{"id":38142,"date":"2025-11-03T12:25:44","date_gmt":"2025-11-03T09:25:44","guid":{"rendered":"https:\/\/ces.org.ua\/?p=38142"},"modified":"2025-11-03T16:21:22","modified_gmt":"2025-11-03T13:21:22","slug":"italy-and-ukraine-are-rebuilding-economic-bridges","status":"publish","type":"post","link":"https:\/\/ces.org.ua\/en\/italy-and-ukraine-are-rebuilding-economic-bridges\/","title":{"rendered":"Beyond Steel: How Italy and Ukraine Are Rebuilding Economic Bridges"},"content":{"rendered":"

Originally posted: ISPI – Italian Institute for International Political Studies.<\/a><\/p>\n

Goods, services, people, and capital: the two countries are transforming their relationship, with Rome playing a strategic role in Ukraine\u2019s reconstruction and EU integration beyond mere trade.<\/p>\n

Once defined by iron and metallurgy,\u00a0Italy-Ukraine relations are being recast in the fields, factories, and financial corridors of a reshaped Europe<\/strong>. As Ukraine\u2019s economy adapts to war and deepens its EU integration path, Italy has emerged as both a critical trade partner and a potential strategic advocate inside the European Union.<\/p>\n

Italy\u2019s role has also grown diplomatically<\/strong>: as host of the\u00a02025 Ukraine Recovery Conference (URC) in Rome<\/strong>, and as an active member of the\u00a0G7 Multi-Agency Donor Coordination Platform<\/strong>, Italy has positioned itself at the core of Europe\u2019s reconstruction architecture.<\/p>\n

With the EU\u2019s four freedoms regarding the movement of\u00a0goods, services, people, and capital<\/strong>\u00a0as a framework, this partnership reveals both continuity and transformation. From Ukrainian corn feeding Italian cattle to Italian engineers contributing to Ukraine\u2019s reconstruction, the bilateral connection reflects not only commercial ties but also a shared European project in the making.<\/p>\n

Goods: From Steel to Grain<\/h2>\n

Before Russia\u2019s full-scale invasion, Ukraine\u2019s exports to Italy were the product of an industrial symbiosis. The Ukrainian\u00a0Metinvest Group<\/strong>, one of the largest steel producers in Europe, owned two Italian plants \u2013\u00a0Trametal<\/strong>\u00a0and\u00a0Ferriera<\/strong>\u00a0Valsider<\/strong>\u00a0\u2013 creating a vertically integrated supply chain that shipped slabs and pig iron from Mariupol to the Italian industrial North.\u00a0Steel, iron, and pipes\u00a0<\/strong>accounted<\/strong><\/a>\u00a0for roughly 60% of pre-war exports to Italy<\/strong>, while agriculture played a secondary role.<\/p>\n

Figure 1<\/strong><\/p>\n

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That picture has now flipped, while total trade turnover has shown resilience. Today, Ukraine\u2019s exports to Italy are dominated by agricultural goods, particularly corn<\/strong>. In 2024 Ukrainian corn accounted for nearly 40% of Italy\u2019s total corn imports, or roughly three million tonnes. Given Italy\u2019s annual consumption of about 12 million tonnes for animal feed, this means that one in every four Italian pigs or cows may be eating Ukrainian corn. Ukraine feeds the raw materials of Italy\u2019s food industry, sustaining the production of hams, cheeses, and other staples of the \u201cMade in Italy\u201d brand.<\/p>\n

Meanwhile,\u00a0Italy\u2019s exports to Ukraine have become more technologically oriented<\/strong>. About 6% of Ukraine\u2019s industrial machinery imports come from Italy, and 9% of Italy\u2019s defence exports now go to Ukraine. The shift from metallurgical inputs to machinery and defence highlights both adaptation and alignment.<\/p>\n

On one side, Ukraine\u2019s loss of industrial capacity has opened new demand for imported technology and capital equipment; on the other, Italy\u2019s advanced manufacturing and defence sectors are gaining relevance in reconstruction planning.<\/p>\n

In a future defined by decarbonisation and reindustrialisation,\u00a0Italy could become a gateway for green Ukrainian steel<\/strong>\u00a0\u2013 produced using renewable energy and exported to the EU under low-carbon trade regimes. Likewise, expanding joint ventures in fodder production and agri-logistics could deepen value-chain integration and reduce both countries\u2019 exposure to supply disruptions.<\/p>\n

Services: Narrow Channels, Expanding Opportunities<\/h2>\n

Trade in services remains\u00a0modest<\/strong>\u00a0but strategically significant. Italy is among Ukraine\u2019s top ten partners in services, but Ukraine ranks below Italy\u2019s top 40 extra-EU partners, reflecting a\u00a0limited but growing relationship<\/strong>. In 2023 Italy recorded a positive balance of \u20ac76.7 million in services trade with Ukraine.<\/p>\n

