Abstract
The alignment of the Kingdom of Saudi Arabia and the Republic of Italy in the mid-2020s represents a critical, yet understated, geopolitical and commercial vector, fundamentally reshaping the dynamics between the Middle East and Southern Europe. While the relationship spans nine decades—Italy being among the first nations to establish formal ties with the Kingdom in the early 1930s—its current velocity is unprecedented, driven by the Saudi commitment to the Vision 2030 transformation and Italy’s repositioning as a primary industrial and technology partner in the European Union. This acceleration culminated in the establishment of the Saudi-Italian Strategic Partnership Council following the Al-Ula Summit between Crown Prince Mohammed bin Salman and Prime Minister Giorgia Meloni, marking a definitive “turning point” in the bilateral trajectory Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. This partnership is not merely transactional; it is a foundational strategic choice, evidenced by the $10 billion (or €10 billion) worth of agreements and Memoranda of Understanding (MOUs) signed across 26 distinct projects in sectors ranging from aviation and clean energy to advanced defense and infrastructure immediately following the summit Asharq Al-Awsat Interview with Italian Ambassador, November 2025.
The core of this elevated cooperation is the highly complementary nature of the two economies. Saudi Arabia, leveraging its massive Public Investment Fund (PIF), seeks global expertise and technology to localize industrial capabilities, diversify its GDP away from hydrocarbons, and build the mega-projects of Vision 2030. Italy, a manufacturing powerhouse and global leader in high-end design, advanced engineering, defense, and specialized SMEs, provides the requisite intellectual and industrial capital. Data from the International Trade Centre (ITC) indicates that in 2023, total Saudi non-oil exports to Italy amounted to $286.9 million, while Italian exports to the Kingdom—comprising machinery, pharmaceuticals, electrical equipment, and specialized industrial components—grew by a remarkable 28% to reach €6.2 billion ITC Trade Map, 2024. This significant growth in Italian exports is directly linked to the Kingdom’s massive investment cycle in infrastructure and the energy transition.
A defining feature of this new axis is the shift from a conventional client-supplier relationship to integrated strategic co-investment, anchored by mutual interest in the global energy transition and technological sovereignty. The energy sector, traditionally the bedrock of relations, has expanded well beyond oil and gas. Italian energy majors, including Eni and Enel, and engineering contractor Saipem, are deeply involved in Saudi clean energy ambitions alongside Saudi Aramco, SABIC, ACWA Power, and Alfanar. The Kingdom’s drive to become a global hub for green and blue hydrogen export, leveraging its low-cost electricity generation capabilities, is seen as a key prospect for supplying European markets, directly aligning with Italy’s and the wider EU’s decarbonization targets Asharq Al-Awsat Interview with Italian Ambassador, November 2025. ACWA Power Chairman Mohammed Abunayyan underscored this by highlighting that the Kingdom’s advanced infrastructure and low electricity costs will enable it to become the “world’s data center,” a critical need for power-hungry technologies like Artificial Intelligence (AI).
Beyond energy, the Saudi-Italian synergy is most pronounced in high-technology, defense, and infrastructure. In the advanced industries and defense sector, Italian industrial leaders like Leonardo (aerospace and defense), Fincantieri (naval platforms), and Elettronica (electronic warfare) are actively supporting the Saudi national strategies for industrial localization (Vision 2030‘s Localization goal). This includes cooperation in naval platforms, helicopters, and advanced surveillance technologies, as affirmed by Italian Ambassador Balducci Asharq Al-Awsat Interview with Italian Ambassador, November 2025. Similarly, in the massive Vision 2030 urban and tourism projects—such as Al-Ula, Diriyah, and the Red Sea Project—Italian expertise in engineering design and high-end hospitality is paramount. A concrete example is the “Desert Dream Train” project, being implemented by the Italian Arsenale Group Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. This signals a deeper, long-term commitment that transcends standard construction contracts, integrating Italian design and luxury brand capital into the Kingdom’s emerging tourism industry.
In the digital domain, Saudi Arabia’s ambitious National Artificial Intelligence Strategy and the launch of the national AI company, Humine, have opened a new frontier for Italian expertise in industrial automation, specialized software, and cybersecurity. The Kingdom’s telecommunications sector, which recorded total profits of 14.46 billion riyals ($3.86 billion) during the first three quarters of 2025, growing by 5.72% year-on-year, provides a robust domestic market and infrastructure platform for these advancements Asharq Al-Awsat Telecommunications Report, November 2025. The market size, estimated at $26.97 billion in 2025, is projected to reach $37.19 billion by 2030, representing a CAGR of 6.64% Mordor Intelligence via Asharq Al-Awsat, November 2025. Companies like STC, Mobily, and Zain Saudi Arabia are the gatekeepers to this digital expansion. The Italian interest here is not just in exporting technology but in co-developing solutions within Saudi data centers and smart city applications, providing a competitive alternative to US or Asian tech providers.
The geopolitical implication is the creation of a stable, multi-sectoral European anchor for Saudi Arabia’s grand strategy of diversification, particularly as global supply chains are regionalized and subject to increasing geopolitical friction. Saudi Minister of Investment Khalid Al-Falih explicitly called on Italian small, medium, and emerging companies to participate, leveraging the Kingdom’s Green Shoring initiatives—providing clean, reliable energy for energy-intensive industries—to help them meet stringent European standards, including the pending Carbon Percentage Tax (CPAT) Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. This policy framework, effectively offering Italian industry a “green corridor” into the Middle East and Asia, is a powerful strategic lure that bypasses complex regulatory hurdles faced domestically. The commitment is further solidified by Italy’s confirmation of participation in Expo 2030 Riyadh, a direct response to a personal invitation from the Crown Prince to Prime Minister Meloni. This collective trajectory demonstrates a sophisticated, government-level strategy to cement a long-term, multi-layered strategic partnership, transforming historical diplomatic ties into an economic and technological co-dependency designed to withstand global volatility.
Chapter Index (Table of Contents)
Core Concepts in Review: What We Know and Why It Matters
- The Al-Ula Strategic Pivot: Establishing the Bi-Lateral Investment and Partnership Council
- The New Energy Nexus: Italian Expertise in Saudi Hydrogen and Clean Power Grids
- Advanced Industry and Defense: Localizing Italian Know-How within Saudi Vision 2030
- Megaprojects and High-End Tourism: Engineering Design, Hospitality, and the Arsenale Group’s ‘Desert Dream Train’
- Digital Infrastructure and AI Sovereignty: Opportunities for Italian Technology in the Saudi Telecoms Market
- Geopolitical and Commercial Corridors: The Green Shoring Strategy and CPAT Compliance for Italian SMEs
- Core Concepts in Review: Saudi-Italian Strategic Alignment (Data Synthesis)
Core Concepts in Review: What We Know and Why It Matters
he fundamental shift underway between Italy and the Kingdom of Saudi Arabia is best understood as a sophisticated, multi-domain strategic alignment—a departure from the historical transactional relationship based solely on hydrocarbon sales to one focused on co-investment in future technologies, defense localization, and strategic geopolitical positioning. The institutionalization of this alliance through the Saudi–Italian Strategic Partnership Council, established during the landmark January 2025 visit of Italian Prime Minister Giorgia Meloni to Al-Ula, created a formal framework to coordinate cooperation across economic, political, and defense sectors, backed by agreements collectively valued at $10 billion Saudi–Italian Relations: Evolution, Dynamics, and Future Trajectory – Gulf Research Center, November 2025. This pivot aligns perfectly with Italy’s dual-track foreign policy, which seeks full integration within NATO’s deterrence posture while simultaneously reinforcing its distinct security and energy interests in the Enlarged Mediterranean Italy: the 2025-2027 Defence White Paper | Start Insight, October 2025. The deepening bilateral security relationship, evidenced by Italian arms exports to Saudi Arabia averaging over €400 million annually between 2019 and 2024, enhances NATO’s influence on its Southern Flank by empowering a key regional partner to become a more capable security provider Saudi–Italian Relations: Evolution, Dynamics, and Future Trajectory – Gulf Research Center, November 2025.
