Germany wants Greece to hand over more budget control

Masa Serdarevic

It looks like Germany has decided that Greece hasn’t given up quite enough of its sovereignty yet. We know that Wolfgang Schaeuble wants to set up an escrow account to make sure loan installments stay out of Athens’ reach (in order to guarantee that debt repayments are made to creditors). But it seems that Berlin also wants to put any money from a Greek primary surplus into that account as well.
That’s according to Kathimerini, which says it has seen the latest proposals from the German Finance Ministry, leaked to them by Pasok officials. From the docs (emphasis ours):

“A dedicated receipt (such as part of VAT income) in the volume of the requested GRC primary budget surplus could be transferred monthly to the trust account (as earmarking of GRC contribution to debt service),” the proposal says.
“The volume of the primary surplus is to be defined in the MoU. The trust account and the earmarking of revenue secure the delivery of the primary surplus and therefore the GRC contribution to the debt service.”

And if there’s no surplus? Germany wants Athens to be forced to decrease spending or increase
revenues automatically:

“GRC establishes a simple rule for public expenditure. With the agreement of the Troika, cash deficits (deviations from budget plan) automatically lead to spending cuts equally divided through all spending programs (according to their budget share),” says the document.

And if Greece can’t (or won’t) make the necessary adjustments? Bring in someone who’s going to make help them:

“More intense, compulsory employment of external technical assistance for, among others, administrative capacity building, including for tax collection, corruption reduction, statistics, growth-enhancing investment strategies, use of structural funds, privatization process would further support the implementation of the program.”

And what if this is all a bit unpopular with the locals? Throw in some ‘growth and job-enhancing measures,’ perhaps.

“In order to improve the acceptability of the program by the Greeks, those measures of control-enforcement could be complemented by growth and jobs-enhancing measures. The determining factor for investment and growth will be the rebuilding of confidence. In the short run, growth and jobs perspectives could be strengthened by the release of some structural funds dedicated to the 181 projects of high priority,” the German Finance Ministry proposes.
“The project of a public bank for investment currently under consideration could also be accelerated to support SMEs and infrastructure projects.”

is that really enough to ‘rebuild confidence’? We’re not so sure…
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