Merkel ally warns Italy and France to work harder, faster -newspaper

BERLIN (REUTERS) - Italy and France need to work harder and faster to resolve their structural problems, a senior ally of German Chancellor Angela Merkel said in a newspaper interview published on Thursday.

Michael Meister, deputy parliamentary floor leader in Merkel's Christian Democrats, told the Neue Osnabruecker Zeitung newspaper that the European Central Bank should stop buying Italian government debt if Italy failed to meet its debt reduction requirements.

"Italy and France have structural problems to resolve and not economic problems," said Meister, deputy to parliamentary floor leader Volker Kauder.

"They can't wait any longer. More time won't relieve the problem. It'll only make it worse."

Italian government bond yields have fallen in recent months as investors put their faith in the ECB's ability to prevent indecisive elections earlier this year driving Italy into full-blown crisis. The ECB has signalled its determination to see out the crisis.

On Wednesday, Italy managed to extend the average lifespan of its debt by issuing its first 30-year bond since 2009.

Meister's comments came just as Germany's campaign for the September election gets into full swing.

"The credibility of the ECB requires that it demand Italy to meet its obligations," he added.

"If Italy does not do that, the basis for the ECB's bond-buying programme is no longer applicable."

Meister added: "The ECB should thus not buy any further bonds without a critical examination of the obligations that Italy has promised. It (the ECB) has already been skating on thin ice. It should concentrate on monetary policy." Meister said Italy urgently needed to work on improving its competitiveness and consolidating its budget.

"That's the job of national political leaders and not the ECB," he said.

He added the new Italian government was capable of taking the necessary action and the country has a relatively strong industry.

"Italy can do it on its own strength," he said.

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