The convergence point for defense and high-technology investment is the Saudi commitment to Vision 2030‘s industrial self-sufficiency goals. The core metric driving Italian defense exports is the General Authority for Military Industries (GAMI) mandate to localize 50% of total military spending by 2030. Major Italian firms like Leonardo S.p.A., a partner in the multinational Global Combat Air Programme (GCAP) The New Partnership among Italy, Japan and the UK on the Global Combat Air Programme (GCAP) | IAI Istituto Affari Internazionali, March 2025, are central to this localization. Leonardo’s January 2025 MoU specifically targets the transfer of technology and industrial capacity for Combat Air systems, helicopter assembly, and the localization of advanced electronic warfare systems and radars Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration in the aerospace and defence sector, January 2025. Similarly, naval modernization and shipbuilding capacity building are addressed by Fincantieri’s November 2025 MoU with the Saudi Ministry of Industry and Mineral Resources, aiming to localize the design and maintenance of vessels, including dual-use offshore platforms Fincantieri, Saudi Arabia sign shipbuilding MoU – The Maritime Standard, November 2025. This strategy transforms Italy from a simple hardware vendor into a strategic co-developer of the Kingdom’s sovereign defense industrial base, guaranteeing a long-term revenue stream for Italian defense technology.
Perhaps the most economically disruptive concept is Green Shoring, the Saudi initiative designed to pivot the relationship from oil to low-carbon molecules and industrial relocation. This strategy directly addresses the imminent financial implications of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which moves out of its reporting-only transitional phase to mandatory fees on carbon-intensive imports starting January 1, 2026 The EU Carbon Border Adjustment Mechanism (CBAM): Implications for supply chains, February 2024. The International Monetary Fund (IMF) estimates that the annual CBAM burden for the broader Middle East and Central Asia (ME&CA) region could reach $1.7 billion, or a 14% surcharge on CBAM exports to the EU Macroeconomic Exposure to the EU’s Carbon Border Adjustment Mechanism: The Case of the Middle East and Central Asia in – IMF eLibrary, September 2025. Green Shoring offers Italian and other European energy-intensive manufacturers a sanctuary where they can access vast, low-cost renewable energy—leveraging the 12.7 GW of clean capacity Saudi Arabia is expected to install by the end of 2025 Saudi Arabia’s renewable energy capacity to double by year-end, surpassing 12 GW, March 2025. By producing goods using this clean power, Italian SMEs can minimize their CBAM liability, ensuring continued competitive access to the EU market.
This energy transition is physically manifested through the emergent Green Hydrogen export corridor. Saudi Arabia is aggressively pursuing a target of producing 2.9 million tons of green hydrogen per year by 2030 Saudi Arabia Green Hydrogen Market Size, Share & Forecast 2030 – Markets and Data, December 2023. Italy serves as the vital European gateway for this new energy stream, primarily through the partnership between ACWA Power and the Italian TSO Snam. This collaboration, formalized in January 2025, is focused on establishing the supply chain and building an ammonia import terminal in Italy ACWA Power and Snam Sign MoU for Green Hydrogen and Ammonia, January 2025. This terminal will feed the 3,300 km SoutH2 Corridor pipeline network, enabling the delivery of Saudi green molecules to industrial centers in Italy, Austria, and Germany SoutH2 Corridor – Our connection for a clean future, April 2024. The urgency is compounded by the fact that hydrogen is a CBAM-covered good, making the certified low-carbon status of the NEOM Green Hydrogen project a direct commercial advantage.
Beyond energy and defense, the partnership is investing heavily in digital sovereignty and giga-project infrastructure. The Kingdom’s National Strategy for Data and AI (NSDAI) aims to establish Saudi Arabia as a global AI leader by 2030, backed by ambitious targets including attracting $20 billion in investment Emerging Technologies Adoption | National Platform, October 2025. The establishment of HUMAIN, the sovereign AI company backed by the Public Investment Fund (PIF), has secured foundational infrastructure partnerships with global tech giants to deliver up to 1 GW of AI compute capacity by 2030, beginning with a 100 MW deployment in 2026 AMD, Cisco, and HUMAIN to form joint venture to deliver world-leading AI infrastructure, November 2025. This rapid build-out presents a substantial opportunity for specialized Italian expertise in high-security, industrial-grade automation and AI application development, fields where Italy’s own domestic industrial automation market is valued at $3.65 billion in 2025 Italy Factory Automation And ICS Market Size & Share Analysis, January 2025. The need for secure, reliable systems at the core of projects like NEOM and The Line, where Italian firm Webuild holds a $1.4 billion contract for high-speed rail tunnels Webuild wins $1.4bn contract for The Line’s high-speed rail, March 2024, ensures that Italian technological input is structurally integrated into the physical and digital core of the Vision 2030 transformation. The synergy between high-end Italian design and Saudi tourism is epitomized by the Arsenale Group’s “Desert Dream Train” project, a luxury railway service backed by an initial €100 million investment for new rolling stock, marrying high-end Italian hospitality with the Kingdom’s goal of reaching 150 million annual visitors by 2030 Arsenale Group, SAR to launch luxury rail service in Saudi Arabia, March 2023.
This comprehensive strategic alignment demonstrates that the Saudi-Italian relationship is strategically deep, politically formalized, and economically resilient, leveraging the regulatory pressure of EU climate policy (CBAM) to accelerate the transfer of Italian defense, engineering, and digital expertise into the Kingdom, ensuring Italy secures a privileged, long-term position in the new Saudi non-oil economy.
The Al-Ula Strategic Pivot: Establishing the Bi-Lateral Investment and Partnership Council
The formal establishment of the Saudi-Italian Strategic Partnership Council on January 26, 2025, during the Al-Ula Summit between Crown Prince Mohammed bin Salman and Italian Prime Minister Giorgia Meloni, transcends conventional bilateral diplomacy, creating a high-level coordination mechanism that immediately operationalized strategic alignment across defense, energy, and advanced industrial localization Saudi Arabia announces ‘Strategic Partnership Council’ with Italy, January 2025. This Council is explicitly intended to serve as the cornerstone of long-term cooperation, providing a direct, structured channel for ministerial and private sector dialogue, which had previously been intermittent, allowing for coordinated long-term planning essential for integrating Italian industrial capacity with Vision 2030‘s timeline and goals Italy and Saudi Arabia shaping a bold, shared future, November 2025. This pivotal meeting resulted in the signing of an agreement to establish the formal Council, alongside the immediate announcement of 26 agreements and Memoranda of Understanding (MOUs) that were valued at over $10 billion (or €10 billion), spanning critical sectors such as clean energy, industrial technologies, infrastructure, and defense Asharq Al-Awsat Interview with Italian Ambassador, November 2025. The sheer volume and speed of these MOUs reflect a fundamental shift in Saudi strategic thinking, prioritizing proven European Union (EU) industrial partners like Italy to ensure technological diversity and supply chain resilience, rather than relying predominantly on US or Asian sources.
The Strategic Partnership Council’s mandate is uniquely broad, covering not only economic and energy cooperation but also defense, security, and cultural exchange, reflecting the Kingdom’s comprehensive, multi-domain approach to geopolitical alliances Italy and Saudi Arabia shaping a bold, shared future, November 2025. Within the sphere of defense and security, the relationship has moved beyond traditional arms procurement toward joint industrial development and localization, directly supporting the Saudi General Authority for Military Industries (GAMI) objective of localizing 50% of all defense spending by 2030 Saudi Arabia increases defense spending to $78B in 2025, February 2025. This commitment is underscored by the Kingdom’s substantial allocation of approximately **$78 billion** to the military sector in the 2025 budget, which represents 21% of total government spending and 7.1% of Saudi Arabia’s Gross Domestic Product (GDP) Saudi Arabia increases defense spending to $78B in 2025, February 2025. The localization rate of military industries stood at 19.35% at the end of 2023, demonstrating a substantial gap that Italian defense companies, known for their system-level integration and transfer of intellectual property, are well-positioned to bridge.
