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The Italian government has presented recently an analysis of the country’s economic relations with the “third world”, the move which some national experts dubbed as “political capitalism”. This new phenomenon is based on such priorities as, for example supporting national businesses and development both in the African private sector and Italian national economies towards sustainable growth.
Background
Shortly after winning power in 2022, Italian Prime Minister G. Meloni announced that the government was going to set out a new strategy for Africa. One of the country’s experts, Umberto Marengo writes that this strategy – dubbed the “Mattei plan” – reveals more about Italy and Italian political capitalism than it does about Africa (references below).
Since the Italian government launched its “Mattei plan” with great fanfare about a year and a half ago, relations between Africa and the West have unfortunately continued to deteriorate. The public debt of countries like Egypt, Kenya and Nigeria has skyrocketed, while loan and reform packages from the World Bank and the International Monetary Fund have been met with protests and uprisings.
The Italian analysis of the geopolitical and economic development has been circulating so far around the relationships with the African states defining thematic areas, regions and tools for most promising “intervention”. Italy’s approach could pave the way for a different European modus operandi in Africa, moving away from the dominance of a single great power (like the US, China, Russia, etc.) towards a kind of “collaborative framework” led by the European “middle powers”.
The Italian “political capitalism” rests on the following practical ideas and paths: development of the African private sector and facilitating national growth, as well as supporting Italian business.
Thus, at a conference in January 2024 in Rome ( the so-called African summit) devoted to “creating a bridge for common growth”, the Italian government unveiled the so-called “Mattei Plan”, which transcends mere migration concerns and includes politico-economic ideas, “potentially representing a pivotal shift” not only for Italy but for the whole EU’s approach towards third countries, and Africa in particular. At the end of August 2024, Denmark has released a national plan for “fruitful cooperation” with the African states.
According to Italian experts, the plan embodies an attempt at a strategic recalibration of Italy’s relations with Africa, attuned to the evolving “geopolitical landscape characterized by heightened competition for markets and energy resources”.
At the recent Africa summit, the Italian Prime Minister Giorgia Meloni outlined the vision and first projects of the “Mattei Plan”, an ambitious project announced officially at the end of 2023 with an idea of “shaping Italy’s strategy for Africa” in the years to come.
All references and citations from: https://www.ciaonet.org/catalog?f%5Bcontent_type%5D%5B%5D=Commentary+and+Analysis&f%5Blocation%5D%5B%5D=Africa&f%5Bpub_date%5D%5B%5D=years_10&per_page=100&searched=yes&sort=year
Political capitalism announced
The Italian-Africa summit this January coincided with Italian presidency in G7; the occasion represented both the Italian geopolitical ambitions and support for national corporate community. The long-awaited summit was the first test for the strategy of “cooperation as equals” with African states that Giorgia Meloni has repeatedly proposed as central to her government’s foreign policy. It was also the first occasion to test the real scope of the so-called Mattei Plan for Africa, the project with which the Italian government wanted to notified the official strategic outlines for the new “political capitalism”.
Political commentators were unanimous: in the current geopolitical context it was right to think about strengthening large nationally strategic companies. As soon as large companies want to expand, they rely on both the national industrial strategy and international dimension for growth.
There are numerous successful examples in Italy, e.g. Enel, Italy’s national oil and gas company, which in the last decade became a world leader in renewable energy in the third world, i.e. in Africa, Asia and Latin America. Enel’s growth idea was truly ambitious, and like all strategic choices, it came with a cost: debts increased and the stock price was affected too, but with increased corporate profits; so the government called for changes in the course with new management and revised ambitions,.
The Mattei plan contributed another strategic ambition focusing on African continent with the “national diplomatic platform” driven by state-owned enterprises: so when Italian enterprises are being truly innovative and take risks, it is the great chance that the Italian treasury would take the dividends.
Reference to Umberto Marengo’s article (he is a Visiting Fellow at the European University Institute) in: https://blogs.lse.ac.uk/europpblog/2024/08/20/italys-mattei-plan-for-africa-a-story-of-italian-political-capitalism/
Mattei Plan: Italian vision
The plan reflects three key EU-wide needs for three key reasons. Firstly, the plan hints at a reconceptualisation of ‘development cooperation’ linking development objectives with industry interests and should remain well focused on this without dispersing funds: i.e. including collaborative partnerships with clear benefits to local communities. Development funds would be used not only to address Africans’ social needs but also to enhance the investment climate, laying essential groundwork for sustained economic engagement. For instance, water system improvements should aim to benefit local communities while supporting agribusiness demands. Likewise, technical education programs respond to local education needs while catering to industry-relevant skill development. This approach potentially translates into a collaborative public-private partnership that mitigates investment risks, moving away from traditional donor-centric methods and acknowledging shared interests between Italy and African nations.
