In a bid to strengthen economic relations and explore potential investments in crucial sectors, Italy and Saudi Arabia have entered into discussions regarding a potential Saudi investment in Italy’s “Made in Italy” fund. The announcement was made on Monday by Italy’s Industry Minister Adolfo Urso during an investment event in Milan, where the two nations also formalised a deal to enhance economic collaboration, with a particular focus on the energy sector.
The “Made in Italy” fund, approved in May, is poised to receive an initial endowment of 700 million euros ($756 million) in 2023, with an additional infusion of 300 million euros scheduled for the following year from state coffers. Sources familiar with the matter have previously disclosed that Italy’s Prime Minister Giorgia Meloni is actively seeking sovereign wealth funds to bolster the fund’s financial prowess. The fund’s overarching objective is to support Italian companies entrenched in vital supply chains, while simultaneously working towards enhancing procurement and recycling of “critical raw materials.”
This strategic initiative serves a dual purpose, fortifying Italian manufacturing and reducing dependence on external suppliers. However, it must be noted that Meloni’s coalition government grapples with managing a budget deficit while pursuing these ambitious economic strategies.
Since assuming office in October of the previous year, Prime Minister Meloni has been proactive in fostering closer ties with Gulf countries, a marked departure from the stance of previous administrations, which often voiced concerns about human rights issues.
On Monday, Italy and Saudi Arabia solidified their commitment to bolstering economic relations by signing an agreement that lays the groundwork for increased investments in sectors of strategic importance, particularly energy. The discussions included the possibility of mergers and acquisitions (M&A) deals, as conveyed by Minister Urso to reporters in Milan.
Minister Urso acknowledged the differences in values between the two nations but stressed the importance of navigating this evolving global landscape. “We have to start from the premise that the world is very different from the values to which we remain firmly committed,” Urso stated.
Saudi Arabia, represented by Investment Minister Khalid al-Falih, expressed its intent to focus on key areas such as energy, sustainability, supply chains, and sports to expand its presence in Italy. Notably, while Saudi Arabia has invested in sports, including soccer, in various countries, it currently lacks direct investments in major Italian soccer clubs.
Under Prime Minister Meloni’s leadership, Italy envisions itself playing a pivotal role in facilitating ties between the European Union and energy suppliers in the Middle East and North Africa, especially as the EU seeks to diversify its energy sources, reducing dependence on Russia.
The Memorandum of Understanding (MoU) signed between Italy and Saudi Arabia is set to span two years and will automatically renew for an additional 24 months unless either party provides a six-month notice of withdrawal.
In 2022, Italian exports to Saudi Arabia amounted to just over 4 billion euros, predominantly in the manufacturing sector, while imports from Saudi Arabia exceeded 7.4 billion euros, primarily comprising oil products.
During the same event in Milan, leading Italian energy company Eni and Saudi Acwa Power forged an agreement to collaborate on a green hydrogen project in the Middle East and Africa. Additionally, Acwa Power entered into a separate MoU with regional utility A2A and electrodes manufacturer De Nora to jointly explore green hydrogen initiatives.
While Saudi Arabia has already advanced its green hydrogen project under the NEOM initiative, Italy is yet to develop significant plans for domestic green hydrogen production, marking this collaboration as a potentially transformative step in the country’s energy landscape.
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