A critical pillar of this advanced defense cooperation is the Italian aerospace and defense giant, Leonardo S.p.A., which significantly expanded its strategic collaboration with the Kingdom through a new Memorandum of Understanding (MoU) signed in January 2025 Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration, January 2025. This agreement, building on a previous MoU from early 2024, explicitly targets the expansion of industrial collaboration in Combat Air systems and helicopter technologies, alongside the localization of advanced electronic warfare systems and radars Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration, January 2025. Leonardo’s commitment extends to the establishment of a dedicated regional headquarters in the Kingdom, ensuring deep integration with local technological partners and research establishments, a prerequisite for generating sustained development and production within Saudi Arabia Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration, January 2025. The cooperation encompasses a range of previously supplied assets, including rotorcraft for passenger transport and rescue, maritime defense systems, electronic sensors, and crucial cybersecurity solutions, reflecting Leonardo’s long-standing, multi-faceted contribution to Saudi air defense infrastructure Leonardo signs new agreement to boost aerospace and defence collaboration with Saudi Arabia, January 2025.
Concurrently, the naval domain is being fundamentally recalibrated through the involvement of Fincantieri, the Italian state-controlled shipbuilding group, which has signed a Memorandum of Understanding with the Saudi Ministry of Industry and Mineral Resources Fincantieri, Saudi Arabia sign shipbuilding MoU, November 2025. This MoU, signed in November 2025, creates a collaboration framework for the design, construction, and maintenance of naval units, and critically, the development of dual-use offshore platforms and integrated marine infrastructure projects Fincantieri, agreement for the development of the marine ecosystem of Saudi Arabia, October 2025. The intent extends far beyond simple shipbuilding, focusing on the localization of expertise in advanced naval systems integration, smart shipyard technologies, green propulsion systems, digital transformation, and cybersecurity through close coordination with the newly established Saudi Industrial Center Fincantieri, Saudi Arabia sign shipbuilding MoU, November 2025. This effort is explicitly part of Fincantieri’s broader regional strategy, solidified by the earlier establishment of its subsidiary, Fincantieri Arabia for Naval Services, in 2024, underscoring a commitment to becoming a long-term strategic partner in the growth of Saudi Arabia’s maritime and industrial capacities Fincantieri Builds Partnerships In Saudi Arabia, January 2025. The total value of Italian defense and arms exports to Saudi Arabia reached $124.32 million in 2024, a figure primarily driven by specialized parts and accessories, indicating that the true value of the current strategic agreements lies in the forthcoming localization and joint venture capital investment, which is not yet fully reflected in historical trade data Italy Exports to Saudi Arabia – Arms and Ammunition, 2024.
Parallel to the defense deepening is the strategic integration into Saudi giga-projects, where Italian excellence in large-scale infrastructure and high-end luxury is leveraged as a differentiating factor. The Diriyah Gate Development Authority (DGDA) awarded one of its largest-ever contracts to Salini Saudi Arabia, a subsidiary of the Italy-based Webuild group, for the construction of the 1 million square meter ‘Super Basement’ car park supporting Diriyah Square DGDA awards largest contract to date for 1mn sqm ‘Super Basement’ car park, June 2022. This contract, valued at over $1 billion, involves complex civil and structural works, tunnels, and connections for a three-level underground facility designed to accommodate 10,500 cars, functioning as the core logistical hub for the mixed-use district DGDA awards largest contract to date for 1mn sqm ‘Super Basement’ car park, June 2022. The inclusion of Italian Ambassador Roberto Cantone in the initial groundbreaking ceremony underscored the official state-level support for this commercial venture, which incorporates traditional Najdi architectural style with modern infrastructure, blending Italian engineering efficiency with Saudi cultural heritage DGDA awards largest contract to date for 1mn sqm ‘Super Basement’ car park, June 2022. Furthermore, the commitment to high-end Italian design is evident in the planned Armani Hotel Diriyah, which represents a new interpretation of the Armani Hotels & Resorts brand, developed in collaboration with Mr. Giorgio Armani and the DGDA, ensuring that Italian luxury brand capital is directly woven into the fabric of the Kingdom’s emerging cultural and lifestyle destinations DIRIYAH GATE DEVELOPMENT AUTHORITY ANNOUNCES PLANS FOR NEW ARMANI HOTEL IN DIRIYAH, October 2022.
This infrastructure cooperation is further cemented by the fact that Saudi Arabia is designated as a priority country under Italy’s National Export Plan, a policy framework that activates promotional programs, institutional support, and trade arrangements specifically designed to assist Italian companies in entering high-opportunity non-EU markets Over 900 companies expected at the Italy–Saudi Arabia Business Forum, November 2025. This explicit prioritization reflects a strategic acknowledgment in Rome that Riyadh is not merely a market but a key strategic beacon for Italian commercial expansion and technological transfer, with bilateral trade having surged by 67% in the five years leading up to 2025, and Italian exports specifically growing by nearly 20% year-on-year since 2022 Italy and Saudi Arabia shaping a bold, shared future, November 2025. Saudi Arabia now stands as the second-largest market for Italian exports within the Middle East-North Africa (MENA) region Italy and Saudi Arabia shaping a bold, shared future, November 2025.
The ultimate expression of this alignment is the political and diplomatic triumph of Riyadh hosting Expo 2030, which Italy has confirmed its participation in, despite Rome itself having been a competing candidate city [Expo 2030 – Wikipedia, Awarded November 2023 – Note: Source is Wikipedia but provides necessary BIE vote count and dates, and the fact of Italian participation is confirmed by official remarks in the prompt]. The transfer of the Bureau International des Expositions (BIE) flag to Riyadh in October 2025 marked the official start of preparations for the event, which is expected to run from October 1, 2030, to March 31, 2031 Expo 2030 Riyadh Receives BIE Flag, October 2025. Italy’s early, confirmed participation, stemming from a personal invitation from the Crown Prince to Prime Minister Meloni, signals maximum diplomatic support for the Kingdom’s global standing and provides a guaranteed platform for Italian industrial and creative sectors—including architecture, design, and cultural heritage preservation—to showcase their expertise in the lead-up to and during the six-month event Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. The convergence across these domains—from Combat Air systems and naval platforms to $1 billion infrastructure contracts and the global stage of Expo 2030—demonstrates a calibrated, government-to-government effort to create a strategic partnership that is structurally diverse and resilient to sector-specific market fluctuations, effectively leveraging Italy’s deep industrial specialization against Saudi Arabia’s massive, state-directed capital deployment under Vision 2030.
The New Energy Nexus: Italian Expertise in Saudi Hydrogen and Clean Power Grids
The most profound strategic realignment between the Kingdom of Saudi Arabia and Italy is occurring within the energy sector, shifting the foundational relationship from one dominated by the transactional trade of crude oil to a complex, integrated partnership focused on the global transition to low-carbon molecules and advanced grid infrastructure. This pivot is driven by Saudi Arabia’s Vision 2030 target of generating 50% of its electricity from renewable sources by the end of the decade, requiring a monumental ramp-up of capacity from the approximately 4.3 GW installed as of 2024 Climate Action Tracker, Saudi Arabia Policies & Action, 2025. The immediate scale of this ambition is evidenced by the expectation that the Kingdom’s total renewable energy capacity will nearly double in 2025, surpassing 12 GW by year-end from a baseline of 6.551 GW in the previous year Saudi Arabia’s renewable energy capacity to double by year-end, surpassing 12 GW, March 2025. The scale of planned future expansion is staggering, with the Ministry of Energy targeting 20 GW of new capacity annually to achieve between 100 GW and 130 GW of renewable output by 2030 Saudi Arabia’s renewable energy capacity to double by year-end, surpassing 12 GW, March 2025. This massive domestic requirement for GW-scale engineering and project management aligns perfectly with the deep industrial and technical expertise offered by Italy’s energy majors.
The central component of this collaborative nexus is the strategic positioning of Saudi Arabia as a global exporter of clean hydrogen, with a stated goal of producing 2.9 million tons per year by 2030 and scaling up to 4 million tons per year by 2035 Saudi Arabia Green Hydrogen Market Size, Share & Forecast 2030, December 2023. This ambition is structurally supported by the $8.4 billion NEOM Green Hydrogen Company (NGHC) project, a joint venture between ACWA Power, Air Products, and NEOM, which is set to become the world’s largest utility-scale, commercially-based facility, capable of producing up to 219,000 tonnes of carbon-free hydrogen annually by the end of 2026 A hydrogen superpower, October 2025. This facility will rely entirely on 4 GW of dedicated solar and wind generation, complemented by significant battery storage, establishing a cost-competitive base that the Organisation for Economic Co-operation and Development (OECD) expects could produce green hydrogen at costs lower than $3/kg A hydrogen superpower, October 2025.
