Italy spoils the euro party

Berlusconi appointed himself as the new foreign minister

By CNN's European political editor Robin Oakley

LONDON, England -- Most countries have taken the arrival of Euro notes and coins in their stride. But there have been chaotic queues and plenty of angry consumers in Italy.

A bank strike hasn't helped, but part of the trouble has been a lack of governmental conviction about the introduction of the new euro currency and a series of squabbles within the government.

Prime Minister Silvio Berlusconi may yet come to regret the fact that those squabbles have been severe enough to provoke the resignation of Foreign Minister Renato Ruggiero, who resented the lack of enthusiasm, not to say hostility in some cases, of many of his Cabinet colleagues over the single currency.

Berlusconi has attempted to minimise the affair, dismissing Ruggiero as a technocrat and taking on his former foreign minister's job in addition to his own.

But the divisions in the Italian government are not confined to the euro and Berlusconi now faces problems with the rest of Europe over the growing Euroscepticism of his government.

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He himself has angered EU leaders with his lack of touch, including the famous gaffe when he insulted the Islamic world and proclaimed western Christian values as superior at a time when all his EU counterparts were insisting that they had no quarrel with Islam, only with those who harboured terrorists.

EU leaders have been alarmed at the departure of Ruggiero. As a former boss of the World Trade Organisation he was a figure of international standing who added weight and respectability to the Italian cabinet.

But one issue after another has led them to question Berlusconi's commitment to the EU.

In another clash with Ruggiero, Berlusconi ruled out Italian participation in the European military airbus project, the A400M. At the Laeken summit he boorishly wrecked a European deal on parceling out EU institutions, scoffing that the Finns, who wanted to play host to the European Food Safety Organisation "don't even know what prosciutto is."

EU leaders were especially angry when Berlusconi sought in December to block the establishment of a Europe-wide arrest warrant to aid the battle against terrorism.

Diplomats from other nations told journalists privately that the billionaire Italian prime minister was doing so to prevent actions against himself over his murky business dealings and he was forced to climb down.

EU leaders knew the Berlusconi coalition contained a number of Euro sceptics, notably the Lega Norda leader Umberto Bossi , who has compared the EU to Soviet Russia, and Gianfranco Fini, leader of Alleanza Nationale.

They had relied upon Ruggiero as a counterweight and now he has gone they fear Italy, one of the founding fathers of the EU, becoming a maverick state.

With Spain now holding the EU presidency its foreign minister Josep Pique is hoping for an early talk with Berlusconi about what the Spaniard is calling a "crisis in the European family."

Other leading figures like French finance minister Laurent Fabius have called for Berlusconi to demonstrate his country's continuing commitment to the EU.

Although Berlusconi has told Corriere della Sera that he will hold the foreign minister's job for at least six months most experts say that will prove impossible, given the number of meetings involved for both government heads and foreign ministers.

It is likely that Italy's President Ciampi, who had pushed for Ruggiero's inclusion in the cabinet, will now pressure Berlusconi to appoint a new foreign minister much sooner than that.

But Europe's longer term worries will remain over Italy, which has traditionally produced prime ministers ready to go along with the French, Germans and Benelux countries in pushing for greater European integration.

Now it has a Thatcherite prime minister and a cabinet who are increasingly ready to play the nationalist card.

What remains to be seen is how that goes down with the Italian public. They have been among the most eager Euro-enthusiasts, with most political observers reckoning them happy to go along with giving Brussels more say in Italy's affairs on the basis that it was likely to improve on anything offered by their own notoriously unstable governments in the past fifty years.