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France and Italy want to strengthen the influence of the EU with a “friendship treaty”

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France and Italy were so divided two years ago that Paris recalled its ambassador and a dispute between leaders turned to abuse – but a Franco-Italian “friendship treaty” that President Emmanuel Macron will sign in Rome this week shows the mood changed.

The 60-page Quirinale Treaty is intended to stimulate closer cooperation in all areas from foreign policy to defense to culture and reflects a Franco-German deal from 1963. The idea was discussed by Macron and former Italian Prime Minister Paolo Gentiloni in 2017, but sunk the following year by Italy’s Five Star and Nationalist League, which clashed violently with Paris over migration to the EU.

Now the project has been revived under Macron and Mario Draghi, Italy’s Prime Minister. With the former president of the European Central Bank at the helm in Rome, Italy’s nationalist-populist impulses were so tamed that even the league endorsed the treaty.

“Our interest is to resume talks with France,” Lorenzo Fontana, the league’s foreign policy-maker, told Italian media.

Politically, the Draghi government wants to play a more active role at the European level through a better relationship with Paris – especially at a time when Germany is supposed to be more domestically oriented, as a new government takes over the reins of Angela Merkel.

For France, too, there are important benefits from a stronger relationship. Strengthening the relationship will help Macron strengthen the moderate, Western European core of the EU and gain pressure against populists at home, while also gaining an important ally to support him during the French EU Council Presidency from early 2022.

The bridge between Rome and Paris could also help negotiate post-pandemic reform of EU budget rules. The Stability and Growth Pact is intended to limit government deficits and debt and is currently suspended due to the pandemic. With so-called “frugal” countries like Austria, Denmark, Finland and the Netherlands, a reform struggle could threaten.

However, even with Macron and Draghi at the helm, things could not go smoothly between the two countries – especially in the business sphere, often a source of friction between rival French and Italian industries.

Discussions over the possible sale of an Italian arms manufacturer owned by state-controlled defense company Leonardo to a French rival could prove an early test. People close to the deal talks expected the sale to be discussed during the French visit, but Italian doubts mean a decision could take much longer.

KMW-Nexter, a Franco-German armaments joint venture, has made a non-binding offer for 650 million euros to purchase the Defense Systems division of Leonardo, according to several interviewees. The division comprises two companies formerly known as OTO Melara and Wass, leading manufacturers of naval cannons, armored turrets and torpedoes. The offer is 200 million euros above that of Italy’s state-controlled shipbuilder Fincantieri.

But a backlash has begun when the Five Star Movement, the leading member of the Draghi coalition government, said it was against “selling off Italian strategic assets to foreign investors.” The Democratic Party, through Labor Minister Andrea Orlando, and trade unions have also criticized the idea of ​​a sale.

Orlando, who comes from the Ligurian city of La Spezia, where OTO Melara is headquartered, said over the weekend that it was not about “protectionism”. [but] It is obvious that it is not a wise strategy to finance the growth of foreign corporations with national funds. “

“I spoke to [defence minister Lorenzo Guerini] and I think he’s very clear on this, ”he added.

Guerini has been more cautious in public statements, and several officials in Rome say a solution is not easy because it is in Italy’s interest to be part of a Franco-German project to build the so-called European main battle tank.

Proponents of an agreement argue that it would support Italy’s defense capabilities by lowering production costs and be a tangible sign of increased European defense cooperation. Critics say Italy will help France get rid of a major competitor in the arms industry while putting Italian jobs at risk.

Reluctance between French and Italian companies in the past has led to lengthy takeover battles – as well as some bad feelings. “French industrial groups have bought many Italian companies,” said Philippe Moreau Defarges, former diplomat and senior fellow at the think tank of the French Institute for International Relations.

In luxury goods in particular, French businessmen such as Bernard Arnault and François Pinault have conquered emblematic Italian brands and expanded their empires to include Loro Piana, Bulgari and Gucci.

Italians have also raised concerns about the automotive merger between France’s FCA and PSA to form Stellantis. Paris, unlike Rome, has a minority stake in the combined group, which they believe will help defend French production facilities and jobs better.

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