Berlusconi Feels The Heat (Again)

As we mentioned in our previous post, yesterday Italian Prime Minister Silvio Berlusconi had to face some serious pressure from Merkel and Sarkozy. In a desperate attempt to save face, Berlusconi has just released a communiqué claiming that "no one in the EU...can lecture his partners". However, it's no secret that his French and German counterparts literally gave him three days to come up with a concrete set of reforms to enhance growth - to present at Wednesday's EU summit.

Il Cavaliere had a particularly bad EU summit yesterday, but once back in Rome, it got even worse as Berlusconi was forced to call an emergency cabinet meeting for this evening and announced a plan to raise retirement age by two years, to 67. This idea drew an immediate rebuke from junior coalition partner Lega Nord, which claims it has already made important concessions, on issues such as private sector female workers' pensions, to save Berlusconi's skin.

So, for the umpteenth time, will this be the end for Silvio? Lega Nord Senator Rosi Mauro said this morning that her party was ready to "take to the streets", should the Italian government decide to push ahead with its pensions reform plan. But most importantly, the emergency cabinet meeting (initially scheduled for 5 pm London time) has kicked off more than one hour later, because Berlusconi was stuck in a meeting with Italian Economy Minister Giulio Tremonti and Lega Nord leader Umberto Bossi (see picture). At that meeting, the latter reportedly threatened to walk out of government, should Berlusconi not drop his plan to increase the retirement age.

In most democratic countries, this would be a pretty hopeless situation for a coalition government. However, as has been made clear time and again (see here and here), the Italian Prime Minister is a man full of surprises. And in fact, two opposition parties have already hinted that they could support the proposed pensions reform (although one of the parties has made clear that Berlusconi would have to resign one minute after the reform is passed)...

P.S.: Meanwhile, Le Monde reports that, behind closed doors, eurozone officials are studying the possibility to activate the eurozone's bailout fund, the EFSF, to take over from the ECB the responsibility of purchasing Italian bonds. The Commission has already denied the reports, meaning that they might well be true...