Rehn says Berlusconi failed to respect EU commitments

Result hit real economy, says European commissioner

Rehn says Berlusconi failed to respect EU commitments

(see related story) Brussels, January 29 - European Economic and Monetary Affairs Commissioner Olli Rehn on Tuesday accused ex-premier Silvio Berlusconi of deliberately ignoring Italy's commitments to the EU when he was still at the helm of government in autumn 2011. Berlusconi resigned as prime minister in November 2011 when Italy's debt crisis threatened to spiral out of control, making way for outgoing Premier Mario Monti's emergency technocrat administration. In the months leading up to his resignation, Berlusconi's government was involved in tense negotiations with the European Commission over the measures Italy needed to take to emerge from the crisis. Rehn said the demise of Berlusconi's third government showed looser fiscal policy would not help countries embroiled in the eurozone crisis. "Italy made some promises of fiscal consolidation in the middle of the summer (of 2011), in part to facilitate the European Central Bank's intervention with its programme of buying bonds on the secondary market," Rehn said. "The commitment started, the ECB intervened and for a brief period, the situation improved. "But in the autumn (of 2011) Berlusconi's government decided not to respect Italy's commitments any more and the result was the drying up of loans, which suffocated growth... "This situation led to the political crisis and the Monti government". The commissioner added that since then Italy has regained the confidence of the money markets, following austerity measures and economic reforms introduced by Monti, and borrowing costs have come down. "This is an example of the effect of confidence in action," said Rehn. Berlusconi is leading the centre right's campaign for next month's Italian election, but he has said he will not be premier if his coalition wins. The centre right is second in the polls behind Pier Luigi Bersani's centre-left coalition, although a media blitz by Berlusconi in recent weeks has narrowed the gap considerably. Monti is also standing on a reform ticket backed by centrist parties that is vying for third place in the polls at the moment with comedian Beppe Grillo's anti-establishment Five Star Movement.

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