The policy of Andronikos II towards the Italian maritime powers, Venice and Genoa, was determinative for the Empire's future. Whereas Michael VIII had managed to maintain a balance in the presence of these powers in the economic life of the Empire, Andronikos II attached himself exclusively to Genoa, who, moreover, was expected to fill the gap left in the Empire's defences by the dissolution of the Byzantine navy as a result of the state's financial problems. The Venetians already being dominant in the southern Aegean, Andronikos II established the presence of Genoa in the northern Aegean, the Propontis and the Black Sea.

The increase in Genoa's power, however, aroused the opposition of Venice and in 1294 war broke out between the two states. The Byzantine Empire became involved in the conflict, siding with Genoa, so that what had begun as a contest between Genoa and Venice soon turned into a war between Venice and Byzantium. What is more, when, in 1299, the Genoese made peace with the Venetians and withdrew from the conflict, Byzantium was left to face the powerful Venetians on its own, and without a fleet. Andronikos II had no alternative but to give in. In 1302 an armistice was declared by both powers and the Venetians acquired new privileges, once again at the expense of Byzantine commercial interests. And so it happened that the weakness of the Byzantine state, added to the often unwise policies of its Emperors towards the Italians, as in this particular case, opened the way for the exclusive domination by the latter of the economic life of the state in the Late Byzantine years.