We must unite or face irrelevance, EU President warns
EUROPEAN Commission President Jose Manuel Barroso has issued a new call for the EU to "unite or face irrelevance" in the face of the mounting economic crisis in Italy.
In a speech last night in Berlin, Mr Barroso said the world was facing fundamental changes to the economic order and European countries had to stand together.
"The challenge is how to further deepen euro-area integration without creating divisions with those who are not yet in it. The world needs a stronger Europe: more Europe, not less," he said.
His comments came after another day of heavy losses on the financial markets as Italy's borrowing costs hit 7pc - the level which triggered bailouts in Portugal and Ireland.
Mr Barroso said the EU was facing a "defining moment" and called on "responsible leaders" to go out and make the case for Europe.
"Populism and sometimes even nationalism raises its head across our continent, claiming that too much Europe is the cause of our current difficulties; claiming that less Europe, or even non-Europe, would bring solutions," he said.
"This is ignoring the global realities as well as our common history that teaches us that this continent is simply too small and too inter-dependent for us to stand apart. To turn our backs to each other."
If the euro area of the 17 single currency member states, or the entire 27-country EU, broke apart, he said, the estimated initial cost was up to 50pc of EU GDP, with ongoing threats to the prosperity of the next generation.
"We must show our citizens what is at stake. We must choose the path of strength over weakness. Unity over fragmentation. The hard choice over the easy one," he said.
"The EU does not promise paradise, but it is our best chance for prosperity. It is the single greatest achievement of our time. Our best means to use the crisis as an opportunity for creativity out of destruction.
"The EU was created for moments such as these. We must collectively stand behind it. We must give it the tools it needs to make Europe stronger.
"We are witnessing fundamental changes to the economic and geopolitical order that have convinced me that Europe needs to advance now together or risk fragmentation. Europe must either transform itself or it will decline. We are in a defining moment where we either unite or face irrelevance."
Italy endured another pounding on the international markets amid fears that prime minister Silvio Berlusconi would attempt to hang on to office and delay essential economic reforms.
In Greece, MPs finally came up with a deal to create an interim government to pass the country's new debt deal, but has there was no confirmation on who will succeed outgoing prime minister George Papandreou.
Mr Berlusconi has pledged to resign after the Italian parliament passes the financial reforms that European officials have been demanding for months.
The process can take up to two weeks, but President Giorgio Napolitano said that would be accelerated to days, allowing him to quickly begin talks on forming a new government or calling new elections.
"Fears are totally unfounded that Italy may experience a long period of inactivity," Mr Napolitano said, adding that "emergency measures" could be adopted at any time.
Italy's key borrowing rate hit a high of 7.40pc as markets expressed concern about how swift and complete Italy's political transition would be, although it fell back slightly to 7.26% after Mr Napolitano's remarks.
With debts of €1.9 trillion, Italy is considered too big for Europe to bail out. Higher borrowing rates will make it more difficult and expensive for Italy to roll over its debts.
The European Central Bank has been buying up Italian bonds to keep yields at reasonable rates, but critics say that is throwing good money after bad.
Any delays in the financial reforms or in establishing a new, stable Italian government frighten the markets, which are already unnerved since some investors in Greece are going to lose 50% of their holdings.
In the meantime, Mr Berlusconi remains in office - and there is uncertainty of what kind of government will follow.
While Mr Berlusconi is not running for office again, he said he would remain active as the founder of his political party and would help out in any political campaigns.