ITALY- RELATIONS WITH RUSSIA COULD NOT BE BETTER

Over recent years relations between Italy and the Russian Federation have evolved to a level of absolute excellence, to the point of justly deserving the designation of “privileged relations”.

Italy’s Prime-Minister Silvio Berlusconi is a personal friend of his Russian counterpart Vladimir Putin and has frequently lobbied on Russia’s behalf in the EU. The convinced and often decisive support with which Italy has encouraged Russia’s integration into the Western community (EU, NATO, WTO and OECD) has been valuable to Russia increasing its foreign policy’s importance and affording Russia a balanced way to address relations with the West and recovering that front line role on the international scene that Russia deserves for obvious historical, geographical, political and economic reasons.

Italy is Russia’s third biggest trading partner. Bilateral trade relations between Russia and Italy peaked at approximately 24 billion euro in 2007, reflecting an increase of 13% over 2006. This has resulted in a contribution to the dynamic expansion of Italian exports (€9.6 billion), which rose 25.4% as compared with 2006 thanks to the gradual improvement of Russian living standards and the consequent increased demand for quality products; the same is true for Italian imports, (€14.4 billion), up by 5.6% in 2007 as a result of Italian increased energy needs. Italy is the second market for Russian gas. 32% of Italy’s gas imports come from Russia and this figure is expected to reach 40% by 2010.

Italian exports to Russia are, for the most part, machinery (32%), textiles products and apparel (16%) and furniture (8%), while a full 71% of its imports from Russia consist of energy products.

As regards Italian investments in Russia, Italy occupies 19th place among foreign investors, with a total of 486 million dollars. But these data are underestimated since many Italian investments in Russia are handled through foreign channels.

Alongside Italy’s solid position in the energy sector, made possible by investments by ENI (long term supply contract with Gazprom until 2035, key partner in Blue Stream II and South Stream Projects) and ENEL, approximately 500 Italian firms are operating in Russia, especially in the sectors of household appliances, ceramics, foodstuffs, apparel, construction, metallurgy and in the sectors of auto manufacturing, petrochemicals, telecommunications—including space telecommunications—and aeronautics (Recently Finmeccanica, the Italian aerospace company, bought a 25 percent stake in the civilian aircraft division of the Russian aircraft manufacturer Sukhoi, which is better known for its fighter jets. With Boeing in an advisory role, Sukhoi is now developing a regional passenger jet, the Superjet. Finmeccanica also signed an agreement with the state-owned holding company Russian Technology to develop security systems for guarding airports, oil depots and other large installations).

With the aim of promoting the formation of Italian industrial clusters in Russia, a Joint Working Group was created back in 2003. Within this framework several Russian regions were chosen for the launch of industrial initiatives: Lipetsk, Ekaterinburg, Moscow, St. Petersburg and Perm.

Russian investments in Italy have good prospects for growth, particularly in the oil, metallurgy and steel sectors. In addition to two major Russian investments by Severstal (steelworks) and the steel group Yevrazholding, an agreement was signed in late June 2008 between ERG and Lukoil in the field of oil refining (valued at €1.4 billion).