Greek finance minister Yanis Varoufakis warns Germany to respect sovereignty as financial reforms face parliament

Greek finance minister Yanis Varoufakis has warned Germany to respect his nation's sovereignty as proposed bailout reforms go in front of the parliament in Berlin.

In a test vote on the eve of the official vote in the Bundestag, German MPs indicated they would overwhelmingly pass the reform program that Athens hammered out with its creditors last week to extend the Greek bailout.

But there are new signs of animosity between the two countries, with reports that conservative MPs in Germany, including finance minister Wolfgang Schaeuble, are stunned and annoyed by recent comments from Mr Varoufakis.

Mr Varoufakis, a Greek-Australian who used to teach economics at the University of Sydney, says trust between Greece and Germany is low.

"One of the great problems that has led me to being the minister of finance, actually the main problem, is that this country went insolvent in 2010," he said.

"And how did Europe, in its infinite wisdom, together with Greek governments - successive Greek governments - deal with this?

"They gave Greece the largest loan in human history on [the] condition that we shrink our income.

"Now a 10-year-old knows that this can't end well. If my colleagues in Frankfurt and in Berlin and Rome expect me to stop addressing this issue and pretending that this is just a liquidity problem, I'm afraid I'm going to have to disappoint them."

"The only way one proud nation can respect another proud nation is if it is sovereign. So re-establishing our sovereignty is a prerequisite for us to be able to overcome any animosity with other nations. Our sovereignty is a prerequisite for friendship."

Mr Varoufakis's penchant for plain-speaking has shaken some eurocrats who are distrustful of his intentions or fearful he will spook the markets, and it has apparently irritated many in Berlin.

Mr Schaeuble reportedly said Mr Varoufakis "strained the solidarity of European partners" by talking to the media about debt write-downs and attacking austerity measures.

Trust between Greece and Germany 'very low'

Before he knew about Mr Schaeuble's reported comments, Mr Varoufakis spoke about debt reduction in Greece.

"There are many ways of skinning a cat and skinning a debt, if you'll excuse the pun," he said.

"A straightforward way is to do what happened in 1953 with German debt, when the allies got together and sort of lopped off 50 per cent of it and actually more.

"That's the most efficient way of doing it but that creates political pressure not to do it from parliaments that do not want to accept this kind of face value loss.

"But there are other ways of doing it. There are ways of swapping debt, for instance linking our repayments to our GDP growth so as to make our creditors partners in our growth."

Mr Varoufakis said the state of trust between Germany and Greece was "unfortunately" very low.

"This is something we must work on and this is why we should refrain from statements about the Greeks or about the Germans," he said.

"As I keep saying, there's no such thing as the Germans or the Greeks. I am a great fan of Monty Python, I think we're all individuals in the end.

"And my message to Dr Schaeuble was that this barrier, this turning one proud nation against another has been tried and tested with abysmal effects in the mid-war period and this is something we should avoid."

'The Australian influence is all over me'

Mr Varoufakis became finance minister after the left-wing Syriza party came to power, and at a time when Greece is clamouring to reassert its sovereignty.

Syriza took power a month ago on the back of widespread public anger against austerity measures imposed by Greece's creditors to rein in the country's $460 billion debt.

Now Mr Varoufakis and his government face a mammoth task as they attempt to appease their creditors, their own disparate left-wing coalition and those who voted for them.

Mr Varoufakis lived and worked in Australia for 12 years before he moved back to his native Greece in 2000.

He said his time in Australia had influenced him "in the way in which I dismiss nonsense without caring too much about decorum".

"Maybe I was influenced by my great admiration of Paul Keating, but at the same time, my criticisms of his - this was the 'recession you had to have' back in 1991 - because I don't believe that anybody has to have a recession if one calibrates one's macroeconomic policy correctly.

"But the Australian influence is all over me."