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In response to
"The news from Europe just keeps getting worse"
by
Brian
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Here's the FT story
Posted by
Brian (aka trav007)
Oct 25 '11, 09:28
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Last updated: October 25, 2011 2:18 pm
Italian coalition talks hit deadlock
By Guy Dinmore in Rome
Silvio Berlusconi
Silvio Berlusconi�s centre-right coalition government in Italy appears in danger of collapsing over European Union demands for a demonstration of concrete action on economic reform by Wednesday�s summit of eurozone leaders.
The EU ultimatum delivered to Mr Berlusconi in Brussels on Sunday risks breaking his coalition instead of giving it an external impetus to move ahead on measures to cut Italy�s debt and promote economic growth.
The ultimatum was delivered as part of efforts to resolve the eurozone sovereign debt crisis, but the Italians� failure to reach agreement on reform threatens EU leaders� stated goal of finalising at Wednesday�s summit a comprehensive solution to the crisis.
Talks on Tuesday morning between Mr Berlusconi and his Northern League coalition partners failed to resolve the deadlock � centred on proposed pension reforms � after negotiations into Monday night made little progress.
�The government is at risk,� Umberto Bossi, leader of the fiercely eurosceptic and federalist Northern League, told reporters in Rome. �The situation is difficult, very dangerous. This is a dramatic moment,� he was quoted as saying.
Commentators said the crisis was the most serious facing Mr Berlusconi since his election victory in 2008, recalling memories of 1994 when the Northern League brought down his first government after just a few months.
The prime minister�s People of Liberty party has proposed that the pension age be raised to 67 years from 65 in line with increasing life expectancy, and that the system of length-of-service pensions also be modified. The Northern League is opposed and La Padania, its party newspaper, on Tuesday attacked what it called �euro-tyranny�.
Altero Matteoli, a PDL minister, said a collapse of the government was a �hypothesis�. He also noted that talks were continuing and that a compromise with the Northern League was still possible.
Government sources said Mr Berlusconi might only be able to present a declaration of intent on proposed reforms to the Brussels summit. If this was found to be unacceptable, then Italy runs the risk of losing support for its bonds on the open market by the European Central Bank.
Mr Berlusconi lashed out at his European critics in a statement on Monday evening, reacting to what was widely seen as humiliating treatment of his handling of the debt crisis at a post-summit press conference held by France�s Nicolas Sarkozy and Angela Merkel of Germany.
�No one in the EU can nominate themselves as special administrators and speak in the name of elected governments and the European people. No one is in the position of giving lessons to his partners,� Mr Berlusconi said.
But Mr Berlusconi was sharply rebuked by Giorgio Napolitano, Italy�s head of state, who in his most forceful intervention to date, urged the prime minister to adopt the �new decisions of great importance� that he had promised.
Mr Napolitano, strongly pro-European and one of the few remaining Italian politicians to command widespread public respect, dismissed complaints of loss of sovereignty as irrelevant, noting that Italy had accepted limits to its sovereignty when it became a founding member of the European Union and later in joining its single currency.
�We have to do everything to reduce the risk that our government bonds are exposed to in financial markets, to make our commitment to reduce the debt more credible and to relaunch economic growth,� Mr Napolitano said in a statement.
The president would play a crucial role in shaping the aftermath of a government collapse. His options would include dissolving parliament and calling snap elections, or trying to find an alternative viable coalition within parliament � possibly a new leader from the centre-right parties or the appointment of an outside technocrat to lead an interim administration.
Pressure on Mr Berlusconi was also building in Brussels. Amadeu Altafaj, spokesman for the EU economic and monetary affairs commission, said Italy had to back up its commitments to cut its debt and implement structural reforms �with specific actions, with a clear timing for all these actions�.
�This is not about challenging sovereignty, it�s not about lecturing, it�s not about humiliating,� he said.
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