Position Paper on Funding of European Defense Agency Through Debt Restructuring

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The underwhelming size of European Debt Holdings of United States Treasury Bonds fails to belie the comfortable position which a sizable share of interest European Banks have taken in the United States Treasury Securities Market. This fact does not go unnoticed by the author. However with outstanding debt totaling in excess of 1.24 trillion dollars being held by European Union countries it is an amount which in my estimation could be bettered managed by both the United States, and the European Union. The manner in which this debt is payed back be it through the issuance of more bonds, the collection of debt held by the United States, or a restructuring of U.S. debt entirely is something that is scant brought up here in the U.S. press, and I’m afraid even more so by European Countries. If the U.S. and Europe are to leverage there strengthening bonds, as laid out in a recent position paper for NATO, for the near term, and long term future, then the resolution of how this money will be paid back should be something which is on the table. The method of payment which I’m promulgating to you today is a complete restructuring of all European Union Debt into one account which will be paid off in part by both the U.S., and the Europeans.

The first part of restructuring which I recommend is the re-issuance of the debt as European Union Bonds. This will allow for the debt to be better managed by the European States and will add leverage on both the U.S. and European side when future negotiations take place. The most sizable holder of U.S. debt in the European Union is Ireland. However the second largest is Switzerland, and though Switzerland is not a part of the European Union, it is a large banking center in the heart of Western Europe. It also happens to be a neutral country which would make it a good arbiter should take place. So then all debt should be serviced for the European Union through Switzerland as a fixed point intermediary.

The next part of the restructuring which I recommend is the transference of the principal and interest which is remaining in the European Union held debt which is outstanding, and held privately to be changed from a United States originator, to a European Union originator. This will make for a more cohesive whole in the European debt which is outstanding and held by the European Union countries. By doing this we also consolidate EU debt into one whole which the U.S. can then pay directly to the European Union as a whole rather than dealing with individual debt holders in the private sector. This in effect relinquishes the obligations of the United States to the private foreign debt holders,  while at the same time obligating the United States to a new sovereign creditor being the European Union.

Once these two efforts at restructuring are done then the next part is the actual recalibrating of the interest rates between the United States and the European Union as the debt which is now sovereign will be paid off more rapidly than if it were simply private lenders. The agreed upon interest rate should be agreed to by both sides.

The fourth part of the restructuring is the agreed upon principals in which the debt now owed to the EU will be paid back by the United States. Ideally the monies which the United States gives to the EU under this program will be used directly to fund, equip and maintain the  newly created European Defense Agency. These monies however could also plausibly be used for other European Union projects such as the maintenance of ongoing peace keeping operations, or refugee resettlement/EURONAV missions. I also foresee the principal and or interest of the now restructured European Union loan being paid off through United States assistance missions involving United States personnel, the acquisition by the European Defense Agency of American military arms, and defense platforms, or the monies paid for the use of space on European combatant ships as relates to United States Army, Navy, Marine, Air Force personnel for the maintenance of United States power projection.

Though the amount of monies which are outstanding between the United States, and the European Union are nominal, registering in at only  6.21% of total debt outstanding, it will still behoove the United States, and the European Union to pool talent, and resources together an order to help both alleviate U.S. foreign debt, as well as find a quick, stable, and reliable source of funds for the newly created European Defense Agency. If as what a recent NATO position paper called for, which is a deepening of cooperation across seven different areas, along over 140 critical points of contact, then the a ready and reliable bolstering of the European Defense Agency by the United States can only be seen as going hand in hand with the deepening of ties which bond the United States, and the European Continent.