In pitching bonds plan, EU invokes birth of US federalism
(BRUSSELS) - The European Commission dug deep into American history Wednesday to sell hugely controversial plans for joint eurozone bonds, pointing to a secret pact in 1790 that helped lay the basis for the US federal system.
The debt crisis has forced the 17 nations that share the euro to take strides towards a federal union, a "United States of Europe" that some nations have resisted for fear of losing their sovereignty.
Leading the charge for deeper integration, the European Commission presented options that could one day end national bonds in favour of a single euro debt instrument, with the hope it could compete with the vaunted US treasuries.
Facing scepticism in eurozone powerhouse Germany, European Commission president Jose Manuel Barroso argued that pooling debt among the 17 nations that share the euro would bring the sort of "tremendous benefits" that the United States enjoys.
"It could lead to greater financial integration, and to the creation of a much larger and more liquid bond market, comparable to that which exists for the United States treasuries," Barroso told a news conference.
US bonds "are seen, even with the debt in US approaching 100 percent of GDP, as some of the safest investments in the world," he added.
Never mind that bickering US politicians cannot agree on how to bring down a national debt of more than $15 trillion.
It was his deputy, EU economic affairs chief Olli Rehn, who sought inspiration in America's post-revolution construction, a time when the first US president, George Washington, ruled over 13 states.
In 1790, Washington's Treasury Secretary Alexander Hamilton had a plan for the central government to assume the debt of these former British colonies.
But he had to convince fiercely independent states, most notably young America's own political powerhouse, Virginia, home of political heavyweights Thomas Jefferson and James Madison.
Rehn drew a distinction between the ways of 21st century Brussels and 18th century America as he touted the commission's "democratic, transparent" way of presenting its plans.
"We are not doing like the United States did in 1790 when it was a secret deal at a dinner between Alexander Hamilton and Thomas Jefferson to create the bonds of the time," Rehn said.
But, he added, "this created the foundation for the federal economic government of the United States."
Rehn noted that as part of the deal, the US administration agreed to move the capital from New York to a location off the Potomac River in Virginia that became Washington DC.
Brussels, the de facto capital of the EU, is probably here to stay, however.
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