Sarkozy dismisses watchdog for Greece

FRENCH PRESIDENT Nicolas Sarkozy has dismissed as “undemocratic” Berlin’s call to appoint an EU “budgetary commissioner” to Greece with powers to veto any government spending that knocks its rescue programme off track.

The controversial call has caused consternation in Greece, but Chancellor Angela Merkel insisted last night that Athens had already agreed in principle to such oversight last year.

“Greece’s recovery plan can be implemented only by the Greeks,” said Mr Sarkozy in Brussels last night. “No country can possibly be placed in trusteeship. It would not be reasonable, democratic [or] efficient.” While Mr Sarkozy insisted Chancellor Merkel was in agreement with him, one door down the German leader was sending a very different signal.

After striking a moderate tone on her arrival in Brussels, she stepped up her calls for extra financial oversight of Greece last night, in line with a paper circulated by Berlin last week.

“Countries not sticking to their programmes create a certain frustration in countries that are financing them and raise the question about oversight,” she said.

The German leader cited a summit decision last October that allowed the European Commission to “offer assistance to ensure the timely and full implementation of the reforms” in Greece. Her request was “nothing new beyond what was already agreed in spirit”.

Greek prime minister Lucas Papademos stayed behind after the summit for talks with the European Central Bank and Brussels officials to discuss plans to cut its private-sector debt by €100 billion.

Delays over this have held up agreement on Greece’s second EU bailout package. Senior EU sources said last night that both sets of talks would be concluded and agreed by next week. European Council president Herman Van Rompuy urged swift agreement to allow time for it to be finalised. Greece urgently needs fresh funding to avert a default in mid-March, when significant bond repayments are due.

Mr Papademos warned his EU partners yesterday that a failure to reach a deal “raises the spectre of bankruptcy with all the dire consequences for society that entails”.

However, German officials insisted a deal could only be concluded as part of a “complete package”, with “further efforts by Greece or private sector-involvement” not ruled out.

Asked if a budgetary commissioner was a “special case” for Greece, Dr Merkel said that troika reports warning of a reform backlog in other countries would “create such discussions” there, too. On the wider fiscal compact, Chancellor Merkel said she was not concerned over EU leaders postponing agreement on a key mechanism in the deal regarding deficit spending.

The agreed treaty text empowers the European Commission to establish that a signatory state has not implemented adequate debt brake procedures, but does not, as demanded by Berlin, permit it to file a case at the European Court of Justice.

Instead leaders have agreed to find a new procedure by March to allow one member state take an action against another.

“With this, we are far better insured against things that happened in the past not happening again,” she said, “and we won’t have any problems finding a way, I’m not worried about that.”