Jorgo Chatzimarkakis, an MEP with the liberal Free Democrats (FDP), the junior party in Angela Merkel's governing coalition, says he is so "fed up with German hypocrisy" in its dealings with Europe he can no longer speak for the country.

In an interview with the Guardian, Chatzimarkakis, who was born in Germany to Greek migrant workers and has dual nationality, accused Berlin of bullying the EU's poorer member states and indulging in the very practices it sought to stamp out.

"Germany is setting the European house on fire. I don't want to be with those playing with fire. I would rather be with those in the fire brigade," said Chatzimarkakis, who recently announced that he would be resigning from German politics after representing Germany in the European parliament for the past nine years.

"Germany is focused on national interests much more than EU interests," said the 47-year-old, who did not rule out standing for re-election with a Greek party when euro elections are next held in May 2014. "It is regarded as the hegemon but is not behaving as the hegemon and that is shown by the stereotypes that are used in the Greek case and, even more, the Cypriot case.

"The Germans in their hearts believe it is OK to bribe if it leads to more profit. They have a totally different attitude to corruption as the donor [party]. Many regard themselves as not guilty if they give," he said, listing German companies that he said handed out kickbacks to secure multimillion pound contracts. "The guilty ones are those who take … this is the sort of hypocrisy that I am personally fed up with."

The politician said he had been left shocked by the country's handling of the continent's worsening economic crisis.

"Members of my own party, liberals, came up with the idea of selling Greek islands and the Parthenon because it was an easy way to win votes," he said. "Merkel herself gave a speech to party members saying the eurozone wouldn't survive if countries in the south continued to take long holidays. She used this stereotype and it was not backed by real data, because the reality is that Greeks, for example, work a lot longer than Germans do."

Berlin's treatment of Cyprus had been the last straw, he said. The island was the best proof yet that double standards in the bloc were now at play.

"Look at the money-laundering that is taking place in Germany," he said. "It is well proved that up to €60bn is laundered in Germany every year. How can a country like Germany then accuse a small country like Cyprus of being nothing else than a criminal money-washing system and at the same time execute a whole economy within a fortnight just to send a message to German voters [in September's general election]?" he asked. "It is unbelievable!"

Such behaviour, Chatzimarkakis argued, had aggravated the growing north-south divide in Europe and contributed to the "bad climate" in the EU. It had also created a hostile atmosphere towards German politicians in the European parliament.

With its dogged emphasis on austerity as the only way out of the crisis, he claimed Berlin had become increasingly isolated and out of touch with its partners even if it remained the biggest provider of bailout funds to indebted nations in the south.

"The atmosphere has become tougher in the EP and I'm afraid we won't be able to wait until the German elections to fix it," averred the MEP, saying visiting German MPS on the country's budget committee had expressed surprise that hostility should exist at all.

"A group of us met them last week and they asked us 'is it really true that everyone is against us?' The question, alone, shows you the level of unawareness. They think all this anger is a media phenomenon and nothing to do with reality."

It was urgent, he insisted, that the German government not only "put things right" but stop "a very dangerous policy" for Europe and European integration.

"It should start, possibly, by apologising to Cyprus, at least symbolically," Chatzimarkakis said. "We have a shadow state that is governing Europe," he added referring to the continent's increasingly dominant eurotocracy. "I am specifically thinking of the euro group, the troika, the European commission, bodies that the German government hides behind and all too often controls."