The decision by Chancellor Gerhard Schroeder to cancel his Italian holiday because of offensive comments by an Italian junior minister will not help Mr Berlusconi's plans to make a splash during the EU presidency.
By Frances Kennedy
But it may have one positive side-effect.
It will deflect attention from a seething crisis among his coalition government.
Tourism Minister Stefano Stefani dismissed Germans as belching unintelligent drunkards in an abrasive editorial in the Northern League newspaper La Padania.
Berlusconi was shocked at repercussions to his original "Nazi" jibe
While several Italian cabinet ministers criticised the remarks, there was no official government condemnation and no suggestion that Mr Stefani should resign.
An opinion poll showed that 49% of Italians said Mr Schroeder was right to cancel his holiday.
Had they been asked whether Mr Stefani should resign, the response would almost certainly have been a landslide Yes.
Despite an enviable parliamentary majority, the Italian Government is looking more wobbly than it has since it was voted in two years ago.
The undisputed and irreplaceable leader is still media tycoon Silvio Berlusconi, but his capacity to keep the disparate members satisfied is waning.
Mr Berlusconi first tried to restore harmony to his fractious coalition last week with a document outlining a review of policy.
However, one of the key elements - a "control room" on economic policy to be headed by deputy Prime Minister Gianfranco Fini - is already in deep trouble.
The first meeting yesterday was cancelled. "Change tack or we'll end up on the rocks" was the ultimatum from Northern League leader Umberto Bossi on Wednesday night, and for the first time his threats to pull out of the coalition are being taken seriously.
Those close to Berlusconi say that, while he was unable to manage an unequivocal apology for his Nazi jibe against a German MEP, he was shocked by the repercussions
It was the League's withdrawal that toppled Mr Berlusconi's 1994 government after just seven months.
For Pierluigi Castagnetti of the centrist Daisy party, the Stefani case is a metaphor of the crisis of the coalition.
"A head of government incapable of ridding himself within 24 minutes of a junior minister who causes huge damage to tourism and to the economy, is incapable of any decision," he says.
The recent controversial immunity bill, which provides for the freezing of trials against the five most senior state officials until the end of their mandate, is a double-edged sword, according to political scientist Franco Pavoncello of the John Cabont University in Rome.
Stefani's comments have angered many Italians
"By using their overwhelming majority in parliament, his allies have allowed him to get off the hook," he says.
Yet the law also makes him vulnerable and his partners are playing on that.
They know that calling a snap election before Christmas is not an option as, if he failed to be re-elected, his suspended trial would restart.
So where does all this leave Mr Berlusconi with his European partners?
Those close to him say that, while he was unable to manage an unequivocal apology for his Nazi jibe against a German MEP, he was shocked by the repercussions.
Minders will be keeping off-the-cuff speaking opportunities to a minimum and speech writers will be insisting the prime minister sticks to the text.
The most crucial factor in the bickering is public finances and the desperate search for funds to cover overspending and lower-than-predicted growth.
More verbal fireworks from the Northern League are a certainty.
Preserving Italy's image as a responsible and committed EU partner is of little interest to the Northern League, whose long term aims include a separate Northern Italian state.
Analysts point out that Mr Berlusconi is a figurehead, but hundreds of diplomats and counsellors have been hard at work for months, if not years, to lay the foundations of Italy's presidency.
The trigger for the coalition's crisis was a poor showing in key local elections. The National Alliance blames the Northern League's anti-Rome propaganda for its strategic loss in the capital.
The problems have been exacerbated by the immigration crisis; cracks emerged as the Northern League called for the use of cannons to turn back refugee boats and the more moderate parties stressed the need for respect for human life along with strict laws.
However, the most crucial factor in the bickering is public finances and the desperate search for funds to cover overspending and lower-than-predicted growth.
Suggestions of re-touching Italy's generous state pension scheme have met vocal opposition from the League and National Alliance.
"Pensions are just one factor in the stalemate; the problem is that there is no guiding hand to patch up the rifts because Berlusconi no longer seems to exercise a leadership role," wrote political columnist Francesco Verderami in Corriere della Sera.