EU closes ranks behind Italy's Monti

(BRUSSELS) - EU leaders closed ranks behind caretaker Italian premier Mario Monti on Thursday -- in the presence of Silvio Berlusconi -- amid fears reforms could stall there after elections next year.

Italy's economic revival, and therefore wider eurozone prospects, has been plunged into turmoil by Monti deciding to resign last week, after the party of disgraced three-time premier Berlusconi withdrew its support.

Monti, the Brussels-schooled "technocrat" installed as head of government in Rome just over a year ago, is not a party figure but unusually joined German Chancellor Angela Merkel and the family of conservative leaders for planning talks before a two-day European Union summit.

Berlusconi was also there, and with Socialist French President Francois Hollande also indicating his support as Italy readies for a February general election, the groundswell of backing was the big talking point in the corridors of Brussels.

Monti, a former European Commissioner, was also hosted earlier in the day by the head of the EU executive, Jose Manuel Barroso -- and received a glowing endorsement from Finland's Prime Minister Jyrki Katainen.

The Finn said several colleagues spoke of the "good work" accomplished under Monti, but that they did not want to "push him" into speaking out himself, adding: "He's not been in politics so far, so it's a big step."

International Monetary Fund spokesman Gerry Rice said Monti had taken "bold steps," adding: "We believe that Italy is now on the right path of fiscal consolidation and structural reform -- and continuing on that path of implementation is the way forward."

Berlusconi has caused some confusion in recent days, first saying he would run again for Italian prime minister in upcoming elections, but then rowing back, telling Belgian television around the summit that he would abandon this idea if Monti could assemble a moderate coalition.

"I have got so much to do outside politics," Berlusconi told VRT television, citing his large family, ownership of AC Milan football club, and organising a foundation to build hospitals.

The 76-year-old said he would put himself forward "only if necessary," adding of Monti that "if he can pull together all the moderate Italians, I will be happy not to be a candidate at my venerable age.

Nevertheless, he suggested that 85 percent of the Italy electorate was against the policies followed by Monti's government.

One participant at the European People's Party (EPP) talks told reporters afterwards that Monti said he felt he "belonged to the family." Another added that Merkel too intended to focus on the Italian job after the summit.

German European Parliament lawmaker Elmar Brok told AFP that "Berlusconi's proposal" to rally moderates behind a programme of reform, was given a "positive" reception around the table.

Nicolas Sarkozy's successor as leader of the main French conservative party, Jean-Francois Cope, told AFP that the talks nonetheless showed "political differences" between the two dominant Italian figures.

Barroso said he told his "old friend" Berlusconi "very frankly" in a "personal conversation" that he must be mindful above all else of Italy's stability.

Credited with pulling Italy from the brink of default, Monti has said he will step down but is holding up his formal resignation until parliament approves next year's budget.

He has declined to say whether or not he will run in the election next year, and refused to comment in Brussels.

"I don't believe this is the right moment or the right place to start discussing issues that have to do with internal politics," he said. "I am still involved actively in what the government needs to do."

Unemployment has risen to record highs and the economy is still mired in recession.