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New Italian PM Letta to meet German leader Merkel

BERLIN (AP) — Italy's new Premier Enrico Letta is making his first trip abroad on Tuesday, visiting Germany in his bid to persuade European leaders to ease the pressure on his country to pursue painful austerity measures.

Letta, who has pledged to turn his country's stalling economy around, is set to meet German Chancellor Angela Merkel in Berlin late Tuesday, only hours after passing his final vote of approval by the Senate in Rome.

Germany's leader, who is a strong advocate of structural reforms, spending cuts and deficit reduction across Europe, has been much criticized during Italy's election campaign for her tough stance. Newspapers and politicians — including some now backing Letta's coalition government — have accused outgoing Premier Mario Monti's government of being a mere stooge to "la Merkel" in Berlin.

Still, Letta is choosing Germany — Europe's biggest economy — as his first destination abroad.

Beside seeking to persuade Merkel to ease off austerity, analysts say he also seeks to reassure financial markets about his government's seriousness by working closely with Germany.

However, Letta could not expect much leniency from Merkel. The conservative leader — who is seeking re-election herself in September — has made it clear that no Italian government should be allowed to fall significantly behind on the reforms and deficit targets agreed within the 17-nation eurozone.

European Union Commission President Jose Manuel Barroso was quick to congratulate Letta following the Senate's approval Tuesday, but reminded him of his "commitment to carry on the process of necessary reforms."

The center-left Letta has pledged to respect Italy's international commitments, but has also announced the immediate suspension of an unpopular tax on primary residences while he makes it fairer to less affluent taxpayers. He also pledged not to raise the sales tax and to reduce some payroll taxes, but has yet to explain how to handle the resulting shortfalls.

"Reducing taxes is a priority," Letta said Monday, promising he would "pinpoint a strategy to revive growth without interfering with the process to heal finances."

Italy, the eurozone's third-largest economy, has experienced years of only anemic growth and is currently in recession. The unemployment rate stands at 11.5 percent and almost 40 percent of those younger than 25 have no job, according to EU statistics. Italy's debt burden has grown to over 120 percent of the country's annual economic output — trailing only Greece's debt level.

The EU's austerity policies of spending cuts and higher taxes since the bloc's debt crisis erupted in 2010 has tried the patience of citizens in Greece, Portugal, Spain and Italy, leading to a backlash at the polls.

EU leaders like Barroso have already hinted that they are considering granting economically struggling countries like Italy or Spain more time to meet their targets to avoid choking off growth.

In Italy, Monti's technocratic government — which won international praise for its reforms — was fired by voters in February, leading to two months of political instability. Letta has now formed a grand coalition that includes former premier Silvio Berlusconi's conservatives.

Letta is set to meet EU leaders in Brussels and French President Francois Hollande in Paris later this week.

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