14 July, 2011

Euro3: How to pay the huge bill for Euro Frauds and 'political' fixes

Many of the EU States are now in deep debt and looking for a bail-out. Too often this is due simply to government overspending for ideological or "political" reasons. Too often these debt problems are accompanied by fraudulent national statistics or fiddling the books. Some of the secrets have not yet seen the light of day and public discussion. Yet the European Community system is vibrant and resilient. It can correct abuse.

Europe needs honest government and a solid economy. But it will take time to bring it in. In the meanwhile it will cost hundreds of billions of euros to shore up failing systems. Europe needs a breathing space to overcome this mismanagement and get a democratic and fully open system into place.

The road is clear. Any viable monetary system for Europe needs to have full participation of organized civil society in the institution designed for it. It needs the trust and confidence of ordinary people. That can only come from their active involvement -- especially when and where the politicians fail.

Non-political civil society has been cut out by 'egotistical and selfish' politicians. Before Europe can get on its monetary feet, politicians will have to learn humility and provide for the election of this major Community institution for organized civil society.

In the meanwhile how can Europe pay the bills? Two basic imperatives are required. One is to stop the secret deals  of politicians deciding matters behind closed doors, thus thumbing their noses at civil society. The other imperative is to mobilize civil society to new goals that will make Europe a continent fit, prosperous and comfortable for our children and grandchildren.

Here are some examples. You can make a list of similar ones for yourself.

The European Union budget amounts to some 130 or 140 Billion euros. It is still discussed in secret by a cabal of politicians -- who think they know best about (1) How to raise the money (2) How to spend it.

Are they efficient in their secret deals? A recent report reveals that perhaps an amount equal to between half to three-quarters of this annual amount is lost to the European economy -- by politician-induced FRAUD. According to a recent report by MEP Bart Staes the fraud due to Value Added Tax (VAT) 'carousel fraud' amounts to 80 to 100 Billion euros EACH YEAR. Mr Staes says that the fraud is entirely avoidable. It is merely the lack of political will that has failed to introduce the counter-fraud measures. This is not all. Fiscal fraud altogether may amount to twice the entire EU budget around 250 Billion euros.

Ask yourself: 'If the people were in charge, rather than politicians meeting in a secret Council, would the taxpayer allow fraudsters to get away with stealing what amounts to the most of or even the double the entire EU budget? Would they say "Yes  OK, you can take 100 Billion euros from my pocket and give it to fraudsters who are laughing in my face on the beach.'?'

No, they would certainly be active to stop the matter as soon as possible. There is one thing worse than paying tax and that is that someone else is not only refusing to do so but is in effect taking your tax money and living high on the hog at your expense. That is worse than government waste. It is encouraging criminal activity -- except that the people involved in the carousel operations are not yet in gaol. They aren't convicted criminal criminals -- yet.

Politicians too often are not willing to take hard decisions for ideological reasons or for lack of guts. If they made a mistake in the system they should correct it. If they have introduced a system that works only partly then they should repair it. An active Chamber for organized civil society, the Consultative Committees, would make sure this was done rapidly. All members would be tax-payers and represent all Europe's taxpayers.

Carousel VAT works by the same fraud well known to politicians -- spin. This time it is geographical spin. It uses the benefits of the Single Market to extract VAT refunds from governments while the fraudster spins his base of operations from one country to the next. The fraudsters 'sell' easily items like microchips, hi-fi, perfumes, mobile phones and carousel from one State to another while the tax officials run around wildly trying to catch them by their fleeing coat-tails.

Mr Staes says:
'The removal of internal administrative borders and the failure to  introduce an effective system of fiscal control within the EU has  created massive opportunities for fraud. The absence of any EU-level  co-ordination of VAT rates and the deficient systematic co-operation and  information exchange are two major issues that have facilitated this  fraud. They make it more difficult for authorities to effectively tackle  cases.'

Mr Staes says politicians' irresponsibility extends to other aspects of taxation.
'Another major shortcoming is the absurd absence of any  formal or official definition of this particular form of fraud within  the EU. A clear and uniform European definition of VAT carousels is  absolutely necessary and a crucial step towards addressing the problem  and allowing for better enforcement. A comparative European {study}, including  the authorities of 25 member states, shows that there are almost no  coinciding formulations of the coordinated directive on VAT.

Eurofisc - a  new initiative, providing for voluntary fiscal co-operation between  member states - has so far failed to emerge as a meaningful platform for  co-operation. Despite an annual reporting requirement, the  deliberations of Eurofisc remain secret. Transparency on Eurofisc is a  necessary step to improving its effectiveness.'

A supranational Consultative Committee is a Treaty-based organ. It was designed to be a powerful network of democratic associations with regular statutes recognized at the European level, all paying tax honestly, represented in the chamber for organized civil society. It would make sure such nonsense never happened.

That is why the politicians in the Council arrested its growth and wanted to kill it off or freeze the three Consultative Committees in the treaties. The Council acted illegally ever since the first Consultative Committee in the 1952 Treaty of Paris and was so condemned by Schuman and Paul Reuter. The Council then decided that the members of the European Economic and Social Committee should be not be properly elected. They would chose who would be members of this 'independent' institution. The membership is decided by the political elites in their party cartel, in the secrecy of the Council of Ministers. Civil society needs to have a chamber with democratic legitimacy.

