<u>Italy</u> has a great trading tradition. Jutting out deeply into the <u>Mediterranean Sea</u>, the country occupies a position of strategic importance, enhancing its trading potential not only with eastern <u>Europe</u> but also with <u>North Africa</u> and the <u>Middle East</u>. Italy has historically maintained active relations with eastern European countries, <u>Libya</u>, and the Palestinian peoples. These links have been preserved even at times of great political tension, such as during the <u>Cold War</u> and the <u>Persian Gulf War</u> of 1991. Membership in the <u>EC</u> from 1957 increased Italy’s potential for trade still further, giving rise to rapid <u>economic growth</u>. However, from that time, the economy was subject to an ever-widening trade deficit. Between 1985 and 1989 the only trading partner with which Italy did not run a deficit was the <u>United States</u>. Italy began showing a positive balance again in the mid-1990s. Trade with other <u>EU</u> members accounts for more than half of Italy’s transactions. Other major trading partners include the United States, <u>Russia</u>, <u>China</u>, and members of the Organization of the Petroleum Exporting Countries (<u>OPEC</u>).
The major dividing factor between the two first political parties, the federalist and the democratic republicans, was how "powerful" the central government should be over the states, with the former wanting more power and the latter wanting less.