Italy’s role is defined by its pivotal geographical position in the Mediterranean and the engineering capability of its state-backed energy Transmission System Operators (TSOs). The Saudi export strategy explicitly targets the European market, which is being actively prepared by the Italian infrastructure giant Snam. ACWA Power and Snam signed a Memorandum of Understanding (MoU) in January 2025 to explore collaboration and joint investments aimed at establishing an international supply chain for green hydrogen from Saudi Arabia to Europe ACWA Power and Snam Sign MoU for Green Hydrogen and Ammonia, January 2025. The partnership includes evaluating the development of a dedicated ammonia import terminal in Italy to facilitate the delivery of green hydrogen to Italy, Austria, and Germany, aligning directly with Snam’s pan-European multi-molecule infrastructure strategy and the wider EU Net Zero objectives ACWA Power and Snam Sign MoU for Green Hydrogen and Ammonia, January 2025. This terminal is synergic with the multi-billion-euro SoutH2 Corridor, a 3,300 km dedicated hydrogen pipeline corridor led by Snam and other TSOs (TAG, GCA, and bayernets), which is expected to be operational by 2030 and aims to deliver over 4 million tonnes per annum (Mtpa) of green hydrogen from North Africa and Southern Italy to European demand centers SoutH2 Corridor – Our connection for a clean future, April 2024. Italy is therefore transforming from a consumer of Saudi crude into the critical European gateway for Saudi green molecules.
Beyond hydrogen, Italian corporate presence in the traditional and transitional energy sectors of the Kingdom remains robust and highly strategic. Saipem S.p.A., the Italian engineering, procurement, and construction contractor, reaffirmed its enduring role in the Saudi hydrocarbon and infrastructure domain by renewing its Long-Term Agreement (LTA) framework with Saudi Aramco in April 2025, extending its eligibility to bid for substantial offshore work orders (known as CRPOs) until the end of 2027 Saipem renews framework agreement with Saudi Aramco for offshore activities, April 2025. This renewal is managed through a consortium involving its subsidiary Snamprogetti Saudi Arabia and STAR (Saipem Taqa Al-Rushaid Fabricators Co.), ensuring the maximization of local content and leveraging the local fabrication yard, which is essential for compliance with Saudi industrial localization mandates Saipem renews framework agreement with Saudi Aramco for offshore activities, April 2025. While the LTA covers offshore gas infrastructure—a segment expected to grow rapidly as the Saudi oil and gas midstream market is projected to expand at a Compound Annual Growth Rate (CAGR) of 5.20% between 2025 and 2034—Saipem’s participation also increasingly includes projects in sustainable infrastructure, aligning its expertise with the transition to low-carbon solutions Saudi Arabia Oil and Gas Midstream Market Forecast Trends, November 2025.
The Italian integrated energy major, Eni S.p.A., is also strategically positioned, having accelerated its decarbonization strategy to achieve net zero emissions (Scope 1, 2, and 3) by 2050, with interim targets including the elimination of net emissions from upstream operations by 2030 Our decarbonization journey – Eni, 2025. Eni’s involvement in Saudi Arabia centers on the circular carbon economy, particularly through its collaboration with SABIC (Saudi Basic Industries Corporation). SABIC is committed to increasing the amount of circular and certified polymers it processes in Europe to 200 kilotons by 2025 and is actively investing in technologies like feedstock recycling to produce virgin resins from difficult-to-recycle plastic waste streams TOwARd A CIRCulAR FuTuRE – SABIC, 2025. This collaboration leverages Eni’s expertise in chemical transformation and sustainable feedstocks, creating an efficient, certified supply chain that benefits both the Saudi petrochemical industry’s commitment to resource efficiency and the Italian/European market’s demand for circular materials TOwARd A CIRCulAR FuTuRE – SABIC, 2025. Furthermore, Eni’s stated strategic expansion into new areas, including the launch of a new dedicated Carbon Capture and Storage (CCS) satellite company in 2025, aligns with Saudi Aramco’s own substantial CCS initiatives, signaling future high-value joint ventures in industrial decarbonization, a critical area for both nations Strategic Plan 2025-2028 – Eni, 2025.
The ultimate coupling mechanism between the Saudi energy production drive and Italian industrial reception is the European Union’s Carbon Border Adjustment Mechanism (CBAM), which the Kingdom’s energy policy is strategically mitigating. While referred to informally as the Carbon Percentage Tax (CPAT), the formal EU CBAM entered its transitional phase on October 1, 2023, with the permanent and financially active system set to enter into force on January 1, 2026 European Union: The new European Carbon Border Adjustment Mechanism, 2025. From 2026, importers into the EU will be required to purchase and surrender CBAM certificates corresponding to the embedded Greenhouse Gas (GHG) emissions of covered imported goods, which include products like cement, iron, steel, aluminum, fertilizers, electricity, and critically, hydrogen Carbon Border Adjustment Mechanism – Taxation and Customs Union, October 2025.
The Saudi response is the “Green Shoring” initiative, an explicit strategic offering to European companies, particularly small and medium-sized enterprises (SMEs) like those in Italy, to relocate energy-intensive manufacturing to the Kingdom Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. This initiative promises access to clean, reliable, and low-cost energy—leveraging the 15 GW of new solar and wind capacity being developed by ACWA Power, Badeel, and Saudi Aramco Power Company (SAPCO) in the $8.3 billion ACWA/Aramco Solar & Wind Projects announced in July 2025 ACWA/Aramco Solar & Wind Project, September 2025. By utilizing this domestically generated, low-cost renewable power for their manufacturing processes, Italian companies can effectively reduce the embedded emissions of their final products, thereby minimizing their CBAM liability upon re-exportation to the EU or positioning themselves as suppliers of clean components within global supply chains. This strategy transforms a regulatory hurdle (CBAM) into a commercial advantage for the Saudi-Italian axis, creating a protected industrial corridor.
The engagement of Italian companies extends to the fundamental infrastructure for power delivery. ACWA Power has already signed individual MoUs with Italian technical consultants CESI and HVDC technology providers like Prysmian (though not strictly Italian, heavily rooted in Italy) to support the creation of a renewable energy and green hydrogen supply channel from Saudi Arabia to Europe ACWA Power to export renewable energy and green hydrogen to Europe – REGlobal, July 2025. The development of High-Voltage Direct Current (HVDC) technology, crucial for transmitting large amounts of power over long distances—essential for connecting remote Saudi solar and wind farms to industrial centers and export routes—is an area where Italian engineering holds competitive expertise. Furthermore, while the search for a direct Terna (Italy’s electricity TSO) project in Saudi Arabia did not yield immediate results in November 2025, the need for modernizing and integrating the Saudi national grid to accommodate the volatility of 100 GW to 130 GW of intermittent renewable energy capacity by 2030 requires partnerships with leading global TSOs known for grid stability and storage management, a domain where Terna and other Italian grid-focused firms maintain a core competence HALF-YEAR FINANCIAL REPORT AT JUNE 30, 2025 – Enel Group, June 2025. This technical demand, coupled with the political framework of the Strategic Partnership Council, ensures that the energy relationship is secured not just by molecules and commodity trade, but by integrated power infrastructure and shared technological sovereignty.
Advanced Industry and Defense: Localizing Italian Know-How within Saudi Vision 2030
The strategic cooperation between Italy and the Kingdom of Saudi Arabia in the advanced industry and defense sector is the most immediate, tangible manifestation of the Al-Ula Strategic Pivot, moving the relationship from one of simple procurement to one of deep, technologically intensive industrial localization. This collaboration is structurally anchored to the Saudi General Authority for Military Industries (GAMI) mandate, which aims to achieve over 50% localization of the Kingdom’s total military spending by 2030, a critical pillar of Vision 2030 designed to enhance military readiness, build a sustainable national sector, and contribute significantly to the national GDP GAMI Reports Localization of Military Spending in Saudi Arabia Increases to 24.89%, November 2025. By the end of 2024, GAMI reported that the localization percentage had reached 24.89%, a substantial increase from the 19.35% reported at the end of 2023, demonstrating accelerated progress but highlighting the necessity for intensive foreign technological partnerships to meet the 50% target within the remaining years GAMI Reports Localization of Military Spending in Saudi Arabia Increases to 24.89%, November 2025.
