Venice was part of the Tiberium infestation which had swallowed all of the waterways through the city. It survived the First Tiberium War, Second Tiberium War and the Firestorm Crisis by supporting GDI through the Italian government. By 2042, Italy became a Red Zone where Nod captured a Threshold tower as the Scrin defended it and GDI destroyed the Relay Node in the Third Tiberium War five years later. Italy, as a GDI affiliate had joined the G8 summit including the European Union and in the Generals Universe, NATO.
When Italy got invaded by the Soviet Union and later, liberated by Allied Forces was that Venice became a pathway for both factions' troops. Soldiers on both sides travel through the waterways by using gondolas to capture or retake the major city as Italy became a battleground for the two of them. This actually happened in the Second World War. By the Third World War (third iteration), Rome and Venice were captured by the Soviets under Premier Cherdenko and General Krukov in another conquest of Europe. Italy didn't had a battle ever since Great World War III and the Psychic Dominator Disaster. During WWIII, the Allies took back Venice and Rome after their third mission named The Famous Liberation.