Italy is setting up a public and private fund to boost key parts of the economy.
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Italy is moving ahead with a sovereign fund to support key parts of its economy, as some European countries push harder to bring global supply chains closer. .
Italian Business Minister Adolfo Urso on Wednesday announced a public-private fund aimed at strengthening “national strategic supply chains” in the sectors of raw materials and energy. A diplomatic source in Italy confirmed to CNBC that only companies with high potential or involved in the system will receive funding. They added that the plan is expected to be approved by Congress before the end of the year.
The announcement comes after Ireland, another EU country, said earlier this month that it planned to set up a sovereign wealth fund next year. This will be capitalized with unexpected tax revenues and targeted at long-term expenses such as pensions and infrastructure.
France, the eurozone’s second-largest economy, earlier this month also presented plans to set up an investment fund for key metals. More broadly, these announcements follow a trend in Europe, where countries are aiming to reduce their dependence on other countries, like China.
“This is a response to increasing international competition for critical resources and supply chains,” Federico Santi, senior analyst at political consulting firm Eurasia Group, told CNBC via email. .
“The first pandemic and then the war in Ukraine and the resulting energy crisis have shown how vulnerable supply chains are to political and geopolitical changes. At the same time, investment oh The rush to green transition and related technologies has increased the demand for vital resources,” he said.
Italy established a wealth fund in 2011 with investments in the energy, communications and aerospace sectors. The latest plan for a separate fund reinforces the idea that Rome is trying to advance its industrial policy.
When Covid-19 hit in early 2020, many European countries struggled to get masks and other protective equipment made in Asia. More broadly, multinationals with supply chains spanning the world have struggled to maintain their assembly lines, and many products have become more expensive as a result.
Russia’s invasion of Ukraine has disrupted other sectors, most notably agricultural commodities and fertilizers.
Strategic autonomy
French president Emmanuel Macron has long advocated strategic autonomy – the idea that European states need to reduce their dependence on countries outside the region. The concept has gained more and more attention in the wake of recent crises, and Macron took it a step further in April promoting less dependence on the United States, a longtime ally.
Macron warns of Europeans getting caught up in crisis not created by them, for example the US and Chinese positions towards Taiwan.
His comments have sparked criticism in some European capitals, which are more conscious of American security assistance. But Charles Michel, president of the European Council who presides over regular talks between EU leaders, said there was growing support for Macron’s thinking. Michel told Politico that while Macron speaks as president of France, his views reflect a increasing change among EU leaders.
This topic will be in focus when 27 heads of state gather in June and debate how developing a new relationship with China is different from one with the United States. While the US administration has been considering decoupling from Beijing, decoupling its economy, Europeans are developing ways to reduce dependence on China without severing ties drastically. strong.