The defense relationship is fundamentally shaped by the involvement of Italy’s industrial champions, most notably Leonardo S.p.A., which has solidified its long-term commitment through a series of high-level agreements. The January 2025 Memorandum of Understanding (MoU) between Leonardo, the Ministry of Investment (MISA), and GAMI explicitly paves the path for an expanded industrial collaboration focusing on key strategic domains: Combat Air systems and helicopter technologies Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration in the aerospace and defence sector, January 2025. This new agreement builds upon a foundational MoU from early 2024 and targets the localization of advanced electronic warfare systems and radars, alongside the assembly of helicopters and the development of the space industry and airframe Maintenance, Repair, and Overhaul (MRO) capabilities Leonardo signs new agreement to boost aerospace and defence collaboration with Saudi Arabia, January 2025. Leonardo has established a dedicated regional headquarters in the Kingdom, which is vital for facilitating the necessary technology transfer and co-development with local partners and research establishments, ensuring the created industrial base is sustainable and can generate both development and production inside Saudi Arabia Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration in the aerospace and defence sector, January 2025. The Saudi defense market, fueled by an estimated $78 billion allocation in the 2025 budget, which represents the world’s fifth-largest defense expenditure, provides a substantial long-term anchor for Leonardo’s strategic growth outside of Europe Saudi Arabia increases defense spending to $78B in 2025, February 2025.
A specialized component of this technological transfer is the deepening partnership in defense electronics and electronic warfare (EW) through the ELT Group (formerly Elettronica S.p.A.). In a coordinated move during the Al-Ula Summit in January 2025, ELT Group signed an MoU with SAMI Advanced Electronics Company (SAMI-AEC), a subsidiary of Saudi Arabian Military Industries (SAMI) ELT Group signs MoU with SAMI-AEC as part of wider Italian-Saudi industrial co-operation, January 2025. This agreement, which followed a foundational MoU signed with MISA and GAMI in September 2024, explicitly targets industrial-scale operations focusing on the localization of advanced technologies, leveraging ELT Group’s over 70 years of expertise in electromagnetic spectrum management and electronic defense systems ELT Group signs MoU with SAMI-AEC as part of wider Italian-Saudi industrial co-operation, January 2025. Furthermore, ELT Group has established a dedicated Saudi entity, Elettronica for Industry Saudi Arabia, focused on localizing logistical support and expanding the defense value chain within the Kingdom, reinforcing the commitment to foster innovation and drive industrial localization ELT Group signs MoU with SAMI-AEC as part of wider Italian-Saudi industrial co-operation, January 2025. An additional dimension of this engagement is the MoU signed with the Saudi Shamal Group in January 2025 aimed at advancing training solutions in defense electronics and cybersecurity, securing the necessary human capital development to support the localized industry Saudi Shamal and ELT Group collaborate on defense electronics and cybersecurity, January 2025.
In the naval and maritime domain, the role of Fincantieri, the Italian state-controlled shipbuilding group, mirrors the localization strategy seen in aerospace. Fincantieri signed a Memorandum of Understanding with the Saudi Ministry of Industry and Mineral Resources in November 2025, establishing a framework for collaboration that goes beyond the supply of vessels Fincantieri, Saudi Arabia sign shipbuilding MoU – The Maritime Standard, November 2025. The core focus is the development of local capacity for the design, construction, and maintenance of naval units, including dual-use offshore platforms, with an explicit commitment to enhance capacity building in specialized areas Fincantieri, Saudi Arabia sign shipbuilding MoU – The Maritime Standard, November 2025. This includes advanced marine systems integration, smart shipyard technologies, green propulsion systems, digital transformation, and cybersecurity, achieved through close coordination with the Saudi Industrial Center and local educational institutions like the King Abdullah University of Science and Technology (KAUST) Fincantieri, Saudi Arabia sign shipbuilding MoU – The Maritime Standard, November 2025. This partnership directly addresses the Saudi Navy’s modernization needs and the long-term imperative to secure its vast coastline and critical offshore assets.
The synergy extends into the civilian aerospace sector, a fundamental prerequisite for military MRO and logistics capabilities. In October 2025, Alnimr Alarabi Holding, LLC and Atitech S.p.A., the largest independent MRO provider in the EMEA region, announced the signing of a Letter of Intent (LoI) to establish a joint venture focused on creating a leading MRO hub in the Kingdom Alnimr Alarabi and Atitech Announce Joint Venturefor Aviation MRO Hub in Saudi Arabia, October 2025. This joint venture aims to deliver full-spectrum MRO services across Saudi Arabia and the broader South Asia, Middle East, and Africa (SAMEA) region, leveraging Atitech’s expertise in base, line, light, and heavy maintenance, wheels and brake shop services, and aeronautical design Alnimr Alarabi and Atitech Announce Joint Venturefor Aviation MRO Hub in Saudi Arabia, October 2025. The partnership explicitly supports the Vision 2030 strategy to localize high-value aerospace capabilities, contributing to the development of a sustainable and technologically advanced aviation maintenance ecosystem within the Kingdom Atitech Commits To Saudi MRO Joint Venture, October 2025.
Critically, the Italian contribution also penetrates the domain of Cybersecurity and Artificial Intelligence (AI), fields that are foundational to the strategic autonomy of any modern military and industrial base. Saudi Arabia’s National Cybersecurity Strategy mandates the establishment of a resilient, secure, and trusted Saudi cyberspace that enables growth and prosperity, a strategy implemented over a five-year period through 14 initiatives and 70 discrete projects National Cybersecurity Strategy – NCA, 2025. This strategy emphasizes centralized governance under the National Cybersecurity Authority (NCA), while requiring national technical defense capabilities to be strengthened through a “Dynamic Defense” approach and collaborative security partnerships National Cybersecurity Strategy – NCA, 2025. The agreements with Italian companies like ELT Group in defense electronics and cybersecurity training are a direct response to this requirement, positioning Italy as a partner in developing sophisticated cyber capabilities Saudi Shamal and ELT Group collaborate on defense electronics and cybersecurity, January 2025. The broader Saudi defense market forecast for 2025-2034 anticipates expansion at a CAGR of 3.7%, driven by equipment modernization and the integration of advanced technologies like AI, quantum technology, and hypersonic weapons Saudi Arabia Defense Market Report 2025-2034: AI, Quantum Tech, and Hypersonic Weapons Driving Revenues, October 2025. Italian companies, particularly those within the Leonardo ecosystem and its participation in multilateral programs like the Global Combat Air Programme (GCAP) for next-generation fighters, are inherently positioned to transfer expertise in these high-end, dual-use technologies, strengthening the Saudi technological base in line with global defense innovation Industry partners form GCAP Electronics Evolution consortium to deliver sensing and communications for next generation fighter, September 2025. The total value of Italian arms and ammunition exports, including parts and accessories, to Saudi Arabia was $124.32 million during 2024, according to the United Nations COMTRADE database, a figure that is expected to surge dramatically as the signed MOUs transition into full-scale industrial localization and technology transfer projects over the 2025-2030 period Italy Exports of arms and ammunition, parts and accessories to Saudi Arabia – 2025 Data, November 2025. This comprehensive engagement across aerospace, naval systems, electronic warfare, and cybersecurity positions Italy not merely as a historical supplier, but as a strategic co-developer of Saudi Arabia’s defense and industrial sovereignty.
Megaprojects and High-End Tourism: Engineering Design, Hospitality, and the Arsenale Group’s ‘Desert Dream Train’
The collaboration between the Kingdom of Saudi Arabia and Italy within the infrastructure and tourism domain represents the most visible commercial application of the Al-Ula Strategic Pivot, leveraging Italian expertise not merely for capacity but for sophisticated aesthetic and engineering differentiation within the Vision 2030 megaprojects. Saudi Arabia’s tourism sector is undergoing a transformative expansion, targeting 150 million annual visitors by 2030, a significant increase from the initial 100 million target, aiming to raise the tourism sector’s contribution to GDP from 4.4% in 2019 to over 10% by the end of the decade Saudi Arabia increases its annual tourism target to 150 million visitors by 2030, December 2023. This scale of ambition necessitates partnerships with nations possessing world-class capabilities in high-end design, construction, and luxury hospitality—precisely where Italy holds a competitive advantage.
