José Manuel Barroso, president of the European Commission, has tabled a blueprint for deeper economic and monetary union in the eurozone, saying a more federal Europe is the only way to address the root causes of the sovereign debt crisis.
Presenting the blueprint on Wednesday (28 November), Barroso said the report would feed into discussions about economic and monetary integration scheduled at the next EU summit in December.
"It is important that markets recognise that we are not just only taking short-term emergency measures for countries that are under specific constraints," the Commission president said.
German Chancellor Angela Merkel has insisted on centralised EU oversight over national budgets as a necessary step to draw a line under the eurozone crisis.
She hopes the December summit can agree on a concrete date for the start of a convention for a new European treaty to achieve that.
Other countries like France have called for greater solidarity among eurozone members if they are to agree to such steps, like mutualising debt by issuing joint eurobonds.
The Barroso blueprint seeks to meet both these demands.
"Of course we know that there will be some calling for more discipline. Some will be calling for more solidarity. The main message of the blueprint is that we need both!" Barroso said.
The Commission's blueprint, he continued, is also realistic because it contains short-term incremental measures that can be adopted rapidly, like setting up a central authority to supervise the 6,000 banks operating in Europe.
"It is true that our blueprint is ambitious," Barroso said. "But if the Commission does not set out this ambitious vision, who will?"
Two-speed Europe: Eurozone budget and Treasury
In the medium term (18 months to 5 years), the Commission foresees further integration on tax and employment policy among eurozone countries, indicating that this would require changing the EU treaties.
A special eurozone budget relying on own revenue sources – like an EU tax – would provide the financial ammunition to help achieve economic reforms in countries under stress. A specific "Treasury within the Commission" would deal with monitoring and managing that budget.
The blueprint also foresees a partial pooling of sovereign debt, with so-called eurobills – short-term government debt with a maturity of up to one or two years.
Critics in the UK and elsewhere fear such plans would accelerate the trend towards a two-speed Europe, with the eurozone as an inner core, and potentially jeopardise broader EU policies like the single market for products and services.
But the EU executive believes this should not be the case.
"The euro area must be able to integrate quicker and deeper than the EU at large, whilst preserving the integrity of the policies conducted at 27, notably the single market," it said in a statement.
Losing the momentum?
Barroso acknowledged that delivering on the longer-term reform agenda – and especially changing the EU treaties – would be difficult as the sovereign debt crisis decreases in intensity, diminishing the urgency for bold EU action.
"Yes, I am concerned that now not all capitals have the same sense of urgency that they had several months ago," Barroso said, referring to announcements by the European Central Bank and the Eurogroup that have eased pressure on the sovereign bonds market.
Indeed, some of the Commission's ideas are likely to stir unease even within the eurozone, where countries such as France are reluctant to surrender more sovereignty to EU institutions.
Barroso said he hoped the 2014 European elections would provide an opportunity to organise a broader debate on EU federalism. Deeper reforms needing an EU treaty change could happen after that.
The Commission blueprint will feed into the "four presidents' report" prepared jointly by Barroso and Herman Van Rompuy of the European Council, Mario Draghi of the European Central Bank, and the Eurogroup's Jean-Claude Juncker.
"I thought it was important that the Commission puts out clearly its vision" for the long-term, Barroso explained, saying the blueprint contained "some differences" with the upcoming presidents' report, which might reflect a "temporary consensus" among EU member states.
The blueprint "is bringing value added" to the debate, he said, by combining in a single document the short-term economic and financial analysis with legal analysis.