Italy planning a sovereign fund amid a new era of national interest

Rome: Italy’s Minister of Enterprises Adolfo Urso announced Wednesday a public-private fund that looks at consolidating “national strategic supply chains” in the areas of raw materials and energy.

A diplomatic source in Italy confirmed to CNBC that only high-potential or systemically relevant firms will receive funding. They added that this plan is expected to pass through Parliament before the end of the year.

The announcement comes after Ireland, another EU nation, said earlier this month that it intends to start a sovereign wealth fund next year. This would be capitalized by windfall tax receipts and target long-term costs such as pensions and infrastructure.

France, the second largest euro area economy, earlier this month also presented a plan for an investment fund for critical metals. More broadly, these announcements follow a trend in Europe where nations are aiming to reduce their dependency from other countries, like China.

“This is a response to growing international competition over critical resources and supply chains,” Federico Santi, a senior analyst at political consultancy Eurasia Group, told CNBC via email.

“The pandemic first and later the war in Ukraine and resulting energy crisis have laid bare how supply chains are vulnerable to political and geopolitical shifts. At the same time, massive investment in the green transition and related technologies has increased the need for critical resources,” he said.

Italy established a wealth fund back in 2011 which has investments in energy, communications and aerospace sectors. The latest plan for a separate fund reinforces the idea that Rome is trying to boost its industrial policy.