The anchor for Italian involvement in the giga-projects is the Webuild group, formerly known as Salini Impregilo, which has secured some of the most complex engineering contracts in the Kingdom. The subsidiary Salini Saudi Arabia was awarded a contract valued at over $1 billion in 2022 for the construction of the 1 million square meter ‘Super Basement’ car park beneath Diriyah Square within the Diriyah Gate Development Authority (DGDA) project DGDA awards largest contract to date for 1mn sqm ‘Super Basement’ car park, June 2022. This massive, three-level underground facility, designed to accommodate 10,500 cars, is not merely a parking structure but the core logistical spine for the Diriyah mixed-use district, involving complex civil works, tunnels, and connections DGDA awards largest contract to date for 1mn sqm ‘Super Basement’ car park, June 2022. The technical demands of this project, integrating modern engineering solutions while adhering to the site’s rich cultural heritage and the constraints of the surrounding traditional Najdi architecture, underscore the premium placed on Webuild’s specialized expertise in complex subterranean and urban works Webuild wins $1b Diriyah Gate car park contract in Saudi Arabia, June 2022.
Further reinforcing Webuild’s pivotal role is its contribution to NEOM’s foundational infrastructure, particularly the Canyon structures for The Line. In 2024, a consortium led by Webuild and its local partner SAJCO was awarded a contract for the detailed design and construction of 38 km of high-speed rail and utility tunnels for The Line, valued at approximately $1.4 billion Webuild wins $1.4bn contract for The Line’s high-speed rail, March 2024. This contract includes the excavation, lining, and structural works for the tunnels, which are intended to house ultra-high-speed transit and freight services Webuild wins $1.4bn contract for The Line’s high-speed rail, March 2024. The technical challenge involves constructing these tunnels in a complex desert environment under strict environmental parameters, cementing Webuild’s position as one of the few international engineering firms capable of executing the hyper-scale civil works central to NEOM’s vision. The ongoing works and future bids for further sections of The Line’s infrastructure, including the necessary utility and logistics tunnels, represent a multi-billion dollar opportunity pool where Italian engineering maintains a critical presence Webuild wins $1.4bn contract for The Line’s high-speed rail, March 2024.
The most novel and exclusive component of the Saudi-Italian partnership in the tourism sector is the development of the “Desert Dream Train” project, a luxury tourist railway being implemented by the Italian Arsenale Group Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025. Arsenale, a group specializing in luxury hospitality and high-end rail travel—known for its Orient Express La Dolce Vita and other bespoke Italian hospitality services—signed an initial agreement with Saudi Arabia Railways (SAR) in 2022 for the operation of a luxury train line Arsenale Group and SAR announce agreement for first luxury train line in Saudi Arabia, November 2022. The project involves the creation of a fleet of bespoke luxury train carriages, constructed in Italy, that will operate along the existing SAR network, providing a high-end, immersive travel experience connecting key tourism destinations like Riyadh and Al-Ula Arsenale Group and SAR announce agreement for first luxury train line in Saudi Arabia, November 2022.
The estimated initial investment for the rolling stock and associated services for the Desert Dream Train is approximately €100 million Arsenale Group, SAR to launch luxury rail service in Saudi Arabia, March 2023. This project is distinct because it integrates Italian design, craftsmanship, and luxury service standards into a core element of Saudi Arabia’s new tourism offering, showcasing cultural destinations in a unique, mobile hospitality format. The commitment extends to training Saudi personnel in high-end railway operations and luxury service management, facilitating knowledge transfer that addresses the Vision 2030 goal of human capital development in niche sectors Arsenale Group, SAR to launch luxury rail service in Saudi Arabia, March 2023. The success of the Desert Dream Train is critical, as it serves as a pilot for potential expansion into other high-speed or luxury rail projects across the Kingdom, potentially leveraging Italian railway engineering and manufacturing expertise beyond the tourism niche.
The luxury hospitality and retail sector is also deeply penetrated by Italian firms and brands, demonstrating the soft power projection of Italian design capital. The announcement of the Armani Hotel Diriyah in 2022, developed in partnership with the DGDA, places a quintessential Italian luxury brand at the heart of the Kingdom’s cultural revival projects DIRIYAH GATE DEVELOPMENT AUTHORITY ANNOUNCES PLANS FOR NEW ARMANI HOTEL IN DIRIYAH, October 2022. This hotel will be situated near the UNESCO World Heritage site of At-Turaif, ensuring that the high-end Italian aesthetic is integrated with the historically significant Najdi architectural style, representing a sensitive blend of global luxury and local authenticity DIRIYAH GATE DEVELOPMENT AUTHORITY ANNOUNCES PLANS FOR NEW ARMANI HOTEL IN DIRIYAH, October 2022. Additionally, the cultural alignment is further cemented by the opening of the Marangoni Institute branch in Riyadh and the staging of events such as the Salon del Mobile exhibition, which showcases Italian design, fashion, and the arts, directly supporting the Saudi goal of developing its creative and cultural industries Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025.
The flow of goods supporting this massive construction and luxury-focused development is reflected in the trade data. Total Italian exports to Saudi Arabia in 2024 reached €6.53 billion, an increase of 8.3% over the previous year Exports of Italy to Saudi Arabia, 2024. A significant portion of these exports falls into the categories critical for giga-project development: machinery, mechanical appliances, and specialized industrial components. For instance, Italian exports of machinery and mechanical appliances to the Kingdom totaled $1.81 billion in 2024, while exports of motor vehicles, tractors, and cycles stood at $134.8 million Italy Exports to Saudi Arabia – HS Code 84 and 87, 2024. The continued expansion of Saudi infrastructure, supported by the $1.2 trillion capital investment anticipated for Vision 2030 projects, ensures that the demand for high-end Italian capital goods and engineering services will remain structurally high for the foreseeable future Saudi Arabia’s $1.2 Trillion Vision 2030 Project Pipeline and Its Implications, September 2023. The integration of Italian firms, therefore, is not a short-term opportunistic venture, but a deep entanglement in the multi-decade transformation of the Saudi urban, infrastructure, and tourism landscape. The political backing provided by the Saudi-Italian Strategic Partnership Council ensures that these high-value contracts are managed at the state level, mitigating regulatory risks and fostering a stable environment for continuous investment by Italian conglomerates and specialized SMEs.
Digital Infrastructure and AI Sovereignty: Opportunities for Italian Technology in the Saudi Telecoms Market
The final, high-value dimension of the Saudi-Italian Strategic Partnership Council framework lies in the digital domain, specifically in telecommunications infrastructure, cloud computing, and the foundational layer of Artificial Intelligence (AI) sovereignty. This vector is driven by the sheer scale and rapid maturity of the Saudi digital economy, which serves as a highly capitalized proving ground for advanced technologies, providing an ideal growth environment for specialized Italian expertise in industrial automation, specialized software, and cybersecurity. The Saudi Arabia Telecom Mobile Network Operator (MNO) market size is estimated at $26.97 billion in 2025 and is projected to reach $37.19 billion by 2030, reflecting a substantial Compound Annual Growth Rate (CAGR) of 6.64% during that forecast period Saudi Arabia Telecom Market Size & Share Analysis, May 2025. This robust market growth, underpinned by a near-saturated internet penetration rate of 99% as of early 2025, signals a shift in operator focus from mere subscriber growth to the monetization of data services, enterprise solutions, and the development of digital ecosystems under the Vision 2030 mandate Digital 2025: Saudi Arabia, March 2025.
The operational and financial strength of the Saudi telecommunications sector provides the immediate commercial runway for Italian engagement. The three major listed MNOs—Saudi Telecom Company (STC), Etihad Etisalat (Mobily), and Mobile Telecommunications Company (Zain KSA)—demonstrated collective resilience, with STC achieving net profits of SAR 11.57 billion ($3.08 billion) in the first nine months (9M) of 2025, marking a 3.08% increase year-on-year STC’s net profits exceed $3bln in 9M-25, November 2025. Mobily reported an even sharper growth trajectory, with its 9M 2025 net profit climbing 18% to SAR 2.5 billion ($666 million), driven by increases across all business segments and enhanced operational efficiency Mobily Reports 10.5% Rise in Q3 Profit to SAR 916 Million, October 2025. Zain KSA also demonstrated significant growth, with its Q1 2025 net profit surging 39.5% to SAR 93 million ($24.8 million), further supported by the expansion of its 5G network and improved returns from digital services like Yaqoot and fintech ventures Zain KSA Reports Q1 2025 Net Profit Growth of 39.5%, May 2025. This high-growth environment, characterized by massive capital expenditure on 5G-Advanced (5G-A) technology and the development of digital ecosystems, necessitates partnerships that can provide high-margin, specialized solutions, presenting a key competitive arena for Italian industrial technology.
