Prime Minister Giorgia Meloni’s government is heeding the pleas of Marco Tronchetti Provera, chief executive at Italian tire maker Pirelli, who warned of what he sees as the growing influence of the Chinese and the Chinese Communist Party.
Tronchetti Provera brought the Chinese on board in 2015, but relations have since deteriorated sharply. The ‘golden power’ of the Italian government has also been expanded considerably, which means that Meloni is now able to use that power as well. ‘Golden power’ is a mechanism by which Rome can intervene in Italian companies with a strategic interest.
Some analysts doubt that the Milan tire producer can be considered strategically important. But the microchips that Pirelli is developing, which may also allow the geolocation of the vehicles to be retrieved, offer the government the opportunity to intervene. Rome wants to prevent such technology from falling into the wrong hands.
By order of Rome, only Camfin, the investment company of Tronchetti Provera that now owns 14 percent of Pirelli, can appoint the CEO and that rule will remain in place in the future. The Chinese partner Sinochem, with 37 percent the largest shareholder, is also excluded from strategic decisions about mergers, or purchases and sales.
Tronchetti Provera has been at the head of the company since 1992. According to an earlier agreement between the shareholders, he was also allowed to choose his successor. But recently Sinochem proposed a new deal in which this would be scrapped, which led to additional tensions.
Also read this analysis:Pirelli CEO asks Italian government to limit Beijing’s power
The Italian government is now intervening and certainly sending a signal to Beijing, but it seems to have weighed that decision carefully. For example, Sinochem is not obliged to reduce its shares in Pirelli, or even to leave the Italian company completely.
Geopolitical context
In the background, the geopolitical context plays a major role. Earlier, Meloni already indicated that it wanted to withdraw Italy from the controversial Chinese infrastructure project ‘Belt and Road‘, an agreement that has yielded absolutely nothing for Italy on a practical level. By now also telling Sinochem the guard, Meloni is also sending a signal to Washington that she is critical of China and prefers to pursue excellent relations with the US.