Beleaguered Berlusconi faces summit moment of truth
Silvio Berlusconi - Photo EU Council
(BRUSSELS) - Embattled Prime Minister Silvio Berlusconi joined an EU summit Wednesday under orders from his peers to prove he can keep Italy from drowning in debt, dragging the whole eurozone with it.
With his credibility at stake, Berlusconi was told to bring written evidence of his resolve to undertake austerity measures aimed at easing fears that the eurozone's third biggest economy risks a financial meltdown.
The Italian premier waved as he arrived but ignored reporters' questions, three days after a first summit at which German Chancellor Angela Merkel and French President Nicolas Sarkozy told him to come back with answers.
Just hours before the summit, Berlusconi overcame discontent that threatened to crack his right-wing coalition, snatching an 11th-hour compromise with the Northern League.
His response was keenly awaited at a summit focused on finding a lasting solution to the eurozone debt crisis, with plans to cut Greece's crippling debt, recapitalise banks and boost the firepower of the bloc's bailout fund.
"Our Italian friends know that we must go with the principle that tonight, it will be announced that Italy will make important (budgetary) consolidation and structural (reform) efforts," said Luxembourg premier Jean-Claude Juncker, who heads the group of 17 eurozone finance ministers. "This is a must."
Berlusconi's supporters privately voice despair at the scandal-riddled prime minister's plight. One member of his inner circle has nicknamed him Nero, the Roman emperor accused of playing the fiddle while Rome burned.
"He is completely disconnected with reality. His obsession is to stay in power," one of his interlocutors said after the first summit on Sunday, which ended with general calls for Berlusconi to reassure his European counterparts.
On Monday, Berlusconi snapped back that "no one is in a position to teach lessons to their partners" and insisted that "no one has anything to fear" about Italy's financial health.
Italian media said Berlusconi went to Brussels armed with a 15-page letter outlining reform plans to reduce the country's 1.9 trillion euro debt mountain -- equal to 120 percent of its gross domestic product.
But the contents of the letter have yet to be made public while his right-hand man, Gianni Letta, said just hours before the summit that it still needed "touching up and perfecting."
A key element in the presentation is to raise the retirement age from 65 to 67 in 2026, reports said.
The decision actually changes little because the retirement age in Italy in 2026 will already be close to 67 due to reforms adopted over the last few years which compensate for longer life expectancy.
The Northern League, however, stubbornly rejected any plans to change the current system whereby workers can retire after 40 years of contributions regardless of age -- a key issue for voters in its northern Italy stronghold.
Berlusconi will also pledge to rush through growth-boosting measures which the government promised this summer but which have been repeatedly delayed by in-fighting within the coalition, the reports said.
Widespread embarrassment in Italy over the EU's public warnings to sort out its economy and fierce wrangling within the fractious coalition sparked talk the government may fall.
While Berlusconi's People of Freedom party supported modifying the pension system, the Northern League had threatened to pull out of the coalition and bring down the government if extensive changes were made.