A hardline proposal has been signed by the German Finance Minister, Wolfgang Schäuble and the Minister of the Economy, Sigmar Gabriel and has been delivered to the European Commission.
Germany wants to tighten its grip on the reform process in the euro area, arguing that the recommendations of the European Commission are binding and that countries that do not comply within a specified period will be penalised with cuts in funding.
The German ministers submitted the proposal in late October to the European Commission, the Eurogroup president and the presidency of the European Union (EU), currently occupied by Italy.
The goal of the two German ministers is to make the process of monitoring and imposing sanctions binding, effective and transparent so that the countries such as Portugal and Greece actually apply the necessary fiscal consolidation and reforms which will help sort out their economies and hence the health of the whole European region.
If the undertakings given by the states are not met, the two German ministers suggest financial penalties are imposed and cuts made in the endless stream of free money that these financially incompetent countries have become dependent on.
According to the German hard-liners, certain national governments have rather "lacked effort" in carrying out the necessary recommendations from Brussels and the debate on the need for reform actually has achieved only "limited success."
The latest partnership agreement between the European Commission and Portugal will see €26 billion in funds arriving in Lisbon between 2015 and 2020, described the former president of the European Commission, José Manuel Barroso, as “a barrel-load of money.”
The risk that Portugal will waste this money, as it has so skilfully wasted past billions to the benefit of only a few, is great.
The German proposal to fine 'reform inefficiency' could cut off the flow of most of the funds earmarked for Portugal.
