Italy watches closely as Greek negotiations come to a head

All of Europe is looking on with eyes wide open as efforts to renegotiate Greek's massive debt to European creditors come to a head at the emergency summit. But the view from Italy is a little different.

Italy is Europe's second most indebted country, behind Greece. It is difficult for Italian Prime Minister Mattero Renzi and Italy to take the same hard line stance on the Greece-EU debt talks that many other countries are taking -- in part because Italy benefits from the same kinds of flexibility Greece is seeking and because a stronger opposition in Italy would undermine Renzi's ability to push through reforms.

"Italy has what I call a 'Greece Problem,'" Alex Tessa, an independent international affairs consultant who is half Greek and half Italian, told Xinhua. "Of course, Italy's political and social issues are much less severe than those in Greece. But at the same time, a lot of the problems in Greece are the same kinds of problems Italy has."

Spain and Portugal, which a few years ago suffered from the same kind of economic malaise some economists say Italy may just be emerging from, have taken a more hardline stance now that their economic recoveries are gaining steam.

Italy has not followed suit. Though Italy is seeing some positive economic signals in recent months, experts are divided on how much of that is fueled by external forces like the weak euro sparking strong exports, or low oil prices that help bring down the cost of industrial production.

Since Renzi took power 16 months ago, he has lobbied the European Union for increased flexibility on fiscal matters, like the cap on debt and the government's deficit levels. He has also pushed through the start of an ambitious reform agenda, and looked for ways to make government more cost effective.

"I don't think Italians fear now that what is happening to Greece will happen to them," Massimiliano Panarari, a political affairs analyst and public management, said in an interview. "Confidence has grown in terms of what is happening economically."

But Panarari warned that the political problems Greece could present for Italy are another story.

"I think Renzi's biggest concern in this area is the rise of the populist opposition," he said. "This is an issue for the political elite."

That could happen if talks on Greece breaks down and the country is forced to default on its debt and maybe even be pushed out of the euro-zone. That would raise the risk for all euro-zone countries and push up borrowing costs. It could also boost the prospects of populist parties like those behind politician Beppe Grillo or perhaps former prime minister and billionaire media tycoon Silvio Berlusconi.

"That is the worst-case scenario," Tessa said. "That is why Renzi must be hoping for the best." Enditem