Not for the first time, unofficial reports and rumours have abounded in the past few days suggesting that the heavyweights of the European Union, and Germany in particular, do not want to expose themselves to the risk of a single currency burdened down by the uncertain economy and unstable political structure of a country like Italy.
Such reports, however, risk scuppering Italy's energetic efforts to catch up with its European partners, upsetting the equilibrium so far provided by cautiously optimistic financial markets and threaten the survival of Prime Minister Romano Prodi's government.
The final straw for Mr Prodi came yesterday with the publication of a report in the Financial Times suggesting that Italy would be offered a compromise deal whereby it would not join Economic and Monetary Union in 1999 but would get in ahead of the final phase in 2002. The report immediately battered the lira's value against the German mark.
In response, a government source said: "Prime Minister Prodi, faced with a continual but baseless stream of rumours and leaks ... reaffirms Italy's firm intention and solemn undertaking to meet the criteria set by the Maastricht treaty on time."
The truth is that Italy is doing far better than anyone expected in its efforts to bring its ragged public finances to order. With a huge austerity budget for 1997 and further cutbacks in the works, it no longer seems inconceivable that Italy's budget deficit to gross domestic product (GDP) ratio could be pushed down to the required 3 per cent by the end of the year.
Inflation is at a record low of 2.5 per cent, growth looks buoyant and there is good news on trade figures. Interest rates have been cut twice in four months, providing much-needed oxygen to industry as it struggles with a vastly increased tax bill.
Were Italy to be dropped from the front bench, it could have grave political consequences. Mr Prodi's government probably would not survive a rebuff of this kind. A delay would deepen the gulf between the rich north and the under-developed south, risking a split along the lines suggested by the secessionist Northern League.
Mr Prodi will be asking some tough questions of Chancellor Helmut Kohl at a bilateral summit in Bonn tomorrow, and will hope at the very least to postpone the crunch moment for another few months.Reuse content