Merkel ally says Italy must decide if it stays in euro

BERLIN Fri Mar 8, 2013 6:07am EST

Rainer Bruederle, parliamentary faction leader of the liberal Free Democratic Party (FDP) addresses a session of the Bundestag, German lower house of parliament, at the Reichstag in Berlin September 12, 2012. REUTERS/Fabrizio Bensch

Rainer Bruederle, parliamentary faction leader of the liberal Free Democratic Party (FDP) addresses a session of the Bundestag, German lower house of parliament, at the Reichstag in Berlin September 12, 2012.

Credit: Reuters/Fabrizio Bensch

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BERLIN (Reuters) - Italy may decide to exit the euro or take other drastic action, a leader of German Chancellor Angela Merkel's junior coalition partners said after an Italian election showed rising opposition to austerity measures.

Financial markets have been on tenterhooks since the election less than two weeks ago in which the center left won a majority in Italy's lower house of parliament but failed to gain the Senate majority it would need to govern.

"The decision to adjust to the common currency is one that Italy has to take for itself, it's not for us to take. If Italy does not want to do that, they have to take the consequences," Rainer Bruederle of the Free Democrats (FDP) told a talk show on Thursday night.

"That could mean that they exit (the euro) or that they take drastic measures. But it's down to Italy to decide that," said Bruederle, the pro-business FDP's parliamentary leader who is heading its campaign for a federal election in September.

The prospect of prolonged uncertainty and new elections within months in the euro zone's third-largest economy could reignite the debt crisis just as a central bank promise to do what it takes calmed markets in recent months.

Bruederle's comments on the German public broadcaster ZDF could anger Italians already upset with German politicians commenting on their internal political affairs.

Last week, Italy's president canceled a dinner with Peer Steinbrueck in Berlin after the opposition SPD chancellor candidate described former Italian premier Silvio Berlusconi and comic-turned-politician Beppe Grillo as "clowns".

Bruederle also said Italy had not taken necessary reforms for years and was lacking competitiveness.

"What's Italy's core problem? Italy is not competitive. They are not capable of earning what they think they deserve to spend," Bruederle said.

"High unemployment is not the responsibility of Brussels or German politics...Italy has to (reform its labor market) as well. To do nothing but moan is too easy."

With less than seven months to go until federal elections in Germany, his comments drew criticism from the opposition.

Joachim Poss, deputy parliamentary floor leader for the center-left Social Democrats, said Bruederle and the FDP had "already contributed to the destabilization of the euro zone" with their reservations about some of the bailout schemes.

"Bruederle is disqualifying himself again for top political positions with such irresponsible comments on a possible euro-exit by Italy," said Poss.

Earlier this year, a female journalist's allegations that Bruederle, 67, had made sexist comments about her cleavage in a bar a year ago stirred a debate about the relationship between reporters and politicians in Germany.

(Reporting by Annika Breidthardt; Editing by Stephen Brown and Angus MacSwan)

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