Mr Merz, who is considered most likely to succeed German Chancellor Angela Merkle. He made the serious allegations against the government of Giuseppe Conte on Twitter on Sunday. The Christian Democratic Union (CDU) leader now finds himself facing a backlash.
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Mr Merz explained said Italy, hard hit by the coronavirus crisis, wanted to use the pandemic for its own purposes.
Italy has so far not wanted to accept aid provided by the EU, he wrote in a tweet.
The tweet said: “That shows that Italy has no acute need for financing.
“It tries to find unlimited financing options for its state budget in the slipstream of coronavirus.”
The comments caused outrage in Italy and in Germany.
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The Green European politician Reinhard Bütikofer responded and said: “This is as malicious as it is wrong.
“The EU can fall apart because of such lies.”
The general outrage surrounding the tweet led the hashtag “#Merz” to trend on Twitter on Sunday.
Armin Laschet, a competitor in the race for the CDU chair also received criticism for his policy in the coronavirus crisis on Sunday.
Italy faces its most severe crisis since the second world war.
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There have been more than 15,000 deaths from coronavirus and its economy on course to suffer the deepest recession in its modern history.
There is a rising feeling among even its pro-European elite that the country is being abandoned by its neighbours.
Carlo Calenda, leader of the pro-European Action party, says members write to him saying: “Why do we want to stay in the EU, it is useless.
“A massive, massive shift is happening in Italy.
“You have thousands of pro-Europeans moving to this position.”
Last month Sergio Mattarella, Italy’s softly-spoken 78-year-old president, and the man its establishment has relied on to safeguard its constitution and international alliances warned the future of Europe was at stake if its institutions did not show solidarity with their country.
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