Greece vexed by German demand for 'budget commissioner'

“Whoever puts before a people the dilemma of choosing between financial assistance and national dignity disregards basic historical lessons," he warned, a veiled reference to the Nazi occupation of Greece during World War II.

A German draft proposal, published on Friday by the Financial Times, envisaged the appointment of a "budget commissioner" by the eurozone finance ministers. This person's job would be "ensuring budgetary control" and compliance with the EU-IMF conditions attached to the second bail-out, which still has to be approved.

Education Minister Anna Diamantopoulou said the plan was “the product of a sick imagination” and her cabinet colleague in charge of culture, Pavlos Yeroulanos, told the BBC it would be "impossible" for Greece to cede control of its tax and spending powers.

But high-ranking German politicians have publicly endorsed the plan.

“We need more leadership and monitoring in implementing the course of reform. If the Greeks fail to do this themselves, the leadership and monitoring must come in a stronger way from outside, for example through the EU,” German economy minister and vice-chancellor Philipp Roesler said in an interview with Bild newspaper published on Monday.

The head of the Christian-Democratic Union in the German parliament, Volker Kauder, echoed similar demands in an interview with Spiegel Online last Thursday.

"We must increase the pressure on Greece. We have to see what comes out of their negotiations with private lenders. One thing must be clear: There will be no more money unless the country is ruled strictly, perhaps even by a state commissioner appointed by the EU or euro-countries. It would be hard, of course, but Greeks themselves may become fans of this in the end," he said.

Kauder argued that if Greek citizens would be asked to choose in a referendum between a "temporary state commissioner" or an "exit from the eurozone," they would vote in favour of the commissioner. "Their confidence in the Greek political class seems to be exhausted," he said.

Finance ministers and the EU commissioner in charge of economics, Olli Rehn, last week gave a scathing assessment of Greece's performance, saying the country is "off track" and urged for a speedy deal with private lenders on a 50 percent cut in their revenues on Greek loans - a precondition for a second bail-out of €130bn Athens hopes to receive to avoid a 'disorderly' default.

Charles Dallara and Jean Lemierre, representing the creditors, said on Saturday talks were "close to the finalisation" and hoped the deal could be signed off this week.

Political support for the reforms is another sensitive question, as the country faces elections in April and the New Democracy leader, Antonis Samaras, has only reluctantly signed a written commitment to the EU-IMF reforms in case his party comes to power. On Sunday, Greek Prime Minister Lucas Papademos gave reassurances that all the political leaders back him in the talks with both creditors and with the EU and IMF for a subsequent bail-out.

“If this process isn’t successfully concluded then we face the spectre of bankruptcy with all the dire consequences for society that entails,” Papademos warned in a statement before heading to the EU leaders' meeting in Brussels on Monday.