The long reform of the Parliamentary Assembly into the European Parliament -- still far from complete -- shows the path for the Economic and Social Committee. It took nearly thirty years before MEPs were able to be directly elected. All that is lacking is civil courage -- to stand up against what is wrong and what is fraudulent in the political cabal that believes in secret 'economic governance'. Time will tell.

Now reflect on an example of what could be done positively with a revived supranational democratic system comprising the five active institutions in the energy sector. This is far more democratic and powerfully productive than the present political internationalism that passes for governance in the EU.

First consider how much money is lost on foreign energy supply. Last year the rise in gas and oil prices -- not the actual cost but just the rise in price -- cost the EU as much as HALF the EU budget. The total cost amounts to more than twice the cost of the EU budget. The Founding Fathers warned that reliance on external energy sources was bad for Europe. It was bad for the economy and also bad because with Middle East oil in a cartel like OPEC Europe would lose its ability to have an independent foreign policy. They warned Europe to get off oil addiction. De Gaulle and other self-willed politicians did not listen. Europe has already lost trillions of euros.

This warning has proved to be accurate. Oil and gas prices are set to rise and rise. The time to start doing something sensible and intelligent is NOW. Oil is not only vital for the engines of cars and freight vehicles, it is also necessary for building the roads themselves. The price of tarmac is now sky rocketing too.

Why use tarmac or bitumen on the road? Habit, bad habit. Europe and North America have been doing it for more than a century. But in the last four years the price of a ton of bitumen rose from $175 to over $1000. Tarmac (tarring McAdam roads) may have seen a good idea in 1901, but is it a good idea today? Hardly. It was then a means to improve roads for horse drawn carriages to smooth and waterproof them for cars. Until then the speed of travel on roads differed little from the time of the Romans -- or for that matter the ancient Persians.  Bitumen was sold off as a waste product from the people who gave you the oil cartel. They also set up an infrastructure of petrol pumps and roads that made it difficult for Europeans, who have little oil, to kick the addiction.

It is time to move on. What is the solution? One innovative scheme getting US funding is solar roadways. The idea is to use a whole range of new industrial developments and intelligent innovations to create solar panels made of reinforced glass. Glass? Well, if glass can withstand bullets and bombs it is no problem to withstand the weight of a large lorry or multi-wheeler truck. Made from sand, glass has been developing technological refinements since 3500 BCE in Babylonia.

Modern glass can also have safety features unheard of and even undreamed of last century. Glass embedded with high tech microchips can not only supply electricity to the electric vehicles as they travel and powerfeed into to nearby homes, it can turn the highways into an intelligent system with warning lights, ice and snow melting system and human safety features. A parking area could power an entire office building.

If the USA had these panels in place today it could generate THREE times its entire electricity supply needs with enough for most of the rest of the world.

Europe needs to mobilize this present generation to create new ideas that will make Europe a place fit for the next generation. A system of solar roadways could pay for itself in 20 years. The pay off would come that much sooner if Europe really set itself the goal of energy independence by 2020 through an Energy Community based on democratic supranational principles.

Let us assume that this is a proven, technically feasible idea that would save the EU trillions of euros, create new industries, provide a European IT nervous system, an intelligent backbone across the Continent and help share intelligent grids systems and cut costs of power, how shold the EU proceed?

Do you think that the politicians would understand the technicalities of changing a centuries old infrastructure into one fit for the future? Would they have the courage to introduce it? Not much hope. Many of the career politicians with backgrounds in politics and the law would be afraid of derisive laughter from the media and maybe from their electors about a fragile glass road.

But if you asked a chamber composed of highly technical associations of industries, workers and consumers they could tell you how to change from a petroleum based economy to one based on creating an intelligent electrical infrastructure. They would all gain, in products, services and work so they would be highly motivated to succeed. They could call on the greatest expertise in computer networks, highways,  in glass, electricity, safety, vehicle production and a whole range of other leading edge areas that need to be coordinated to make it a success. Europe's confidence in its future must similarly depend on the solidarity of expert experience and trust of all our citizens.

A Consultative Committee would force competing lobbies to work together. Why? because they would have to vote in a tripartite consultation of industries, consumers and workers, on all the important legal measures. It acts like a comprehensive, continent-wide think tank, a network of expertise. This would ensure that instead of wasting an ever-increasing amount of resources on petroleum, the Energy Community projects would use the money on creating employment and expertise for Europe that it could then help the rest of the world with in the inevitable transition to the sustainable, non-polluting, non-oil economy.

Europe has the brains, the industries the workers. What it lacks is the will to get its supranational act together. Schuman designed it as the most moral solution. A humble Statesman brought in a solution based on humility and pragmatic wisdom. After two thousands years of continuous war, European nations implemented the first stage of a system that made war 'not only unthinkable but materially impossible'.

Today politicians want to forget that lesson. When will they come to their senses? That time might come, unfortunately, when the politicians have been shown the futility of all the other cul-de-sac policies that they are presently trying.

A supranational Europe with a fully functioning system of Consultative Committees would also have a major purifying effect on monetary fraud. Their specialized committees would make sure that the politicians did not get their fingers into the national and European  piggy banks. They would be subject to the proper supervision and control.

Thus Europe could enter on the next exciting stage of democratic solidarity that Schuman predicted.

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