The leaders of France, Germany and the European Council have ratcheted up the pressure on Silvio Berlusconi, Italy’s prime minister, to implement economic reforms.
Nicolas Sarkozy, France’s president, and Angela Merkel, Germany’s chancellor, met Berlusconi before the start of today’s summit to stress the importance of Italy reducing its debt burden.
Merkel was unusually outspoken in a speech yesterday (22 October) about the need for Italy to reduce its debt, which stands at 120% of gross domestic product.
She told members of her centre-right Christian Democratic Union (CDU) party that other eurozone countries would not be able to help Italy unless it cut its debts. If Italy’s debt level remained at 120%, she said: “It won’t matter how high the protective wall is because it won’t help win back the markets’ confidence.”
Speaking at a joint press conference today in Brussels with Merkel, Sarkozy said: “There is no point in calling for solidarity if those that we want to help don’t take the required measures.”
Merkel said she believed that Italy would implement the necessary reforms. She said: “We hope that the necessary measures will in fact be taken. Italy has great economic strength but also high debt.”
Herman Van Rompuy, the president of the European Council, also emphasised the importance of Italy doing what it had promised, so that investors were reassured.
The Italian parliament has delayed until the end of the month plans to approve measures designed to boost growth, raising fears that the weakness of Berlusconi’s government may make it difficult to push through unpopular reforms.
Relations between Berlusconi and Sarkozy were further damaged last Friday when the Italian prime minister announced that he was nominating Ignazio Visco to succeed Mario Draghi as the governor of Italy’s central bank. Sarkozy had lobbied Berlusconi to nominate Lorenzo Bini Smaghi, currently one of the six members of the European Central Bank’s executive board.
When Draghi was chosen as the next president of the European Central Bank, Sarkozy had demanded that Bini Smaghi step down from the executive board so that there were not two Italians on the board. The failure to appoint Bini Smaghi to the Italian central bank means his date of departure from the ECB board is uncertain, although he was reported to have given assurances to Van Rompuy that he would leave before the end of the year.