A proposal by the German finance ministry to clampdown of Greece’s finances has caused unease.
In a move that is sure to get alarm bells ringing in the minds of people already opposed to the EU’s plans to impose closer fiscal authority over its members, details of a leaked report reveal that the German finance ministry is drawing up proposals for Greece to give up more of its fiscal sovereignty.
The document which was leaked to the Greek newspaper Kathimerini English edition, proposes measures to build upon the deal agreed to by European finance ministers in February that Greece’s next loan installment should be paid into an escrow account in order to ensure that the repayment of existing debt is guaranteed, effectively holding the Greeks to ransom at a desperate time.
As the Kathimerini newspaper writes: ‘Germany is proposing that Greece give up more of its fiscal sovereignty and come under closer economic control, according to a document leaked on Tuesday. The German Finance Ministry proposals were made public by PASOK officials and made for controversial reading as they called for an escrow account into which Greece’s bailout installments are paid to be transferred to the European Central Bank and for the account to also receive the tax revenues that Greece collects.
The document adds that should Greece not achieve a primary surplus, as agreed with the troika, it would have to decrease spending or increase revenue accordingly. The German plan calls for automatic cuts should targets not be met.
The proposed measures include:
• The creation of an escrow account managed by an external body such as the European Central Bank. All aid payments will be placed in this account.
Controversially, the measure also outlines that some Greek revenue will be directed straight into this account, once Greece has reached a primary surplus.
• Should Greece miss its targets, the government would have to make sweeping cuts to all areas of official spending.
• Greece could need “external approval” from a body such as the EU commission before it could borrow. This is described as being “along the lines of supervision of regional or local authorities by some federal states” – even though Europe is not (yet) a federation.
• Greece will receive compulsory ‘technical aid’ to improve its tax collecting service, anti-corruption operations and privatization program.
Greek citizens are also deeply concerned by the loss of sovereignty implied by the measures, with one Greek telling the Guardian newspaper; “It’s actually worse than putting the country under receivership and more akin to directly governing it through troika-appointed czars. You can’t get any closer than this to an occupation without actually rolling in with tanks.”
The report also reveals that the German finance ministry was expecting resistance to the plan from Greek citizens, listing plans to appease them. The Ministry called for more external assistance to be provided to Greece to conduct structural reforms by enhancing the role of the EU Task Force.
Berlin proposes. “More intense, compulsory employment of external technical assistance for, among others, administrative capacity building, including for tax collection, corruption reduction, statistics, growth-enhancing investment strategies, use of structural funds, privatization process would further support the implementation of the program,” Berlin proposes.
The Greeks may have gotten themselves into the mess they are now in, but is it really a good idea to take sovereignty away from the struggling nation? To some it appears to be the start of a slippery slope and reinforces the belief of those who think the EU is a threat to democracy.
Since the leaked documents publication there has yet to be an official response from the Greek government.
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