29 January 2012

FT: Greek fury at plan for EU budget control

Greece's finance minister angrily rejected a German plan for the eurozone to impose a budget overseer onto Athens in return for a new €130 billion bailout, saying it would improperly force his country to choose between "financial assistance" and "national dignity".

Evangelos Venizelos said the proposal to create a European Union “budget commissioner” with the power to veto Greek tax and spending decisions “ignores some key historical lessons”. He added EU lenders already had sufficient monitoring safeguards in place in its bailout programme.

Mr Venizelos’s comments came as talks in Athens shifted from the weeks-long negotiations over restructuring its privately held debt to the question of which public institutions will have to pay to fill a widening gap in Greece’s budget figures. Negotiators representing Greek bondholders largely completed a deal with Athens at the weekend which would cut the long-term value of privately held bonds by just over 70 per cent.

But the formal signing of the agreement has been delayed amid disagreement over whether a remaining budget shortfall will be filled by further Greek austerity measures, additional loans from EU governments, or by the European Central Bank, which is facing pressure to give up profits on the €40 billion in Greek bonds it holds.

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