The Greek Drama Hits An All Time Crescendo

In a little mentioned story on Friday as the focus of Greek news has been the debt swap negotiations, Germany in effect set out to take over the Greek budget, you might even say it was an attempt at a new form of colonialism, Financial Colonialism.

In a stunning move, according to a Reuters exclusive:

Germany wants Greece to give up budget control

"Germany is pushing for Greece to relinquish control over its budget policy to European institutions  as part of discussions over a second rescue package, a European source told Reuters on Friday." Reuters add: "There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough,"

The Financial Times said it had obtained a copy of the proposal showing Germany wants a new euro zone "budget commissioner" to have the power to veto budget decisions taken by the Greek government if they are not in line with targets set by international lenders.

"Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the document said.

The German demands for greater control over Greek budget policy come amid intense talks to finalize a second 130 billion-euro rescue package for Greece, which has repeatedly failed to meet the fiscal targets set out for it by its international lenders.

Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time. A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control. He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, b) to veto decisions not in line with the budgetary targets set by the Troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service.

The new surveillance and institutional approach should be formulated in the MoU as follows: “In the case of non-compliance, confirmed by the ECB, IMF and EU COM, a new budget commissioner appointed by the Eurogroup would help implementing reforms. The commissioner will have broad surveillance competences over public expenditure and a veto right against budget decisions not in line with the set budgetary targets and the rule giving priority to debt service.” Greece has to ensure that the new surveillance mechanism is fully enshrined in national law, preferably through constitutional amendment.

For anyone feeling a bit lost, the Troika, which is simply a front for Germany as Germany remains the leader of all things EU related, is making the next aid tranche that Greece needs to avoid default in March, is making that aide contingent upon Greece handing over its national sovereignty to be administered by a figure head who is clearly an agent of Germany. Furthermore, they are making this demand in such a serious manner that it would require Greece to amend its constitution. The seriousness of this cannot be underestimated, this is the first time since World War Two and ironically led by the same country, that Europe has seen one nation (Germany) trying to effectively colonize another European country. Perhaps this in part explains why Greece has been using bailout money and expected bailout money to beef up their military.


Apparently with foreknowledge of the Greek response to come, the BBC's Andrew Neil, tweeted the following:

He is speaking of the UK foreign office and that it is "Merkel" who now believes Greece will default.


Shortly afterward came the formal Greek response through the Dow Jones Newswire:


GREEK GOVERNMENT SPOKESMAN DECLARES THAT THE BUDGET IS SOLELY ITS RESPONSIBILITY - DJ


It now appears that if Greece is unwilling to hand over transfer of national budgetary sovereignty, as well as a "constitutional amendment" thereto, there is no Troika funding deal; meaning Greece WILL NOT get the next tranche of aide regardless of the debt restructuring deal outcome, which means in March Greece WILL Default, although the debt deal almost guaranteed a default in whatever manner it could have possibly been resolved.

This situation is very fluid and the consequences for the European continent are politically the most sensitive sine WW2. What for example happens when Ireland, SPain , Italy and certainly next, Portugal are bribed in to accepting similar agreements? Merkel's CDU have indeed been busy little bees.