Giovannini Calls for European Empire as Solution to EU Crisis

February 11, 2010 (LPAC)— Alberto Giovannini, a key operative in the euro system, let the cat out of the bag and said that the EU must create an efficient empire structure as a solution to the current crisis. Giovannini, a protege of Robert Mundell's, is head of a EU Commission advisory body called the "Giovannini Group," which was originally established in order to oversee the transition from national currencies to the Euro. Giovannini was on the board of LTCM and created the EuroSTMS platform for electronic trading of state bonds.

"History teaches us that empires are more efficient and achieve great prosperity because the imperial model is successful with an extended geography, through a center playing an effective and functional political role."

Giovannini says this in an interview with the Italian business daily Il Sole 24 Ore, where he endorses a draft paper circulated in the EU Commission, according to which 80% of EU member public debt would become EU debt, whereas the rest would remain connected to single national sovereign risks and exposed to default. "I like this idea, because it enables you to achieve the advantages of large emissions with high-ratings, without the risk of contagion from credit risks of single countries."

Giovannini says that in his "Giovannini Group," they have discussed technical aspects of a euro-bond scheme: "We elaborated various mechanisms. Technical solutions can be found: the problem is a political one. We need a political entity, a political union before the bonds."

"The political problem is a problem of money: who creates the debt? Who pays and who guarantees it? How to distribute resources collected with such bonds?" So far, "special interests" prevail in the EU, Giovannini complains. A solution "to avoid the Union Bond from becoming a system to increase local expenses with money from the center" is "to establish a European, non-national tax, connected to the European bond. The European Parliament, which is currently a jumble of particular interests and plays no leadership role, could be strengthened to express a European political union."

MORE: http://www.larouchepac.com