LEAD: German plan for budgetary oversight of Greece comes under fire

Jan 30, 2012, 15:53 GMT

Brussels - Germany was criticized Monday over a leaked proposal to have a new eurozone commissioner oversee tax and spending decisions in Greece, as European Union leaders held a summit overshadowed by the country's debt problems.

Athens has faced increasing pressure over its slow implementation of bailout-dictated reforms. Germany wants further non-compliance to be met with oversight by a budget commissioner appointed by eurozone finance ministers - complete with veto powers.

'Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time,' reads the document, first reported by the Financial Times.

It also proposes forcing Greece into using state revenues 'first and foremost' to pay off its debt.

Germany wants both measures to be enshrined in Greek law and serve as conditions for Athens to receive the second financial rescue package it has been promised by the EU, International Monetary Fund and European Central Bank.

'I think it is appropriate to have strict controls, but I don't believe it is a good idea to appoint a supervisor just for one country,' Austrian Chancellor Werner Faymann told reporters.

'I am against the idea of imposing a commissioner only to Greece,' added Luxembourg Prime Minister Jean-Claude Juncker, who also chairs the meetings of eurozone finance ministers.

German Chancellor Angela Merkel said: 'It comes down to this: How can Europe be supportive of having ... conditions adhered to in Greece? I don't want to have a discussion that is controversial, but a discussion that is successful - successful for the people in Greece, nothing else.'

Several politicians called for keeping offensive statements out of European politics. 'We have to give respect to every government we have in the euro area and in Europe,' said Finnish Prime Minister Jyrki Katainen.

But, he added, 'It's very natural that the countries who help Greece need more information about what is happening in Greece,' and called for a 'suitable compromise.'

An EU diplomat said Athens' fiscal problems would be discussed at the summit, the focus of which is jobs and growth. Merkel downplayed that possibility, saying there would be no 'extensive' talks about the matter.

Former Greek prime minister George Papandreou told reporters at a pre-summit meeting of Socialist politicians that his country is 'at a turning point.'

'We feel we either move in a democratic way - where each country is responsible for its own policies - or we will be undermining democracy throughout Europe,' he added.

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