SENIOR EUROPEAN figures piled pressure on Italian leaders to settle quickly the growing political crisis in Rome as Italian prime minister Silvio Berlusconi lost his parliamentary majority and the country’s borrowing costs jumped to new records.
The turmoil overshadowed a Brussels meeting of EU finance ministers, which broke up last evening without a breakthrough on key reforms to expand the lending power of Europe’s bailout fund.
“People were kind of watching and waiting and talking about developments in Greece and Italy, that’s where it is this week, I presume it’ll move on,” Minister for Finance Michael Noonan told reporters in Brussels.
Amid continued uncertainty about Mr Berlusconi’s fate, the relentless pressure on Italy has pushed the debt crisis into a new phase as the third-largest euro-zone country faces questions about its power to finance itself on private debt markets.
“As regards the Italian bond spreads, certainly we are concerned about the situation and we are following it closely but I would not want to comment on or state that any particular level is dramatic because the essential thing is now to restore confidence,” EU economics commissioner Olli Rehn said.
“The situation in Italy, as you know as well as I do, is in a certain movement. I don’t predict what will be the outcome of the movement. It’s not my task. But the essential thing is that the economic and financial situation of Italy is very worrying and we want to help Italy through our rigorous surveillance.”
Inspectors from the European Commission arrive today in Rome to monitor the implementation of a drastic new austerity plan. International Monetary Fund inspectors will join them within weeks.
Mr Rehn said he awaited a response from Rome to 40 “very specific” questions about the plan, which has deepened the divisions within Mr Berlusconi’s fractured coalition.
Brussels wants Italy to provide clarity about the plan quickly, he added.
“Let’s not rush ahead of events. Let’s wait how things unfold but from our side the sooner the better because time is of the essence and Italy is facing very significant market pressures.”
The turmoil in Rome has rattled Europe as Italy is too big to be rescued. The crisis in the country – and uncertainty over the plans for an interim coalition in Greece – has swept the political focus away from the difficult process to boost Europe’s bailout fund.
“It is difficult to see that we in Europe would have resources to take a country of the size of Italy into bailout programmes,” Finnish prime minister Jyrki Katainen told parliament in Helsinki.
In Brussels, finance ministers lined up to decry the uncertainty over Italy and Greece. British chancellor George Osborne said: “The euro zone needs to show the world it can stand behind its currency, it cannot just wait on developments in Athens and in Rome.”
