Power play

Experts agree: Greece is teetering on the precipice of bankruptcy. If eurozone member states and the International Monetary Fund (IMF) don't send more cash to Athens soon, Greece will become insolvent.

Auditors from the "troika" - comprising the European Union, the IMF and the European Central Bank (ECB) - are worried the Greek economy is even worse off than previously feared. They're also unhappy that Athens has made little progress introducing the structural reforms it promised.

Germany bears the brunt of the risks in the troika's bailout plan. So it's not surprising that federal officials in Berlin started to ask: Wouldn't it make sense to send a eurozone nanny - or "budget commissioner" - to Athens to oversee the government's austerity plans? Or subject Greece to some broader form of fiscal surveillance? - As members of Chancellor Angela Merkel's Christian Democratic Union (CDU) demanded at their last party conference.

Unrealistic option

Although such populist measures may placate angry German voters who don't understand why their taxes are being forwarded to Athens, they will achieve little else - for three reasons.

First, there is no legal basis for the appointment of an external commissioner to oversee Greek government spending. Greece would need to agree to the plan and probably change its constitution. That's unlikely to happen.

Second, Greece is a democracy. Its parliamentary system grants citizens the right to self-determination. Removing fiscal independence from the equation would be seen by many Greeks as a violation of the nation's sovereignty – and rightly so. Popular newspaper reports that compare the "budgetary commissioner" plan to Nazi Germany's occupation of Greece in the Second World War may be exaggerated – not to mention distasteful - but the point is clear.

Third, the appointment of a budgetary supervisor with veto rights would be tantamount to an official eurozone confession that Greece is indeed bankrupt. The budget commissioner would be similar to a liquidator who manages a corporate bankruptcy by selling off assets and firing employees. The trouble is: Greece is a nation state. It cannot be dissolved like a company, and its citizens cannot be sent packing. By taking budgetary control of Greece, the eurozone or EU would implicitly assume much wider responsibilities that it is not willing or able to bear in the long term.

Rising pressure

Given that Berlin's proposal is unrealistic, the details can only have been leaked to the media with one goal in mind: to pressure Greek parliamentarians to cut spending further and introduce drastic economic reforms.

All European leaders recognize that Greece virtually surrendered its fiscal sovereignty when it accepted its first international bailout two years ago. The EU, IMF und ECB troika already inspects Athens' books every three months and makes draconian recommendations for austerity. The aim is to convince financial markets that things are improving, because Greece will only regain its financial independence when the interest rates charged on its long-term bonds fall to a manageable level.

The European Central Bank flexed its political muscles in November, forcing socialist George Papandreou to resign as prime minister and make way for party-neutral Lucas Papademos - a former ECB executive.

Restricting Greece's limited sovereignty even further by appointing a budgetary commissioner would be a mistake. Greece needs to find its own way out of the crisis, and its citizens must make sacrifices. If they are unwilling to do so, eurozone members should stop throwing cash at Athens and encourage Greece to leave the monetary union and start over with a new national currency.

Author: Bernd Riegert / sje
Editor: Gabriel Borrud