The war has reshaped service flows in two ways. First, Ukraine\u2019s IT and digital sectors have maintained impressive exports despite wartime challenges, creating space for partnerships with Italian firms in software, logistics, and data-driven reconstruction. Second, Italian engineering, architectural, and consulting services are increasingly sought in Ukraine\u2019s recovery projects, particularly those financed by EU and multilateral institutions.<\/p>\n

As Ukraine advances toward EU membership, service-sector alignment will become more crucial<\/strong>. Regulatory convergence in telecommunications, professional qualifications, and digital payments could unlock growth. Italy\u2019s experience in small and medium-sized business services \u2013 especially in design, logistics, and renewable engineering \u2013 could be leveraged to accelerate Ukraine\u2019s transition from raw material exports to higher-value services.<\/p>\n

Ultimately, expanding trade in services requires not just business interest but mobility of expertise, educational partnerships, and digital infrastructure \u2013 areas where EU frameworks can be mobilised effectively.<\/p>\n

People: A Human Bridge Across the Continent<\/h2>\n

If goods and services reflect structural ties, people embody the social and emotional depth of bilateral relations.\u00a0Italy is home to one of Europe\u2019s largest Ukrainian communities<\/strong>. By May 2025,\u00a0approximately 390,000<\/strong>\u00a0Ukrainians<\/strong>\u00a0were legally residing in Italy \u2013 making up about 10% of all non-EU citizens.<\/p>\n

Before the full-scale invasion, Italy already hosted around 223,000 Ukrainian residents, primarily women working in care and domestic sectors. Following 2022, an additional 167,000 Ukrainians arrived under temporary protection. Despite the challenges of displacement,\u00a0integration outcomes have been strikingly positive<\/strong>: 66% of Ukrainians are employed, 80% hold higher education degrees, and about half report good living conditions.<\/p>\n

This diaspora contributes to both economies. For Italy, Ukrainian workers are indispensable in health and care services, sustaining an ageing population. For Ukraine, their financial contributions are vital: remittances from Italy represented around 10.2% of total inflows in 2024, one of the highest shares among partner countries.<\/p>\n

Beyond economics, this community acts as a human bridge between Kyiv and Rome. Many Ukrainians in Italy are women with professional skills and transnational families. Structured return or circular mobility programmes could transform this demographic into a\u00a0reconstruction asset<\/strong>\u00a0\u2013 channelling skills in healthcare, education, and small business into Ukraine\u2019s rebuilding efforts.<\/p>\n

At the same time, Italy\u2019s experience with migration and integration positions it as a natural advocate for freer movement of people between Ukraine and the EU, especially as labour shortages across Europe intensify.<\/p>\n

Capital: Financial Links and Industrial Footprints<\/h2>\n

The movement of capital tells\u00a0a quieter but equally important story<\/strong>. On the Ukrainian side, Metinvest\u2019s Italian plants and Vesco Clays Italy represent the country\u2019s key outbound investments.\u00a0On the Italian side, capital flows have been constrained by wartime risk but not absent<\/strong>: between 2022 and 2024, Italian firms invested roughly \u20ac30 million in Ukraine \u2013 less than 2% of total foreign direct investment inflows.<\/p>\n

Italy\u2019s most prominent presence in Ukraine\u2019s financial landscape is\u00a0Intesa Sanpaolo\u2019s ownership of PravexBank<\/strong>, a network serving Ukrainian households and businesses. This presence provides a channel for future investment expansion once security conditions stabilise.<\/p>\n

According to Centre for Economic Strategy\u2019s estimates<\/a>,\u00a079 Ukrainian companies are linked to Italian ownership or partnerships<\/strong>, together generating over \u20ac1 billion in annual revenues. This network, largely consisting of trade representatives and intermediaries, could evolve into a backbone for deeper integration \u2013 particularly if supported by EU-backed credit guarantees and reconstruction insurance instruments.<\/p>\n

Defence-industrial cooperation also offers potential<\/strong>. Italian manufacturer\u00a0Leonardo<\/strong>\u00a0has expressed interest in expanding its presence in Eastern Europe, including radar systems, drone technologies, and aerospace components. Such partnerships could link Ukraine\u2019s engineering talent with Italy\u2019s industrial capacity under NATO and EU frameworks.<\/p>\n

The next step is institutional<\/strong>: introducing risk-sharing mechanisms for investors under EU programmes, and establishing an Italy-Ukraine business dialogue to coordinate private and public reconstruction priorities.<\/p>\n

A Strategic Outlook: Italy as Ukraine\u2019s Southern Gateway<\/h2>\n

Italy\u2019s role in Ukraine\u2019s reconstruction and EU integration could extend\u00a0beyond trade statistics<\/strong>. As a G7 member and EU founding state, Italy is uniquely positioned to act as both partner and advocate \u2013\u00a0translating Ukraine\u2019s needs into European policy momentum<\/strong>.<\/p>\n

In practice, this means, first, anchoring cooperation in specific, high-impact sectors:<\/p>\n