MNI EXCLUSIVE INTERVIEW: ETUC Sees EU Finance Ministry Need

--ETUC SecGen Visentini Tells MNI That Both Juncker, Moscovici Agree

--EU Treasury Only Way To Unlock Public Investment - ETUC

--Accepts Germany Needs To Be On Board

By Tara Oakes

     BRUSSELS (MNI) - Key European players are on board for the creation of a

euro area treasury to revive dwindling public investment, Luca Visentini,

Secretary General of ETUC, told Market News on the eve of the European Union's

State of the Union address.

     Commission President Jean-Claude Juncker will deliver his latest SOTEU

speech at 0700GMT, outlining the direction the bloc will take over coming

months, with many looking for a clearer post-Brexit economic roadmap.

     The EU-wide investment plan that bears Juncker's name is often namechecked

in relation to projects for which it has succeeded in drumming up investment.

But Visentini said during an MNI interview that the plan has done little to

mobilise public investment.

     "Public investment dropped dramatically after the (financial) crisis,

especially in the last five years. But it's not recovering at all despite the

investment plan and despite all of the mechanisms that have been put in place,"

he told MNI.

     "The European Stability Mechanism, the different funds to save the

countries in trouble: all these forces didn't mobile public investment at all.

This is the major reason why although there is economy recovery, there is no job

creation," Vistentini added.

     Unemployment has dropped in the bloc since the crisis, but the recovery is

uneven and masks worryingly high figures in Greece and Spain, Visentini said,

noting the precarity of many of the jobs created.

     The solution? A European Treasury, according to the ETUC chief, whose

organisation represents 45 million members from different national unions.

     "The only way to do it is to have a joint tool managed by the European

Union - particularly the European Commission - gathering money in the markets at

very low interest rates and reinvesting this money in a country in the European

Union, particularly the ones that need more investment because they don't have

fiscal space to find this money to be invested," Visentini told MNI.

     BIG BEASTS

     Visentini said he was "hopeful" the issue would be raised by Juncker in the

SOTEU.

     "President Juncker agrees on this. Commissioner Moscovici, who would be in

charge of this kind of tool if it's created, also agrees with this," Visentini

claimed.

     The idea is not new: the 2015 Five Presidents' report on strengthening

Economic and Monetary Union suggested that "completing EMU" would require "more

far-reaching actions ... to make the convergence process more binding, through

for example a set of commonly agreed benchmarks for convergence which would be

of legal nature, as well as a euro area treasury".

     Closer EMU would also be enhanced by handing over the running of the

currently informal Eurogroup to the Commissioner for Economic and Financial

Affairs: currently France's Pierre Moscovici.

     "We would be very happy if Moscovici would take over the position from

Dijsselbloem," Visentini confirmed. Jeroen Dijsselbloem currently holds the

Eurogroup chair as a result of his position as finance minister of the

Netherlands. For Visentini, moving it away from Eurozone finance ministers and

putting the Commission in charge of the position would be an "extraordinary,

revolutionary change".

     But to get some traction, Germany will have to be convinced of the merits

of the new ideas: a hard sell, likely only to be addressed after the upcoming

elections.

     "This kind of Treasury mechanism we are proposing doesn't imply any fiscal

transfer," Visentini insisted.

     "It's simply about guaranteeing bonds to be issued in the market by the

treasury to gather money to pay to them to invest this money in every country.

And this doesn't imply, let's say, German voters or taxpayers give money to

Greece or others. It's simply only a guarantee to be able for this public

mechanism managed by the EU to mobilise public investment," he told MNI.

     CHARITY BEGINS AT HOME

     Germany is certainly the largest economy in Europe. But beyond calling for

"solidarity" with other member states whose economies are lagging behind,

Visentini echoed the EC's concern that Europe's powerhouse is not spending

enough back home on investment or increasing wages.

     "Solidarity doesn't mean only fiscal transfers to countries in trouble. The

main issue is that they start investing back in their own country," Visentini

told MNI.

     "The German government is not doing that. This is a scandal in Europe," he

added.

     However, it's not distant German elites who need convincing, but the voters

themselves.

     Centre-left chancellorship candidate Martin Schulz has called for greater

public investment in infrastructure, internet, childcare, housing and more, with

one campaign leaflet recognising that despite the flourishing economy: "Germany

has one of the worse public investment quotas of industrialised nations".

     His reward for speaking out on the country's refusal to invest in itself

has been nothing but flagging poll numbers: the latest INSA survey, published

Monday, put his SPD party at 23.5%, compared to Angela Merkel's CDU/CSU at

36.5%.

     But Merkel too, even if she sleepwalks back to power, will have to take

into account Juncker's Wednesday vision for the bloc and any pushes for closer

EMU -- then test the waters back home.

--MNI Brussels Bureau; +44 203-865-3851; email: tara.oakes@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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