Edoardo Bonatti
18 maggio 2020
Nicola Lener has been Ambassador of Italy to the United Arab Emirates since 1 October 2019. During his diplomatic career, he occupied the role of Head of the Economic and Commercial Office of the Embassy in Lima, Peru, and in Amman, Jordan; he was Consul General in Casablanca, Morocco, and held the post of Deputy Ambassador in Ottawa, Canada. In Rome, he worked at the General Directorate for Italians Abroad and Migration Policies and the General Directorate for the Promotion of the Country System, where he was also Deputy General Director.
Testo disponibile in italiano (PDF – 240 KB)
InvestorVisa: Ambassador, you were recently appointed as the Head of the Italian Mission to the United Arab Emirates. What were the economic relations with Italy when you arrived in the country?
Lener: Thanks to the work of my predecessors, I inherited a rather interesting situation. In the past few years, the total value of the commercial exchange was around five billion euros with Italy enjoying a net surplus of almost four billion. The Emirates thus represents just under 10% of the global Italian trade balance. This was the state of affairs before the upheaval caused by the pandemic, but we look forward to going back to normality.
Between the end of 2018 and the beginning of 2019, ENI’s arrival in the country represented a positive game-changer. ENI signed strategic deals with ADNOC, its homologous Abu Dhabi counterpart, which will offer very advantageous positions both upstream (exploration and use of offshore reservoirs), and downstream, as it acquired 20% of ADNOC Refinery and now holds a 20% stake in the new company selling Emirati oil products. This strategic interaction brings special value to bilateral relations, going beyond the two firms and affecting the two countries as a whole.
Expo 2020, recently postponed to 2021-22, will be another tremendous opportunity: a global event to show Italy’s ability to innovate and a unique occasion to consolidate our economic relations with the Emirates, especially in high-tech sectors.
You served as a member of the General Directorate for the Promotion of the Country System of the Ministry for Foreign Affairs for a long time. How will your knowledge of the internationalization processes of the Italian economy translate into your new assignment?
In this country, I found myself dealing with many matters that, in some way, I had already tackled during my time in Rome. Among all: Italian companies’ internationalization efforts, Emirati investment attraction, and preparing for our participation in Expo 2020, where we are collaborating closely with the General Commission curating our Pavillion. We must understand that the UAE is a very competitive country as Emirati businessmen and authorities are always looking to invest their significant resources in the best the world has to offer. Our entrepreneurs must present quality projects, as innovative as cost-competitive, and try to cooperate closely with our political institutions, such as the Embassy and Consulate General, Italian Trade Agency offices, and SACE-SIMEST. In this market, we must face global competitors as a country, not as individual companies.
Several missions led by members of the Italian government, including one headed by the President of the Council Giuseppe Conte, visited the Emirates in 2019. What is your assessment of current political relations between the two countries, and what implications will there be for economic cooperation?
Between 2018 and 2019, the Prime Minister has been to Abu Dhabi twice, once to attend expressly to the signing of ENI’s deals. In April 2019, the former Minister for Economic Development, Luigi Di Maio, led a large-scale mission here; Undersecretary of State for Foreign Affairs, Manlio Di Stefano, also visited the country multiple times. In any case, our dialogue is still ongoing even during the pandemic: at the height of the crisis, Ministers Di Maio, Franceschini, Speranza, Lamorgese and Azzolina held a telephonic conference with their Emirati counterparts while PM Conte spoke with the Crown Prince of the Emirate of Abu Dhabi, Mohammed bin Zayed Al Nahyan. Italy shares many interests with the Emirates, in fact, as an actor with a growing presence in the region, they lead continuous bilateral political consultation on various scenarios, such as the Gulf, Libya, or Yemen. Therefore, it is in Italy’s strategic interests to maintain a constant and satisfactory relationship with them.
The COVID-19 issue looms large over all of us. What do you think the future of the Italian economy and foreign investment trends will be, once the country is out of the pandemic?
The UAE was hit by a double shock. In addition to the pandemic, there has been the oil shock, due to a collapse in demand and contrasts in Opec+ between Saudi Arabia and Russia. Needless to say, the depression of crude oil prices was the result of the evident oversupply, but it is commonly thought that the crisis will be temporary and they are therefore looking to the future and preparing for the coming years. The Emirates are striving to diversify their energy production, as oil prices will continue their downward trend in the future, by investing in renewables and extracting the maximum added value from their enormous oil and gas reserves, the agreement with ENI was the first step in this direction. All services have been influenced by these events, even in a thriving country like the UAE, especially tourism, real estate, and civil aviation.
In such a framework, however, Italy remains an attractive country for Emirati investors, thanks to the quality of its companies, to the level of its engineering and technology, to its ability to combine functionality and beauty, to the creativity of its geniuses. The recent news of the acquisition of the Colnago bicycle company by the Abu Dhabi Chimera Investments fund, as well as the recent purchase of Cavalli by Damac of Dubai, only corroborates the widespread appreciation that our quality enjoys here in the UAE. For our economic system, the challenge is now to combine these M&A operations with a growing number of greenfield and brownfield investments, and to achieve this goal we need to restart the reform process to improve the investment climate in our country, as the Prime Minister announced recently.
Dubai is one of the main economic and financial hubs in the Middle East. Notwithstanding this, and despite enjoying sound commercial relations with Rome, Emirati investments in Italy are modest. What do you think this fact is due to and what can our diplomatic network do to correct this trend?
