution against sanctions on Russia and in support of Crimean “self-determination”, saying that Russian counter-sanctions are badly damaging the Venetian economy. This vote is not legally binding, but it is not unimaginable that other regions could stage their own votes on the issue, putting more pressure on the government.

In any case, Washington and Brussels will keep applying pressure on Rome to prevent it breaking the ranks on sanctions. Italy will be forced to maintain this difficult balance between its NATO/EU membership and the special relationship with Russia. It is nonetheless clear that Rome will continue promoting détente with Russia until 2030 and beyond.

Nord Stream versus South Stream

In 2006, ENI – one of Italy’s biggest oil and gas companies – and Gazprom signed an agreement in order to forge a strategic partnership and implement the so-called South Stream pipeline (based on the model of the Nord Stream pipeline in the Baltic Sea), which was intended to send gas to Western Europe, bypassing Ukraine. It was also intended as a competitor to the Nabucco pipeline, which was sponsored by Washington and Brussels. Both these projects have since been cancelled. South Stream was controversial as it contradicted the EU’s Third Energy Package. Moscow eventually cancelled it in 2014 following obstacles from Bulgaria and the EU, the Ukraine crisis, and the imposition of European sanctions on Russia. To some Italians, including the current Prime Minister Matteo Renzi, EU resistance to the project seemed like a double standard, particularly during discussions on Nord Stream 2.

Energy dependence or inter-dependence?

Italy’s economic relations with Russia are primarily driven through oil imports – but how important is Russia as an energy partner for Italy? Due to relatively warm winters and falling demand from power plants, Italian gas consumption dropped by one fifth between 2011 and 2014 (76 to 60 billion cubic metres). It will take years to recover to pre-financial-crisis levels. The Italian gas market is heavily dependent on imports – mostly from Algeria and Russia in equal measure. However, in 2012, decreasing Italian demand for imported gas led to the flow from Algeria being reduced, while flows from Russia increased (it was ENI policy to give priority to the relationship with Gazprom). So today Russia is Italy’s biggest supplier of natural gas. But is this trading relationship sustainable? Probably not. If the Italian economy continues to stagnate and unemployment continues to grow (according to OECD forecasts), there will inevitably be a reduction in gas imports from Russia as well.

While it is commonly said that Europe is (over)dependent on Russia, it is in fact an inter-dependence. Russia supplies 35 percent of Italian gas imports and 39 percent of EU gas imports, but 90 percent of the total energy exported by Moscow is purchased by Europe alone. Just as Italy cannot afford to turn its back on Russia as a source of energy in the medium term, nor does Moscow have many alternatives. The EU is Russia’s closest and most profitable energy client and this will not change any time soon. Russia’s pipeline structure is set up for Europe (rather than China) and the price that Europeans have been paying for energy imports is very high and will remain so, ceteris paribus. China is not a realistic alternative to Europe as an energy market for Russia because Beijing wants energy on the cheap and prefers to rely on its own resources (coal, nuclear energy) rather than depend on Russian gas.

Italy and Russia will likely remain interdependent in the years up to 2030 and beyond. Certainly, Russia has few alternatives. Italy, though, may well be tempted to search for them – by looking to Algerian natural gas sources and/or diversifying with liquefied natural gas and shale gas.

Conclusion

For Italy, Russia and the eastern neighbourhood come second in importance to the Mediterranean. From the Italian perspective, the present doctrine – “Building resilience in the eastern neighbourhood” – is just a new version of Kennan’s containment doctrine that was applied to the USSR during Cold War. In Italian foreign policy circles, the discussions revolve more around how to prevent the Ukraine crisis from spiralling into an open confrontation between NATO and Russia than about how to actually implement the Minsk Agreements.

Rome is stuck in a sensitive geopolitical position between Washington and Moscow. As a peripheral EU state, Italy feels abandoned by northern EU member states and overwhelmed by the refugee crisis in the Mediterranean Sea. When it comes to relations with Russia, all Italy wants is to go back to its marriage of convenience as soon as it can and, if possible, before 2030.

 

Angelantonio Rosato

Independent Analyst, Professional Journalist and military PSYOPS