Italy: EU’s loss, China’s gain – and PH’s one more reason for winning
Credit to Author: MAURO GIA SAMONTE| Date: Sat, 23 Mar 2019 17:13:49 +0000
News accounts now have it that Italy is breaking away from the European Union for sure. There seems to be no reconciling anymore between Brussels and the ruling coalition in Italy in their tiff over the Italian 2019 budget, which the European Union (EU) wants trimmed down considerably.
Italy wants its debt ceiling raised to a level it deems necessary to lift the country’s economy from a deep slump. So it insists on its calculation of Italian GDP at 1.67 trillion pounds sterling (1.87 trillion euros). EU deems that figure too high and demands that Italy lower it to a manageable level, or otherwise face fine of up to 3 billion pounds (3.4 billion euros).
Budget differences with the EU government in Brussels have had a way of gelling even further the strong Italian ruling coalition. While Italian Prime Minister Comte has already expressed openness to join China’s Belt and Road Initiative (BRI), Deputy Prime Minister Matteo Salvini has visibly been in the forefront of protests against Brussels both before thousands in his Facebook account and thousands more out in the streets, screaming: “We have a right to work, a right to health, a right to education, a right to a pension. In Brussels they have nothing else to do but send us disapproving letters, threatening letters, telling us to change our budget plan, not to change our pension law. Telling us not to reduce taxation but to actually add more… Nothing and nobody, no big or small letter will make us backtrack. Italy will no longer be a slave and will no longer kneel down.”
Last Thursday, Chinese President Xi Jinping, together with his wife Peng Liyuan, began a two-day visit to Italy, accompanied by a strong contingent of Chinese economic managers. As expected, the visit resulted in the overall integration of the third largest European economy with China’s worldwide BRI — the largest economy so far to join the ambitious Chinese infrastructure plan aimed at realizing President Xi’s vision of “a world community of shared future.”
The Chinese leader’s visit should bail out Italy from the budget woes heaped upon it by the EU. This must be a foregone conclusion, in any case. China has been on record as coming to the aid of a distressed nation at a time it needs succor most.
That was the case, for instance, with Pakistan when as far back as 1959, it gained interconnectivity with the Chinese economy through the construction by China of the Karakoram Highway that cut across mountains, ending up in the Port of Gwadar in the Indian Ocean. It took two decades for the highway to be completed and become operational. Actually signaling the start of the BRI, then termed One Belt, One Road, the construction of the highway and the port ultimately redounded to the betterment of the Pakistani economy, ultimately making it qualified to be one of the founding members of the Asian Infrastructure Investment Bank (AIIB), the mother institution for funding BRI’s worldwide infrastructure development binge.
This, too, was the case with the Philippines in 2016. The level of the country’s growth at the time can be gleaned from that year’s annual budget of P3 trillion. That amount was all the country could produce at the time, or the gross domestic product (GDP).
President Rodrigo Duterte came home from a visit to China in 2016 already with about P25 billion worth of grants, loans and business investments packages concluded with the Chinese government. These economic assistance packages materialized during China’s Premier Li Keqiang’s visit to the Philippines in November 2017, ultimately expanded during President Xi’s visit to the country one year after.
Under deliberation now in the Philippine Senate is the 2019 General Appropriations Act, providing for a national budget worth P3.76 trillion. This budget should attest to a P750 billion increase in GDP since 2016. Help me out with my math, but that certainly is no mean growth. And to think that what Italy is griping against the European Union — for which it has now broken away from the group – is Brussels demanding for it to stay within the limits of a 4 percent budget deficit.
In other words, while the EU’s third largest economy is fighting for the “the right to live” on high budget deficits, the Philippines is beginning to gloat on growth. And that growth must reflect gains the Philippines made from China in just over two years.
Covered by the 29 agreements signed on the occasion of Xi’s visit last year were the Chico River Irrigation Project, for irrigating the vast Cagayan Valley rice lands, the Kaliwa Dam Project for supply of water to Metro Manila and outlying environs (at the moment suffering from acute water shortage), two additional bridges across Pasig River (by the way, a grant gratis et amore, not a loan), the Manila-Matnog railway system, a trans-archipelagic railway system running around Mindanao and then through the Visayas onto the tip of Luzon, the lifting of the Chinese embargo on agricultural products imports from the Philippines and on Chinese tourist arrivals in the country, which have now breached the 1 million mark, and counting – the list is long,
If Italy needs to break with the EU – and on the occasion of President Xi’s visit actually makes that break — does this not give President Duterte one good cue on what break he needs to do in turn to get his pet 2019 budget bill done?
All the better to strengthen the Philippines’ own integration into China’s BRI. Expert observers this early forecast that Italy — which is breaking up with the EU in order to join the BRI, and being an influential member among the 28 that compose the union — could cause an exodus of European states into China’s unswerving economic development thrust the world over.
The Philippines has only been a BRI member for a year or so. But already, based on concrete benefits the country has gotten from China, Filipinos can feel qualified enough to tell Italy: Welcome to the club!
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