Home In The News Greece Denounces Leaked German Budget Control Plan As “Product Of A Sick Imagination”

Greece Denounces Leaked German Budget Control Plan As “Product Of A Sick Imagination”

By: EW News Desk Team Date: 30 January 2012

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30 January 2012

Greece was in collective uproar over the weekend after a leaked German report, obtained by the Financial Times last Friday, proposed that the Greek government cede control over all tax and spending decisions to a eurozone “budget commissioner” in exchange for a new 130 billion euros bail-out.

"Whoever hands people a dilemma between financial aid and national dignity is ignoring basic historical teaching," said Greece’s Finance Minister Evangelos Venizelos on Sunday – the eve of a EU summit on the eurozone debt crisis in Brussels.

Anna Diamantopoulo, the Greek Education Minister, also slammed the German plan as "the product of a sick imagination"; while Culture Minister Pavlos Yeroulanos rejected the proposal outright, declaring it as a violation of national sovereignty.

"It's going to be impossible for the Greek government to accept such a deal - I don't think it would be supported by any of the heads of the parties that are involved in the coalition," said Yeroulanos to the BBC.

"We have been giving up quite a bit, but I think sovereignty is a red line that no-one would dare cross. I would rather resign as a minister than allow anybody to tell us the way we should be spending our money."

Germany’s plan, whose authenticity has been verified by the German Economy Minister Philipp Roesler, would have seen an administrator appointed to the Greek government by other eurozone finance ministers; one whose powers included the ability to veto all budget decisions taken by the Greek government.

“Budget consolidation has to be put under a strict steering and control system,” read the proposal. “Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time.”

Under the new German plan, Athens would also only be allowed to spend on the normal functioning of its government after it had serviced its debt to international lenders.

“If a future (bail-out) tranche is not disbursed, Greece cannot threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement,” wrote the document.

Most analysts however believe that the proposal would have little chance of being passed, with the European Commission – part of Greece’s “troika” of lenders – rejecting the proposal almost immediately.

“The Germans have a lot of influence but that goes a little beyond the limits the outer member states could support,” said a senior official involved in the discussions to the Financial Times. “If you went with that model you’d do away with the normal democratic decision-making in a member state.”

In a statement released just before he left for the EU Summit, Greece’s Finance Minister Evangelos Venizelos added: "Our partners know that European unification is founded on the institutional equality of member states and respect for national identity".