The German Solution
The “German Solution” trial balloon floated Friday was so leaden that one might think that it was designed to prompt the response over the weekend that it did receive from Greece. That it was a memo of an “agent provocateur” to harden positions and reduce the ability of reasonable folks to find remedy by inciting passion. That it was crafted to start Greece towards leaving, on their volition, the EZ.
There is the seeds of a solution in this event, though.
As a crisis of a treaty, a currency board or confederacy – then there is not much positive in this event.
But if the current crisis is perceived correctly as a constitutional crisis then all issues become matters of law precedent and all points become something to use in negotiating a constitutional remedy.
The Greeks should grab hold of that part of the memo which is to their, and the entire EZ, benefit – that an authority could have seniority over Greek governance. Embrace and accept that idea and then broaden it to one of equality and uniformity for all the EZ. The idea of such seniority under a European Commissioner should be accepted by Greece provided the following conditions are met:
1. That the European entity, the commission, be broadened to 17 members.
2. That one member for the commission be popularly elected from each EZ country.
3. That the commission be called the European Financial Office
4. That all EZ countries subscribe to oversight from this EFO, in the same manner
5. That the EFO be mandated via a referendum held at the same time for each 17 member countries
6. The EFO supersedes the EP, the EC and the existing commissioners.
Before the EFO is institutionalized, 60% of all existing EZ sovereign debt is retired at par via conversion, with the ECB acting as fiscal agent for the EFO, and debt equal in value to par amount of converted debt be issued in the name of the EFO which will be full faith and credit of the EZ. That only this debt will be presented to the ECB discount window for monetary operations and be the primary asset held by the ECB to effect all monetary operations.
After conversion, the existing debt for the nation members and all subsequent debt will be solely the credit of the nation’s specifically and will not be allowed to be presented to the ECB or the EACB system for discounting. This debt will not be susceptible to any opinion or ruling from any EU or EZ entity or authority such as the ECB.
The EFO with the ECB acting as the sole fiscal agent, will be able to issue or retire debt at will
All members of the EFO will be elected for 7 years with the election for the office held in each member country with franchisement to vote for all residents of that country irrespective of their birth origin, upon the same day.
At the request of all EU entities, the EFO will consider the funding of any general expense of the EU entities – provided the expense is solely for the benefit of the EZ area. But only the EFO may authorize such expenditures and can cancel or renew such requests at will.
Every member country will, upon the determination of the EFO, make available up to 60% of all tax revenue raised at the national level to the EFO. The EFO will be the sole entity which will determine the use of those funds. The EFO will have no right nor be able to seek any taxation or revenues found at the municipal or provincial levels of organization. But for the costs to administer and adjudicate such services, the EFO will have all revenues generated from customs and tariffs or passport or travel fees within but between EZ areas or to and from the EZ area entire. The EFO will have the budgetary oversight over all organizations which police, administer, and implement law in regards to customs and immigration.
The EFO will provide an annual report to the EP disclosing all finances and current position of debt and revenue. Furthermore, the EFO will present, nominating three EFO members to do so, to the EMP on a quarterly annual basis.
All disputes which an EZ member may table towards or with the EFO will be adjudicated by the European Court of Justice which the decisions will be final. It may very well require a special ECJ which is built upon justices with proven residency in only the EZ member states – a “European Court of Budget and Taxation”.
A customs, tariff, excise and taxation police capability will form which will report and be administered by the EFO.
With the above and using the near unworkable German Proposal of this weekend, the Greeks could reverberate back throughout the EZ the usable principals in the proposal to establish remedy.