June 28, 2007 (LPAC)--Jean-Claude Juncker, prime minister of tax-haven of Luxembourg, a mini-state which has more banks than inhabitants, yesterday issued an ultimatum to Italy, not to use income surplus to finance social programs. Juncker, who is chairman of the Eurogroup, the committee representing EU member states which have already adopted the Euro, used tones which observers had not seen since a reform of the EU "stability pact" introduced more budget flexibility for individual member nations.

"Italy must remember that it is responsible for the whole Eurozone, and is not free to distribute the fruits of its growth at will," sais Juncker according to several media reports. "If Italy does not succeed in substantially reducing its own debt, and does not balance its accounts at latest by 2010, there will be serious problems also for the entire Eurozone." Juncker added that he sees "social risks that could result, but Italy must do everything possible to remedy and correct this situation."

Juncker's outrageous statements come in the middle of a delicate negotiation between the Italian government and trade unions on a change in the pension reform law. In order to fully satisfy union demands, the Italian government would have to use income tax surpluses to finance the reform, instead of balancing the budget.