Italy has asked the United Arab Emirates for help in the current economic crisis, inviting it to increase investments in Made in Italy products, but also to contribute to its sovereign debt.
Italian exports rose by 23 percent in the first four months of the year and are expected to reach a record of 5.5 billion euro ($7.08 billion) in 2012. Rome is now relying mainly on interest in maxi sovereign funds.
Italy’s Prime Minister Mario Monti is planning to visit the Gulf states at the end of November and is scheduled to meet with UAE financial experts on Nov. 20 in the UAE capital, Abu Dhabi.
“The United Arab Emirates is Italy’s top commercial partner and the most important market in the Arab world and this role became increasingly consolidated in 2011 and during the first four months of 2012,” Italian Ambassador to the United Arab Emirates, Giorgio Starace, said in an interview with AGI.
Starace put the 2011 exports of goods and services at 4.7 billion euro ($6 billion) in the first four months.
Having achieved its export objectives, now burdened by the European financial crisis, Italy aims to attract investments in its sovereign funds. It eyes the Abu Dhabi Investment Authority (ADIA), which manages excess revenue from the Emirates oil reserves and has investments worth $875 billion in shares and bonds issued by industrial and financial companies all over the world. There is also the Investment Corporation of Dubai, the Emirates Investment Authority and the Mubadala Development Company, which already owns 35percent of Piaggio Aero Industries and shares in Poltrona Frau.
“Our objective will be to attract investments by bringing the UAE’s capital to various Italian sectors. We believe that Italy is a country presenting a window of opportunity, investments and favorable prices, at least until economic growth returns, hopefully at the beginning of 2014. We are encouraging our interlocutors to move towards sectors guaranteeing great opportunities such as aeronautical technology, renewable energy, fashion and luxury yachts, [and] all industries in which Italy excels,” Straace said.
“We are also interested in possible initiatives to be taken by sovereign funds buying our debt.” Starace explained that,” Prime Minister Monti’s visit is one that intends to confirm the excellent relations Italy has with the UAE, but also expresses a desire to attribute an even higher level to these relations, in order to ensure Italy is closer to leading European players in trade, such as the French, the British and the Germans. “We must do more, and Prime Minister Monti’s presence confirms this."
Starace also emphasized that the prime minister enjoys “enormous prestige” also in the UAE, and his visit is the first in five years since Romano Prodi’s visit in 2007.
“Since then we have made great progress here and the time has come to certify this at a political level,” he added. Hence, while there is attention paid to sovereign funds, work continues in supporting Italian companies wishing to establish a greater presence in the Arab world, starting with countries in the Gulf.
“Dubai and Abu Dhabi are the Gulf’s ‘hub’, added Starace. “Companies move here because the country provides the best services in the area, the best free trade zones such as the one in Jebel Ali, and the best air transport system."
The ambassador announced that on Dec. 2, Alitalia will add four flights a week to Abu Dhabi, in partnership with Etihad.
“The Jebel Ali free trade area is a large re-exportation platform and it would be interesting to know how much of the 5 billion euro ($6.4 billion) entering the country is then moved from the Gulf to Africa, or to Iraq, and to much of the Indian subcontinent.”
Re-exportation can in fact act as a multiplier of investments, to which one must add demographic growth.
“There are now more immigrants who are also good consumers. This is the most globalized country in the world, only 10 percent of residents are nationals and there are now Russians, Poles and Egyptians. Abu Dhabi, for example, has a very large community of Syrians, Egyptians and Jordanians who are excellent consumers and contribute to the growth of the country's middle classes.”
While trade between Italy and the Emirates improves, political-diplomatic cooperation remains equally important. “Political cooperation on foreign affairs improved greatly with the Libyan experience. We hosted their planes at the Sigonella base, our foreign ministers were constantly in touch and Italy played a leading role in contact groups”.
This cooperation continues also in addressing the Syrian issue. Starace explained that “Italy is the country most aligned to the Emirates precisely because it is the country most attentive to maintaining balance and peace in the area. Like Italy, the United Arab Emirates have made maintaining balance and peace a question of survival, precisely because everything here is based on economic growth and thus also on the creation of an environment suited to doing business.”