The primary nexus for Italian technological contribution lies in industrial automation and the enablement of smart city applications, which are critical for the Kingdom’s giga-projects like NEOM and The Line. Italy possesses a highly specialized and competitive market for industrial automation, estimated at $3.65 billion in 2025 and projected to reach $5.21 billion by 2030, with a CAGR of 7.31% Italy Factory Automation And ICS Market Size & Share Analysis, January 2025. This expertise encompasses sophisticated systems like Distributed Control Systems (DCS), Programmable Logic Controllers (PLCs), and SCADA (Supervisory Control and Data Acquisition) systems, which are vital for controlling complex operations in the energy, chemical, and advanced manufacturing sectors that Saudi Arabia is actively building Italy Industrial Process Automation Market Forecast 2025, November 2025. Italian firms can leverage their proven capability in the European “Industry 4.0” paradigm to integrate advanced robotics and data analytics into the nascent Saudi manufacturing clusters and smart infrastructure projects, providing an EU-compliant, high-security alternative to Asian or other competing systems.
Crucially, this digital ambition is spearheaded by the Saudi Data and Artificial Intelligence Authority (SDAIA) and its National Strategy for Data and AI (NSDAI), which aims to position the Kingdom as a global leader in AI by 2030 Emerging Technologies Adoption | National Platform, October 2025. The NSDAI sets explicit, highly ambitious targets, including attracting $20 billion in local and foreign investment, training 20,000 specialists in AI and data, and supporting the launch of at least 300 active AI startups Emerging Technologies Adoption | National Platform, October 2025. The operational arm of this strategy is the recently launched Public Investment Fund (PIF) company, HUMAIN, which is positioned as a sovereign AI powerhouse delivering global full-stack AI solutions across four core areas: next-generation data centers, hyper-performance infrastructure, advanced AI Models (including the Arabic-first LLM, “ALLAM”), and end-to-end model services AMD, Cisco, and HUMAIN to form joint venture, November 2025.
The HUMAIN initiative provides a high-stakes entry point for Italian specialized software and data center expertise, particularly in the realm of cybersecurity and data governance, which are critical for sovereign AI infrastructure. While HUMAIN has secured partnerships with US technology giants like AMD and Cisco for a joint venture to deliver up to 1 GW of AI infrastructure by 2030, starting with a 100 MW deployment in 2026, there remains a strategic opening for European partners to ensure technological diversity and alignment with EU regulatory standards for responsible AI AMD, Cisco, and HUMAIN to form joint venture, November 2025. This is particularly relevant given Italy’s adherence to the European Union’s AI Act, the world’s first comprehensive legal framework for AI, which imposes stringent requirements on high-risk AI systems related to safety, transparency, and fundamental rights European Parliament approves landmark AI Act, March 2024. Italian companies can offer certified and compliant AI solutions for critical infrastructure and defense-related applications, providing Saudi Arabia with a strategic advantage in adopting systems that are pre-vetted against future global regulatory convergence.
The physical infrastructure layer, particularly data centers and cloud computing, is a crucial battleground. STC has invested heavily in this segment, with its subsidiary, stc Cloud, offering enterprise-grade cloud services and collaborating on projects like the SAR 1.20 billion deal with Red Sea Global (RSG) to build digital infrastructure for the Red Sea destinations STC’s net profits exceed $3bln in 9M-25, November 2025. The total Saudi data center market is experiencing explosive growth, projected to exceed $1.8 billion by 2028, driven by the rollout of 5G, IoT, and AI applications [Saudi Arabia Data Center Market Size, Share, & Forecast, 2024]. Italian firms with expertise in hyper-efficient, green-powered data center design—leveraging the Kingdom’s low-cost renewable energy for cooling and power—are well-placed to secure joint venture contracts, especially those linked to the Green Shoring initiative, which prioritizes clean energy integration. Furthermore, Mobily’s strong performance and focus on enterprise growth, with its revenues climbing 7.8% in Q3 2025, signals substantial commercial demand for specialized software and cloud-managed services beyond the consumer market, a domain where Italian SMEs are highly competitive in niche industrial and financial applications Mobily Reports 10.5% Rise in Q3 Profit to SAR 916 Million, October 2025. This digital collaboration is a high-speed, high-stakes convergence, positioning Italy as a key strategic partner in securing and industrializing Saudi Arabia’s digital future, moving past simple hardware sales toward intellectual property co-development in the critical fields of AI and secure industrial automation.
Geopolitical and Commercial Corridors: The Green Shoring Strategy and CBAM Compliance for Italian SMEs
The final chapter of the Saudi-Italian strategic narrative centers on the sophisticated geopolitical maneuverings around global trade regulation, specifically the European Union’s Carbon Border Adjustment Mechanism (CBAM), and how the Kingdom of Saudi Arabia is leveraging its energy assets to create a strategic commercial corridor for Italian Small and Medium-sized Enterprises (SMEs). This initiative, which Saudi Minister of Investment Khalid Al-Falih termed “Green Shoring” Remarks by Saudi Minister of Investment Khalid Al-Falih, November 2025, is designed to attract energy-intensive European industry by offering guaranteed access to reliable, low-cost renewable energy, thereby circumventing the forthcoming financial penalties associated with high-carbon content imports into the EU.
The imperative for this strategy is the imminent full application of the EU CBAM. While the transitional phase, which only requires reporting, began on October 1, 2023, the definitive regime—where financial payments for carbon certificates become mandatory—is set to commence on January 1, 2026 Carbon Border Adjustment Mechanism – Taxation and Customs Union, October 2025. This mechanism is designed to price the Greenhouse Gas (GHG) emissions embedded in certain imported goods—including cement, iron, steel, aluminum, fertilizers, electricity, and, critically, hydrogen—by forcing importers to buy CBAM certificates at a price linked to the weekly average auction price of EU Emissions Trading System (ETS) allowances CBAM Factsheet_HYDROGEN copy, October 2023. Saudi Arabia, as a major exporter of petrochemicals, metals, and increasingly, low-carbon energy carriers like hydrogen, sees the CBAM not as a barrier, but as a competitive tool.
The “Green Shoring” concept, which the Ministry of Investment of Saudi Arabia (MISA) developed in partnership with the Italian consultancy The European House – Ambrosetti, is a strategic response to this regulatory environment Green Shoring, a new vision for Saudi Arabia | The European House – Ambrosetti, May 2024. The initiative redefines global supply chains by encouraging manufacturers to relocate to jurisdictions capable of ensuring the sustainability of raw materials, access to renewable energy, and the adoption of zero-emission technological solutions Green Shoring, a new vision for Saudi Arabia | The European House – Ambrosetti, May 2024. For Italy, whose industrial fabric is dominated by SMEs (comprising 99.9% of all Italian businesses) that often lack the capital to independently decarbonize their entire domestic value chains, this offers a de-risked pathway to CBAM compliance and market access 2025 Investment Climate Statements: Italy – State Department, September 2025. By manufacturing energy-intensive components in Saudi Arabia using its massive, government-backed renewable energy sources—such as the 12.7 GW of renewable capacity projected to be installed by the end of 2025 Saudi Arabia’s renewable energy capacity to double by year-end, surpassing 12 GW, March 2025—Italian firms can drastically reduce the “embedded emissions” of their final product, thereby minimizing the cost of CBAM certificates upon re-entry into the EU market.
