EU official's remarks stir Italian political storm

[January 30, 2013]  MILAN (AP) -- A European official's criticism of former Italian Premier Silvio Berlusconi's response to the 2011 economic crisis has spurred allegations of defamation from Berlusconi backers and rare public discord within the European Commission.

Olli Rehn, the European monetary affairs commissioner, told the European Parliament on Tuesday that Berlusconi did not "respect commitments" to get Italy's fiscal house in order as Italian borrowing costs rose to dangerous levels in the fall of 2011. Berlusconi resigned as premier in November 2011 under market pressure, making way for Mario Monti's technical government.

Berlusconi's actions "led to a drying out of lending which suffocated economic growth and led to a political dead-end in Italy and the formation of the new government of Mario Monti, which then later on was able to stabilize the situation," Rehn told the European Parliament on Tuesday. "This is clearly an example of the confidence effect in play."

A key Berlusconi supporter, Renato Brunetta, swiftly accused Rehn of "defamatory statements" and demanded an official inquiry.

"Commissioner Rehn intentionally lies. We call for an official inquiry by the European Parliament," Brunetta said in a statement outlining responses by the Berlusconi government to the crisis. Brunetta was a minister in the Berlusconi government.

Berlusconi is heading a center-right coalition in the Feb. 24-25 national elections, although he has been unclear if he will seek the premiership if they win. Currently, center-left leader Pier Luigi Bersani is leading opinion polls, with Berlusconi's alliance in second followed by center-right parties supporting a Monti agenda.

Rehn tried to calm the storm with a statement saying that his comments should be seen in the context of his responsibilities for fiscal and economic oversight within the European Commission. But his remarks also drew criticism from within the commission, the European Union executive body where discord is rarely aired in public.

`'I regret and dissociate myself from the statement on Italy of my colleague Olli Rehn, which risks raising the appearance that the EU Commission is not independent," said Industry Commissioner Antonio Tajani, an Italian.

[Associated Press; By COLLEEN BARRY]

Raf Casert in Brussels contributed to this report.

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