Greece could have had a referendum, says Danish minister

Her insistence on national democracy being the cornerstone of all decisions made in the EU comes after a series of governments have succumbed to internal and external pressure linked to the sovereign debt crisis.

The Italian and Greek prime ministers stepped down to make room for technocrats. Elections in Spain, Ireland and Portugal swept in the opposition and the Slovak government was voted down over its support for the eurozone bail-out fund.

Outside the eurozone, the Romanian government stepped down after weeks of austerity-linked protests, while the Hungarian Prime Minister is under increased pressure from the EU commission to curb the deficit and undo some controversial constitutional reforms.

But Vestager stresses that it is ultimately up to national politicians to take responsibility and follow or disregard what the EU commission and other member states may say.

"Denmark has also received advice it chose not to follow, because we feel we are part of the European process but it is our own responsibility to pass decisions in parliament. We have raised the retirement age, phased out early retirement benefits and halved the period of time people receive unemployment benefits - which will fundamentally change the way our labour market works. But we have not done everything the commission says, we have done the things we think are wise to do," she explained.

With the increased budgetary surveillance, reporting on deficits and macro-economic warnings, the EU institutions have to make sure that countries are "treated with respect and listened to," she said.

Meanwhile, on the state of Greek democracy, where the idea to call a referendum on the second bail-out last year caused panic among EU leaders and led to Prime Minister George Papandeou's resignation and appointment of a technocrat premier, Vestager said: "I think they could have done that if they really wanted to."

"Each politician has to make up his or her mind, because these are very challenging times. People can recognise from their own lives that when you bring yourself in a situation where you have to take a huge loan in order to get things working - the one who's going to give you the loan will have conditions. It is not different on a European level."

As for the risk that the second Greek bail-out will not work any better than the first, Vestager said it was "important that it's not only an economic agreement for Greece, but an economic and political one."

Scepticism expressed in Germany, Netherlands, Austria and Finland as to whether the Greek politicians will stick to the reforms after general elections scheduled for April is unfounded, in her view.

"I reject the notion that just because you have elections things won't work. As a politician you always have a choice. Doing nothing is also a choice. And if the Greek voters reject all that has been said and done and all the politicians taking these responsibilities, then new politicians will have to present a solution that will actually work," she said.

Greece

Meanwhile, Greek legislators on Thursday were set to pass legislation enabling the start of a bond swap with private creditors, one day after Fitch ratings agency downgraded the country to the second-worst rank explaining that even a voluntary debt restructuring is still a default.

The Greek government is aiming for minimum participation of at least two-thirds of bond holders in a planned debt exchange, the Greek finance ministry said, with a formal offer on the exchange expected to come by the end of this week.

The debt write-down plan aims to erase some €107 billion from Greece's sovereign debt burden. Its success is a pre-condition for the €130bn loan to be issued by eurozone governments and the International Monetary Fund next month.