Michele Geraci, the undersecretary of state for the Italian Ministry of Economic Development, who was present at the meetings with the Russian president, has weighed in with his thoughts on Moscow-Rome trade ties, as well as Italy's economic relations with China, including it participation in Belt and Road Initiative.
Sputnik: Putin and Conte at their joint press conference yesterday paid a lot of attention to bilateral economic relations. Conte said Russia offers important opportunities for the Italian market, while Putin said there are billions of dollars of investments, and he expects Italy will to become a partner of the 2020 Innoprom International Industrial Fair in Yekaterinburg. Should Italy participate, what opportunities does it open?
Michele Geraci: We always look for ways to increase our trade relationship with Russia and with other partners. This will be, I believe, a good way to strengthen the cooperation and to increase a bilateral trade. And so in that respect, becoming a partner will be a positive thing to do.
Sputnik: Putin said last year that trade turnover between Russia and Italy grew by 18%. What is the tendency in the Italian-Russian mutual trade now? Might 2019 see even bigger growth than last year?
Michele Geraci: Yes, that's exactly what we are working on, and actually this is what I am personally working on – to make sure that the number of the Italian export growth to Russia for 2019 is a good positive number, a single digit number, hopefully higher that 5 per cent, between 5 and 10 per cent - that will be the objective. This is for the Italian exports to Russia, not for the bilateral trade.
With export, figures are of course in favour of Russia, but this is only because of the large component of energy and oil that we purchase from Russia. So if we take that away, trade relationship and export is actually very strong also from Italy. We do good business on manufacturing and traditional goods. And of course we could and we hope to do better.
Sputnik: So you say that Italian exports to Russia are growing, correct?
Michele Geraci: That's right. My forecast for 2019 is I hope it will grow for the full year and will show a good performance –between 5 and 10 per cent. That would be a good figure and will make our companies confident in this market. Because you know, companies, in order to export, they need to invest. And in order to invest, they need to have clarity. And we try to make things clear for our companies, to give them a little bit of comfort. This is why we also have them meeting with the government, like yesterday.
Sputnik: Which exports are growing in particular?
Michele Geraci: It’s machinery and particularly precision machinery are growing from consumer goods. These are the two main ones.
Sputnik: What is the amount of direct investments in both countries? Are they growing? In which areas?
Michele Geraci: Investment had its peak some years ago, around between 2005 and 2008, and then 2013 and 2014 in terms of the Russian investment in Italy. Since then, we have seen a decline, this is due to geopolitical reasons. Understandably, the flow of investment has decreased. But this is beyond our control.
However, I want to note that the Italian stock of investment in Russia is quite significant – about 13 billion euros, and it created about 60,000 jobs. This is the value of the Italian investment in the Russian economy. Of course, 60,000 jobs may not be a lot for a large country, but this is our little contribution to the economy.
Sputnik: Yesterday there was the first meeting of the Italo-Russian Civil Society Dialogue Forum after a 6-year break, and Putin expressed hope that this forum would become regular. Do you share the view that it should become regular? Is it important for Italian companies?
Michele Geraci: We hope so. Yesterday there was a very successful restarting of this civil society forum. I did participate in the dinner later on with the president, and the feedback I received from the colleagues from the companies is very positive, there were very good positive vibes between Russian and Italian companies.
Sputnik: So is there a need and interest from the side of Italian entrepreneurs to meet and coordinate more frequently and closer with the Russian authorities and Russian companies?
Michele Geraci: Absolutely. There is a strong interest, and in order to respond to this interest I am personally trying to organise a visit to Russia, which I hope I will do soon. I will go myself and bring some Italian companies so that they can be taken to a state to visit to Russia to explore opportunities.
This visit could be maybe in connection with my trip to Vladivostok, to the Eastern Economic Forum in early September. Or maybe this trip with the Italian companies will be a separate trip, this is still to be discussed.
Sputnik: Putin said Moscow wants the United States and China to reach a mutually acceptable agreement on trade, otherwise there will be a 17 per cent fall in global trade and 2 per cent fall in global GDP by 2024. Conte said they did not discuss Italy’s cooperation with China this time with Putin, but the leaders are on the same page regarding this issue, and talked about it before (in Beijing). Can the solidarity of Russia, Italy and other like-minded countries mitigate the impacts of the US-China trade war?
Michele Geraci: We do not want any trade war. I was in China in March to discuss trade issues with the Chinese counterparts. I also have regular contacts with American counterparts, and I am going to the United States next week to talk to the USTR.
My feeling is that the trade war is little by little… It will not be solved magically, but it will not be a war. I think it will be just discussions with each side trying to get a bit more concessions from the other one. So that is an ongoing negotiation. It will not be solved now, but I think it will also not escalate into a serious trade war.
Sputnik: How is the Italian economic relationship with China developing? What growth in mutual investments do you expect in 2019?
Michele Geraci: So far, we have a so-called zero growth, almost negative. It’s flat. This is not very good. So the first months of the year confirm my initial worries that I had when I first came to the government that Italy needs to do more with China, because we do not to manage to export to China as much as we should.
We have trade model, and it suggested that Italy needs at least to increase its export to China by roughly 8 to 10 billion. So we are low. Think about it: almost the amount of the whole Italian export to Russia is what we have missing with China.
Sputnik: But now that Italy has become a partner of the Belt and Road Initiative of China, do you expect it to improve?
Michele Geraci: Yes. That's why we did it. We hope that in the next few months we will start to see the benefits of having signed the MoU with the Belt and Road.
Sputnik: How can Italy’s participation in the Belt and Road Initiative influence economic relations with Russia?
Michele Geraci: The Belt and Road includes all our partners in Asia, including Russia and other countries. So it’s an opportunity to increase trade with China directly of course, but also with any other country that is in between, along the road, including of course Russia.
Now I am beginning to extend the way I see Europe. When I talk about trade partnership, I talk less and less about Europe, and more and more about the New Eurasia, the Eurasian bloc of countries with whom we can have partnership. We do this of course with Russia, we do this with the Central Asian countries – infrastructure development and energy and even agriculture in some of them. This for us very important, and we want to play a leading role as Italy in relations between Europe and Eurasia.