BRUSSELS (MNI) – Italy’s Prime Minister Silvio Berlusconi failed to
meet an agreed deadline for sending the European Commission the concrete
details of reform measures his government intends to implement, the
Commission said on Wednesday.

European Union leaders had demanded a letter from Berlusconi ahead
of the EU and Eurozone summits Wednesday evening, in the hope that it
would help reassure markets about Italy’s commitment to fiscal and
structural reforms, which are seen as crucial to restoring confidence in
the Eurozone’s third-largest economy and in Europe’s ability to halt the
spread of its sovereign debt crisis.

A spokesman for the Commission said that they now expected the
letter to arrive before the end of the day Wednesday.

“What we asked for is a list of concrete measures, very detailed,
along the lines that we’ve been discussing with Italy,” the spokesman
said.

The consequences of Berlusconi’s failure to keep his promise are
unclear but could create tension at the leaders’ summit tonight,
particularly with France’s President Nicolas Sarkozy and Germany’s
Chancellor Angel Merkel, who exchanged strong words with the Italian
Prime Minister at the EU summit in Brussels last weekend.

EU leaders are concerned that Italy, which has the highest
debt-to-GDP ratio in the Eurozone after Greece, and which has a poor
track record in sticking to promised reforms, is a weak link in the
bloc’s efforts to convince markets that Europe can restore confidence.

Confrontations in which EU leaders gang up on a single
underperforming country are likely to become more frequent as new
economic governance rules strengthen the role of peer pressure in
enforcing discipline.

EU and Eurozone leaders meeting in Brussels on Wednesday hope to
agree a multi-pronged strategy to restore market confidence in
government bond markets and financial institutions, which will include
leveraging the Eurozone’s bailout fund and a reworked debt restructuring
for Greece.

–Brussels Bureau: +324-9522-8374; pkoh@marketnews.com

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