Friday, January 27, 2012

Call for EU to control Greek budget

Financial Times
January 27, 2012

The German government wants Greece to cede sovereignty over tax and spending decisions to a eurozone “budget commissioner” to secure a second €130bn bail-out, according to a copy of the proposal obtained by the Financial Times.

In what would amount to an extraordinary extension of European Union control over a member state, the new commissioner would have the power to veto budget decisions taken by the Greek government if they were not in line with targets set by international lenders. The new administrator, appointed by other eurozone finance ministers, would take responsibility for overseeing “all major blocks of expenditure” by the Greek government.

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

Athens would also be forced to adopt a law permanently committing state revenues to debt service “first and foremost”.

The German plan, circulated on Friday afternoon to finance ministry officials from eurozone countries who make up the so-called “euro working group”, underscores the depths of mistrust between Greece and its European Union lenders.


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