Over the last few years, there were some unlucky Emirati investments in Italy, like Etihad investing in Alitalia, but, as I said, our country is still highly appealing. The role of the diplomatic network, strengthened by the network of ITA desks for the attraction of investments, is to keep in touch both with large institutional investors (such as the sovereign wealth funds ADIA and Mubadala) and with all other potential private investors, enhancing the strengths of our country and deepening the knowledge of their respective investment strategies. In such a sense, our efforts complement the role played in Italy by the Foreign Investment Attraction Committee chaired by the Italian Ministry of Economic Development, an official one-stop-shop for wealthy investors and a centre where proposals to improve our investment climate are developed.
What do you think could persuade a foreign entrepreneur, in particular an Emirati one, to invest in Italy? Are there specific needs and wishes that Italy can satisfy to improve its ability to attract foreign capital?
Even if personal relationships and actual investment prospects play quite a significant part, rules can make a difference. Emirati entrepreneurs are accustomed to a very favourable and lean business environment and expect to find a similar context abroad, where bureaucracy serves companies and norms are straightforward, reliable, and not changing constantly. It is even better if they are also limited in number.
The internationalization and promotion of the Country System have been reorganized to strengthen the coordination function of the Ministry of Foreign Affairs. Do you think this will improve the effectiveness of our economic diplomacy, especially when it comes to attracting foreign investments in Italy?
It is unquestionably an epochal reform to support our companies in foreign markets. We want to streamline the relationship between companies and institutions by bringing to the Italian Ministry of Foreign Affairs and International Cooperation both internationalization and trade issues related to it, such as the Italian position in trade discussions, which is now controlled by the European Union, or the removal of non-tariff barriers that often affect our products. These two competencies need to be intertwined with the formulation of Italy’s foreign policy interests. In doing so, we intend to merge the simplification of the business-government relationship with the protection of Italy’s national interests and economic security. We are in a transitional phase, but I know that my colleagues in Rome are also working hard through the health emergency. I am sure that companies will understand the benefits of this new institutional architecture once fully operational.
Do you think that, reorganization notwithstanding, economic diplomacy can or should be used more and therefore give greater importance and funds to the chamber system and ITA desks, as they are closer to business communities abroad?
The reform brought the ITA under the sole supervision of the Farnesina, which allocates funds for promotional activities every year, establishing which the main objectives are and how to pursue them. A unified administration makes laying the groundwork for ITA projects much easier and faster. Together with ITA, we are drawing up a roadmap to relaunch the Italian presence after the pandemic: we need to address quickly the partial flow breakdown that ensued. The Emirates is a priority country in the government’s short and long term strategies, given its importance in our overall commercial projection.
In 2017, Investor Visa Italy was honoured by your participation in the conference on the new measures to attract foreign investments. In your speech, you stressed the importance of communication, whether institutional or not. Over the years, speaking with directors of the Chambers of Commerce abroad, there is a distinct lack of awareness of what Italy offers in terms of investment prospects and measures like the investor visa. Why do you think such a program did not have much resonance among foreign business communities?
Looking at the Emirates, I do not believe that the investor visa lack of success is due to inefficient communication strategies. I think that the complexity of the regulation compromised its attractiveness. That being said, in the UAE, citizens not subject to a short Schengen visa represent 10% of the population, but there are some large Indian, Pakistani and Arab communities subject to visas. Usually, an Emirati entrepreneur on a business trip will travel to Italy without a visa. I think that if he had an interest in sojourning in Italy with a long-stay visa, he would probably consider the elective residency visa far more appealing, as he just has to attest that he is financially self-sufficient. The ease of the procedure makes all the difference. The multi-annual business visa providing multiple entries still is the preferred instrument among potential non-Emirati investors living here.
Implementing an investor visa program also meant “discarding” the visa for start-uppers aimed at encouraging greater internationalization of Italian start-ups and SMEs. Do you think that foreign investors are not too favourable to this segment of the Italian market or are Italian enterprises unwilling to accept foreign capital? What can embassies do to promote these particular realities?
As far as start-ups are concerned, what I said before is also valid here: we have the tools to attract investors in our country. Generally, the sector is held in very high esteem, as a substantial number of venture capital funds, incubators, and public funding programs can attest. Such a vibrant national sector means that there are many openings for Italian companies looking for partners. We ourselves are planning a cycle of meetings on innovation since here there are resources, governance expertise, and talents to establish mutually beneficial partnerships with Italian start-ups and companies. I do not think that visas may be a problem in this case.
The visa was also devised to obtain donations from patrons in favour of Italian cultural and scientific establishments. Despite the excellent reputation enjoyed by the Italian cultural heritage in the world, there were no significant results. In addition to the embassies’ commitment to promoting Italian culture abroad, what could inspire foreign patrons to invest in Italian culture?
If Eni’s arrival is an economic game-changer for the Country System, the same can be said about the recent opening of the Italian Cultural Institute in Abu Dhabi, the first in the GCC area, for our cultural relevance. We want to address the demand for Italian culture arising from Emirati society that adores our way of life, enjoys travelling to and buying real estate properties in Italy. Our goal is to promote Italian culture but also intercultural and interreligious dialogue, a keenly felt issue here. We perceived great interest in financing high-quality cultural projects, through partnerships with our institutions with a governance structure better suited to them.
Even tax breaks proposed to those who transfer their tax residency to Italy are often deemed insufficient, given that potential investors can enjoy at least equally favourable corporate taxation in their countries. Do you think that this tax law can still help attract foreign investments, or should it be rethought in a broader context, where doing business is encouraged and more straightforward, and only then given tax breaks?
It is difficult to compete with the Emirates using tax breaks, as taxes are very low here. As I said, I think that a radical reform to simplify our tax regulations is essential, and the same must be done for their application.
