Tensions keep rising in Italy, Greece

As Europe's financial crisis threatens to engulf Italy, a country that may be too big to save, top euro-zone officials have taken aggressive steps in recent days to whip errant members into shape.

From sending an international team to baby-sit Italy's economic measures to threatening Greece with expulsion from the euro zone, French and German leaders are pushing as never before, and European Union officials have joined in. But their exhortations have provoked chest-puffing backlash from Italy and Greece, and analysts warn that heavy-handed pressure may do little to solve Europe's short-term problems.

That was dramatized yesterday in Greece, where another day of political deadlock yielded no resolution on who would become the country's next prime minister despite warnings from European leaders that Greece will not receive its desperately needed bailout money until it resolves its leadership stalemate and approves the bailout plans.

European leaders are "fooling themselves if they believe there will be a fundamental change if there's a new prime minister or new elections" in countries that have troubled political systems, said Fredrik Erixon, who leads the Brussels-based European Center for International Political Economy.

In recent weeks, with time of the essence, German Chancellor Angela Merkel and French President Nicolas Sarkozy have used a take-it-or-leave-it approach with Greece: take a bailout plan that commits the country to years of unpopular austerity and international oversight, or leave the euro zone and deal with the consequences. In Italy, the International Monetary Fund team that arrived in the country yesterday is a public admission that Europe no longer trusts politicians there to do it themselves.

"Does Greece want to stay in the euro, yes or no?" Merkel asked last week. Sarkozy said that "not a cent" would be given to Greece if it didn't take the bailout.

And Jean-Claude Juncker, the head of a group of euro-zone finance ministers, called Greek Prime Minister George Papandreou "disloyal" for suggesting a popular referendum on the rescue deal. Officials have been less publicly pugilistic about Italy, but behind closed doors, German officials have been deeply reluctant to extend any assistance to Italy so long as Prime Minister Silvio Berlusconi remains in power.

A new leader in Italy would be "put in place to the disrespect of Italians," Berlusconi said Sunday, before he was forced to give assurances that he would step down after Parliament passes economic measures.