Saturday, 8 October 2011

Indebted states should be made “wards” of the Commission or give up the euro

Not from Holland with Love

The Dutch government has proposed that highly indebted states should be put into “guardianship,” with spending decisions seized from their elected governments and placed under the direct control of an unelected European commissioner.

If a state is unwilling to surrender its sovereignty in this way, then it would be forced to exit the euro.

“If a country repeatedly overspends in breach of EU stability pact rules, this commission overseer would be able to intervene directly in the running of the country, in a similar way to how a court intervenes in the running of a bankrupt firm put into receivership. We propose to take a great new step forward by forging effective rules to be strictly enforced by an especially appointed commissioner.
This is how we must safeguard the heath and viability of the euro zone and all its members for now and in the future.”

The commissioner would be given a “ladder of intervention,” under which the level of control of the state would be steadily ratcheted up and applied to this “ward” of the EU executive.

The first rung of the ladder would involve an outside auditor making adjustments to spending to bring down the level of the deficit. If this level of intervention is insufficient, binding measures would be imposed, or the commissioner could order a country to cut spending or to raise taxes.

The last rung of the ladder would see a country placed under “guardianship.” The auditor would then draft a budget for the country before sending it to the national parliament for approval. Such states, described in the paper as “notorious sinners,” would also lose their voting rights in the EU, and the delivery of European structural funds would be dependent on compliance with the orders of the commissioner.

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