Berlusconi's government may soon collapse

Berlusconi is fighting to prevent a collapse of his center-right coalition government over the issue of EU demands for concrete economic reform measures just before Wednesday evening's highly anticipated summit.

ROME, ITALY (Catholic Online) - The demands for reform have come as European officials work to reach an agreement on bolstering the €440 billion rescue fund so that it can be used to help Italy by purchasing Italian bonds and thus reducing borrowing rates. Currently Rome is borrowing at rates near 6 percent.

This assistance is quite short of full-scale Italian bailout, and officials are saying that it will come with tough new conditions that Berlusconi will have to work hard to implement.
 
Many European officials doubt that the Italian government is serious about fiscal reforms, and that they have some convincing to do.

On Tuesday, talks between Berlusconi and his coalition partners did not yield an agreement on proposed pension reforms. Members of Berlusconi's coalition are warning that the situation is both difficult and dangerous.

Angelino Alfano, secretary of Berlusconi's People of Liberty party, spoke to reassure people that the government would reach an agreement. However, talks between the parties continued well into Tuesday night, and produced no agreements.

The Italian government has been put on notice that if they are to receive financial help from the euro zone, they must implement fiscal reforms. High on that list of reforms is pension reform. However, any talk of reforming pension programs is dangerously unpopular. Umberto Bossi, leader of the Federalist Northern League warned that, "if we touch pensions the people will kill us."

Some have suggested that the Italian government offer a compromise promising future action, however that may not be satisfactory to euro zone leaders who are seeking a prompt and comprehensive solution to the sovereign debt crisis at their summit on Wednesday. Analysts warn that Italy has made similar promises in the past, but has not yet delivered.

The internal problems for the Italian government are adding to the uncertainty that a comprehensive and final debt crisis plan can be reached on Wednesday night. And given the unpopular and occasionally violent reaction of the neighboring Greek people to austerity measures there, Italian officials are finding themselves in a very dangerous spot.

---

'Help Give every Student and Teacher FREE resources for a world-class Moral Catholic Education'