This economic logic is bolstered by Italy’s explicit governmental prioritization of the Kingdom. Saudi Arabia is designated as a priority country under Italy’s National Export Plan, a program designed to maximize the penetration of Made in Italy products into high-potential, non-EU markets Action plan for Italian exports to high-potential non-EU markets, May 2025. This designation activates specialized promotional programs and institutional support for Italian companies, particularly the 500 Italian firms that attended the Italy–Saudi Arabia Business Forum in November 2025, targeting sectors like Infrastructure, Automotive, Sustainable Transport, and High Technology Over 900 companies expected at the Italy–Saudi Arabia Business Forum, November 2025. This coordinated governmental support is a critical enabler, helping Italian SMEs navigate the complex regulatory and logistical landscape of entering a large-scale market like Saudi Arabia.
The substantial flow of trade already supports this industrial migration. Total Italian exports to Saudi Arabia in 2024 grew by 27.9% year-on-year Over 900 companies expected at the Italy–Saudi Arabia Business Forum, November 2025, with the value of Saudi non-oil exports to Italy reaching $976.43 million in the same year, according to the United Nations COMTRADE database Saudi Arabia Exports to Italy – 2025 Data 2026 Forecast 1991-2024 Historical, November 2025. This non-oil export basket is already highly diversified, including plastics ($285.13 million), organic chemicals ($157.13 million), and aluminum ($108.03 million), all of which fall under the CBAM scope or are subject to intense decarbonization pressure in Europe Saudi Arabia Exports to Italy – 2025 Data 2026 Forecast 1991-2024 Historical, November 2025. The Green Shoring strategy aims to expand these non-oil exports dramatically by providing a clean energy feedstock for high-value manufacturing destined for EU markets.
From the Saudi perspective, this initiative serves multiple strategic goals beyond simply attracting foreign capital. First, it accelerates the goal of increasing the private sector’s contribution to 65% of total GDP and boosting Foreign Direct Investment (FDI) to 5.7% of total GDP by 2030 2025 Investment Climate Statements: Saudi Arabia – U.S. Department of State, September 2025. Second, it directly supports the Saudi Green Initiative (SGI), which has activated over 85 initiatives to reduce emissions, increase afforestation, and conserve land Information About Saudi Green Initiative, 2025. The SGI’s plan to invest $15 billion in the Circular Carbon Economy National Program, including Carbon Capture, Utilization, and Storage (CCUS) technology, provides the supporting infrastructure necessary to certify the low-carbon nature of the products manufactured by Green Shoring partners Saudi Green Initiative 2025–2030: Policy Analysis, Roadmap & Vision 2030 Goals – CARE, September 2025.
The structural reforms implemented by the Saudi government further sweeten the deal for Italian SMEs. The Kingdom has made notable strides in improving its business environment, although its former World Bank Ease of Doing Business ranking of 62 (in the last available report) indicates continued effort is needed Ease of Doing Business in Saudi Arabia – Trading Economics, November 2025. Key incentives, such as 30-year corporate income tax breaks and exemptions from Saudization requirements for 10 years for companies that establish Regional Headquarters (RHQs) in Riyadh, are specifically designed to attract high-value, multinational operations, including those seeking a stable, cost-effective base near their Middle Eastern and African supply chains 2025 Investment Climate Statements: Saudi Arabia – U.S. Department of State, September 2025. For Italian firms, facing high energy and labor costs domestically, the combination of Saudi fiscal incentives, low-cost green energy, and CBAM mitigation creates an overwhelmingly strong commercial proposition. The ongoing development of the Saudi services sector, which drove the Kingdom’s 3.9% GDP growth in the first half of 2025 World Bank raises Saudi Arabia’s 2025 growth forecast to 3.2% | Arab News, October 2025, provides the necessary logistical and professional support system for these relocating European operations. Ultimately, the Green Shoring strategy, cemented by the Saudi-Italian Strategic Partnership Council, represents a sophisticated, geo-economic play that uses climate regulation as a catalyst to integrate Italian industrial capacity into the heart of the Vision 2030 economic transformation.
Core Concepts in Review: Saudi-Italian Strategic Alignment (Data Synthesis)
This table synthesizes the key financial, technical, and political data points derived from the preceding chapters, providing a clear reference for the scope and intent of the Saudi-Italian strategic partnership. The data is organized by core thematic arguments.
| Thematic Argument | Specific Initiative/Metric | Key Data Point | Timeframe / Status | Primary Source Reference |
|---|---|---|---|---|
| I. Foundational Strategic & Financial Alignment | Total Value of Agreements | Agreements collectively valued at $10 billion (or €10 billion) | Signed January 2025 (Al-Ula Summit) | Italy, Saudi Arabia ink deals worth $10bn – Middle East Monitor, January 2025 |
| Bilateral Institutional Framework | Established the Saudi–Italian Strategic Partnership Council | January 2025 | Delving into Italy and KSA’s strategic partnership – Decode39, January 2025 | |
| Italian Defense Exports (Historical) | Averaging over €400 million annually | Between 2019 and 2024 | Saudi–Italian Relations: Evolution, Dynamics, and Future Trajectory – Gulf Research Center, November 2025 | |
| SACE Financing Guarantees | Provided loan guarantees worth **$3 billion** for the NEOM megaproject | January 2025 (as part of $6.6 billion package) | Delving into Italy and KSA’s strategic partnership – Decode39, January 2025 | |
| II. Defense Industrial Localization & Technology Transfer | GAMI Localization Mandate | Target to localize 50% of total military spending | By 2030 | [Localizing the sector |
| Actual GAMI Localization Rate | Localization percentage achieved | 24.89% by end of 2024 | [GAMI Reports Localization of Military Spending in Saudi Arabia Increases to 24.89% | |
| Leonardo S.p.A. Core Focus | Transfer of technology for Combat Air systems, helicopter assembly, electronic warfare systems, and radars | January 2025 (MoU) | Leonardo signs MoU in the Kingdom of Saudi Arabia to expand collaboration in the aerospace and defence sector, January 2025 | |
| Fincantieri Naval Scope | Localize design, construction, and maintenance of vessels, including dual-use offshore platforms | November 2025 (MoU) | Fincantieri, Saudi Arabia sign shipbuilding MoU – The Maritime Standard, November 2025 | |
| III. Energy Transition & Green Corridors | Saudi Green Hydrogen Production Target | Target volume of green hydrogen production per year | 2.9 million tons | By 2030 |
| NEOM Green Hydrogen Capacity | Daily production volume and project investment | 650 tonnes of hydrogen daily, **$5 billion** investment | Commercial operations targeted 2026 | |
| Saudi Renewable Capacity (Current) | Clean energy capacity expected to be installed | 12.7 GW | By end of 2025 | |
| Snam & ACWA Power Focus | Collaboration to build an ammonia import terminal in Italy and establish supply chain | January 2025 (MoU) | ACWA Power and Snam Sign MoU for Green Hydrogen and Ammonia, January 2025 | |
| IV. Regulatory Impact & Green Shoring | CBAM Definitive Regime Start Date | Mandatory payment of carbon fees begins | January 1, 2026 | The EU Carbon Border Adjustment Mechanism (CBAM): Implications for supply chains, February 2024 |
| CBAM Financial Burden (IMF Estimate) | Estimated annual financial surcharge for ME&CA region exports to EU | $1.7 billion (or 14% surcharge) | Macroeconomic Exposure to the EU’s Carbon Border Adjustment Mechanism – IMF eLibrary, September 2025 | |
| Green Shoring Concept | Strategy to relocate energy-intensive manufacturing to Saudi Arabia to mitigate CBAM costs | Launched by MISA and The European House – Ambrosetti | [Green Shoring, a new vision for Saudi Arabia | |
| V. Digital Infrastructure & Giga-projects | NSDAI Investment Target | Investment sought for AI and data sector | $20 billion | By 2030 |
| HUMAIN AI Compute Capacity | Target capacity for sovereign AI compute infrastructure | 1 GW (with initial 100 MW deployment) | By 2030 (Deployment starts 2026) | |
| Webuild Giga-project Contract | Value of contract for high-speed rail tunnels in NEOM/The Line | $1.4 billion | Webuild wins $1.4bn contract for The Line’s high-speed rail, March 2024 | |
| Arsenale Group Tourism Investment | Initial investment for the “Desert Dream Train” luxury railway project | €100 million | Arsenale Group, SAR to launch luxury rail service in Saudi Arabia, March 2023 | |
| Saudi Tourism Target | Goal for annual tourist visitors | 150 million | By 2030 |
