Obama’s Visit to Italy Quiet but Crucial

Barack Obama’s meeting with Italy’s Prime Minister Matteo Renzi today is a side event in a Rome agenda dominated by the U.S. President’s more politically significant visit to Pope Francis at the Vatican. For Obama, the political expediency to show some common ground with the highly popular Francis, with whom he shares an interest in promoting the cause of fighting global poverty and inequality, is evident. This is not to say, however, that Obama and Renzi will only exchange diplomatic courtesies.

For Renzi, it would be important to have Obama openly endorse his agenda to revive Italy’s economy. A blessing from the U.S. president, who is still very popular in Italy, would help Renzi build domestic support for his planned reforms of the labor market, the tax system, and government administration – all issues on which he faces significant opposition. The U.S. president has an interest in obliging, not least because Renzi aims to mitigate the German-championed austerity course the EU has been bent on for years. The U.S. administration has never favored the German approach as it is convinced that it has curbed Europe’s recovery, indirectly harming the U.S. economy.

Obama, for his part, has his own priorities concerning Italy. He will remind Renzi of the imperative for Western allies to keep a firm line on Russia following the latter’s forced takeover of Crimea. The U.S. wants Italy to be ready to support restrictive measures that go beyond the modest set of sanctions already agreed at the EU level. This is a thorny question for Italy, which has extensive trade and energy relations with Moscow. One issue U.S. officials will look on with concern is whether Italy will remain committed to the development of South Stream, a gas pipeline under the Black Sea which is being developed by Russia’s Gazprom in cooperation with Italian energy company Eni. The planned pipeline has originated much controversy in the past because it bypasses Ukraine and runs counter to the EU-stated goal of reducing Europe’s reliance on Russia’s energy supplies. In light of the recent events in Crimea, it is safe to say that the U.S. expects Italy to put the project on hold – if not to scrap it altogether.

The crisis with Russia could also give Obama the opportunity to call on Italy to avoid cuts to military spending that could further downgrade its defense capabilities. This is a tall order, however, as Renzi’s cabinet is actually debating a 3 billion euro reduction of defense expenditures. U.S. requests that the axe fall more on personnel costs (which absorb 66% of the defense budget), rather than equipment and investments, are likely to fall on deaf ears. Italy’s parliament has just approved a defense reform which does little to address this problem, and is unlikely to re-open the file anytime soon.

Another issue on which the U.S. would like to see more Italian activity is Libya. The country is near total collapse. The political process has stalled (recent elections for a constitutional assembly have recorded a depressingly low turnout). Armed militias fight each other for controlling portions of the territory – one of them even managed to snatch an oil tanker from the government and bring it into international waters, where it was seized by U.S. Special Forces and given back to Tripoli. Illicit trafficking is rampant. An authoritarian turn or, worse, a new civil war, are concrete possibilities. As Italy has huge energy and security interests at stake in Libya, it is only natural to the U.S. that Rome should take on greater responsibilities in the region. Renzi should profit from U.S. backing and make a sustained effort to mobilize international resources to help Libya’s government to accelerate the democratic transition, train its security forces and restart the economy.

A further issue on the U.S.-Italian agenda is Iran. Under the previous government, Italy’s overtures towards the Islamic Republic raised eyebrows in Washington. U.S. officials worried that the flurry of Italian-Iranian exchanges – between cabinet members, lawmakers and businessmen – could lead to a premature erosion of the Iran sanctions coalition. While U.S. concerns were exaggerated, the Renzi government has not shown the same level of activism and may never do so. Renzi has little foreign policy experience but is a shrewd politician. He could be unwilling to further irritate Washington by authorizing further overtures toward Iran because he knows that the crisis in Western-Russian relations has the potential to strain U.S.-Italian relations.