Berlusconi clears air with Germany

Prime Minister Silvio Berlusconi tried to draw a line under Italy's latest spat with Germany yesterday, saying matters were settled now that a junior minister had resigned after insulting Germans and their country.

He also said that while German Chancellor Gerhard Schroeder had decided to cancel this year's family holiday in Italy because of the affair, the chancellor would return to Italy for next year's vacation.

Stefano Stefani, an undersecretary in charge of tourism, resigned late on Friday - a week after he called Germans "arrogant hyper-nationalistic blondes" - following pressure from Berlusconi and Schroeder himself. "Stefani has tendered his resignation and I have accepted it," Berlusconi said at a late-night dinner for Brussels-based correspondents.

The prime minister said he had spoken with Schroeder, who earlier called for Stefani to be sacked, and agreed that the affair would not affect relations between the countries. The German chancellor, who has spent many summer holidays in Italy, plans to go there for family holidays next year after cancelling plans for this year's Italian holiday after Stefani's insults, he added. In Germany, tabloid newspapers have revelled in the furore, turning the previously obscure Stefani into a household name.

In the 12 days since assuming the rotating presidency of the European Union, the billionaire prime minister has spent most of his time trying to douse the flames of scandal caused not only by Stefani but his own comments against a German politician. On the second day of the six-month presidency, which began on July 1, Berlusconi compared a German member of the European parliament to a Nazi concentration camp guard, sparking international outrage and a diplomatic row.

He has since expressed regret for his comment, stopping short of a full apology, and referred to the debacle again at the correspondents' dinner. "It was a sad and disagreeable event to which excessive importance has been given," Berlusconi said.

He also outlined Italy's agenda for the EU presidency before launching into an impromptu two-hour question-and-answer session, taking the foreign press corps by surprise.