ATHENS: Greece has reacted furiously to a German proposal that a European Union budget commissioner with oversight of its economy be installed in Athens after mounting speculation that international lenders will have to stump up yet more money for the country.
The escalating row threatened to eclipse yesterday's summit after Greece's Finance Minister, Evangelos Venizelos, issued a tart response, saying his compatriots were capable of fulfilling the ''historical obligation'' to take the country out of crisis.
The proposal, in a leaked document, argued for the creation of a commissioner with veto powers over the Greek budget, saying Athens' inability to meet fiscal targets had made the post a precondition of further rescue funds from its ''troika'' of creditors - the EU, International Monetary Fund and European Central Bank.
''Budget consolidation has to be put under a strict steering and control system,'' the document read. ''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 plan, European institutions would have direct control over Greece's budget decisions in what would be an extraordinary depletion of a member state's independence.
With the atmosphere among recession-hit Greeks becoming increasingly explosive three years into the crisis, the proposal was angrily denounced, one politician slamming it as the ''product of a sick imagination''.
The spat erupted amid reports the €130 billion ($161.1 billion) aid package, agreed as part of a second bailout for the country last October, would not be enough. Citing Greece's worsening economic performance and prospects, the German news magazine Der Spiegel quoted a troika official as saying Greece could need €145 billion to be saved once and for all.
Last week, the EU economic and monetary affairs commissioner, Olli Rehn, said a revised analysis had shown more rescue loans would be needed to make up for a shortfall in the second aid package. The extra money, he said, was required to ensure Greece's €350 billion debt burden was reduced to 120 per cent of gross domestic product by 2020 - a figure seen as manageable.
Athens received €110 billion from the EU and IMF in May 2010, the biggest bailout in Western history.
The €130 billion financial support load had been seen as a red line across which no EU government was willing to step.
The spectre of the rescue program being expanded appeared to be the biggest obstacle to a debt deal between Greece and its private-sector creditors finally being concluded over the weekend. Greek officials said while the contentious issue of interest rates on new bonds had been settled - one source describing the coupon as ''a figure that has pleased everyone'' - the agreement would not be announced until there was consensus over the second bailout.
With Athens facing repayment of €14.5 billion of debt on March 20 - money it does not have - time is of the essence in securing a deal.
But negotiations with international debt inspectors that have been conducted in tandem with talks between the government and private creditors have been vastly different.
In what officials described as ''tense discussions'', Greek government ministers have argued fiercely with auditors over the need for further belt-tightening measures to plug a burgeoning budget black hole.
Guardian News & Media