Secondly, the Mattei Plan hints at a crucial reality check on Europe’s actual capacity to effectively engage with Africa, emphasising pragmatic and competence-based approaches rooted in the established strengths of the Italian private sector and civil society. By prioritising sectors where Italy excels, such as agriculture and energy, the plan mitigates the risk of gaps between policy aspirations and on-the-ground implementation. This allows Italian players to compete more effectively amid growing international competition for Africa’s resources, avoiding the pitfalls of broader, less grounded strategies like the EU’s Global Gateway.
Thirdly, Italy’s approach could pave the way for a different European modus operandi in Africa, moving away from the dominance of a single great power like France towards a collaborative framework led by European middle and smaller powers with stakes in Africa such as Italy, Spain, Portugal, and the Nordic and Eastern European countries. These countries can pool their expertise within initiatives like the Global Gateway, recognising the potential for collective action to achieve greater impact. Italy’s relatively less controversial image in Africa positions it to lead this new approach, potentially acting as a bridge between Europe and other international actors, such as the Gulf monarchies, which have shown interest in supporting the Mattei Plan.
Source and citations from: https://www.euronews.com/2024/05/29/is-italys-new-africa-strategy-a-blueprint-for-europe /May, 2024.
Alternative vision
There are at least three alternative visions of the Italian political capitalism:
= The first was to formulate a strategic path: i.e. to design an “Italian strategy for Africa” with allocation of necessary resources and “interventions” based on this path. It would have been necessary to consult governments, international organisations, local economic operators and the Italian Parliament to achieve this. The Ministry of Foreign Affairs would have been in the driver’s seat, and resources would have been mostly allocated as grants or concessional loans to governments. The main criticism of the Mattei plan is precisely the lack of strategy. It’s a legitimate criticism, even though many times more effort has gone into writing a strategy than into implementing it. Grand ambitions have produced bland documents, an example being Italy’s Triennial Strategy for Cooperation. There are many strategies produced by international bodies that have suffered the same fate. Prime Minister Meloni has essentially made the opposite choice: pilot projects first, then strategy.
= The second path was to focus on the development of the African private sector. The UK, France and Germany each invest over €2 bn annually in the private sectors of developing countries. They do so through dedicated public financial institutions to provide financing and capital to local companies. The areas of investment are defined by the government, but investment decisions are made by independent market experts. The goal is to “create markets”, demonstrating with results on the ground that it is possible to have social and environmental impact without losing money. For this reason, a clear separation is needed: ministerial structures do not have the expertise to select these types of projects. Without independence, the purpose of these institutions disappears. Is this a magic wand? Unfortunately, no: creating markets takes time, the selected projects struggle to become systematic, balancing development and financial returns is more of an art than a science, and not all problems have market solutions. In any case, Italy has never truly believed in development finance. It therefore avoided taking this approach.
= Third, to support national business by focusing on national champions, the path that the Italian government has chosen; so far the Mattei plan concluded one major operation: a 2023 IFC loan to Eni for a biofuels project, in which CDP later took a minority stake of $75 million. This is a valuable project, although Eni has loans exceeding fifteen billion and no difficulty in raising funds without resorting to public resources. Other announced initiatives involve Leonardo in cybersecurity issues and even an attempt to revive the Broglio Space Centre, a satellite launch platform founded in Kenya by the Italian Space Agency in the 1960s and semi-abandoned for over thirty years.
= Bottom line: the Mattei plan seems, at least in its initial stages, to be primarily economic diplomacy driven by national champions with some supplements for SMEs. Thus an example with €200 mln (with a part of which are in grants), have been distributed to SMEs for e-commerce, trade fairs and studies. As Italian experts conclude, “these are legitimate choices, but not a paradigm shift from the past”.
More in: https://www.ciaonet.org/catalog?f%5Bcontent_type%5D%5B%5D=Commentary+and+Analysis&f%5Blocation%5D%5B%5D=Africa&f%5Bpub_date%5D%5B%5D=years_10&per_page=100&searched=yes&sort=year