Skip to main content

Barroso: Europe federation 'unavoidable'

By Richard Quest and Oliver Joy, CNN
updated 11:21 AM EDT, Mon October 1, 2012
STORY HIGHLIGHTS
  • European Commission president Jose Manuel Barroso says a federal Europe is "unavoidable"
  • European institutions are already moving toward a more unified Europe in attempts to stem crisis
  • Barroso's call is the latest in a long line of measures taken by European politicians
  • According to Barroso, integration is the only way to compete on the global stage

Editor's note: Watch Quest Means Business on CNN International, 0600pm GMT and 0800pm CET weekdays. Presenter Richard Quest is CNN's foremost international business correspondent. Follow him on Twitter.

London (CNN) -- The European Commission's president Jose Manuel Barroso says a federation of Europe is "unavoidable" if Europe's embattled common currency is to survive the financial crisis.

Barroso's comments to CNN followed Wednesday's annual "State of the Union" address, which he delivered in Strasbourg, France, making the case for a unified Europe to stem the euro-area's debt crisis.

In reference to the euro, shared by 17-member states, Barroso told CNN: "A single currency depends on the solidity, on the credibility of the institutions and the political construct behind it. So, I believe [a federation] is going to happen.

"We are saying that in some areas, like the common currency, like the supervision of the banks, like the common supervision of the budgets, we need this sharing of sovereignty," he added.

Plans for EU banking union under way

European institutions are already moving toward a more unified Europe in attempts to drag the euro bloc out of its financial mire.

Are central banks doing enough?

The European Central Bank -- led by president Mario Draghi -- is undertaking a bond-buying program for fiscally-frail nations in an effort to reduce borrowing costs for the likes of Italy and Spain.

More: Crisis in-depth

On Wednesday, the European Commission -- the executive branch of the EU -- presented plans to extend the bank's powers further. Barroso wants to give the European Central Bank a regulatory role for over 6,000 banks operating in the eurozone.

This raised concerns, particularly by Germany, over sovereignty and banking supervision.

But Barroso told CNN: "citizens of Europe are now paying very, very heavy bills because precisely we don't have that, because the banks are transnational, but the supervision until now is purely national."

His comments follow this week's decision by Germany's Constitutional Court to green light the European Stability Mechanism -- the euro area's permanent bailout fund for debt-ridden nations -- that will come into force in October.

According to Barroso, "the European Stability Mechanism has a capital that is comparable to the International Monetary Fund, so it's the European IMF we have now."

Read: Eurozone now has time, but needs growth

"It's quite obvious that to sustain a common currency, we need more common power," he added.

Barroso's call for a federal Europe is the latest in a long line of measures taken by European politicians to forge closer financial ties. Moves include March's deal for a "fiscal pact" which will come into force January 2013, should it be ratified by 12 of the 17 euro countries.

But Barroso said such measures would not threaten the sovereignty of participating countries: "It's a shared sovereignty," he said. "It's not a transfer of powers from the capitals."

Read: Draghi's gamble

Barroso said he had "no doubts" about the determination of Greece -- at the center of the eurozone debt crisis -- to implement reform and retain its place in the common currency.

According to Barroso, integration is the only way to compete on the global stage. "Even the biggest countries in Europe alone, if they are on their own, they will not have the leverage to deal with these issues globally, with our American friends or with the giants of power, like China and others that are emerging," he said.

ADVERTISEMENT
Part of complete coverage on
updated 3:43 PM EDT, Tue August 27, 2013
German Finance Minister Wolfgang Schaeuble says the eurozone's problems are not solved, but "we are in a much better shape than we used to be some years ago."
updated 11:28 AM EDT, Wed September 4, 2013
The G20 is held in Russia but, amid disagreements over Syria, can anything be done? John Defterios investigates.
updated 11:02 AM EDT, Wed July 10, 2013
Summer could not have come soon enough for Lloret de Mar, a tourist resort north of Barcelona. Despite the country's troubles, it's partying.
updated 1:50 PM EDT, Fri June 7, 2013
The euro club has suffered major shockwaves but its newest member has emerged as an economic star. What;s behind Estonia's success?
updated 9:23 AM EDT, Wed May 29, 2013
The global recovery has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.
updated 9:26 AM EDT, Tue May 14, 2013
The flags of the countries which make up the European Union, outside the European Parliament in Strasbourg, France.
The "rich man's club" of Europe faces economic decay as it struggles to absorb Europe's "poor people", according to economic experts.
updated 10:56 PM EDT, Sun May 26, 2013
Europe's competitiveness is threatened as manufacturing companies scrambling to find enough skilled engineers.
updated 11:02 AM EDT, Wed July 10, 2013
Spain's economic crisis is in its sixth straight year yet tourism, worth 11% of GDP, is holding its own, one of the few bright spots on a bleak horizon.
updated 6:44 AM EDT, Thu May 2, 2013
As European financial markets close for the spring celebration of May Day, protesters across Europe and beyond have taken to the streets to demonstrate.
updated 8:10 AM EDT, Fri April 26, 2013
As Croatia prepares to enter the 27-nation European Union, the country's Prime Minister says Italy must return to being the "powerhouse of Europe."
updated 12:56 PM EDT, Thu April 25, 2013
Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday.
updated 9:55 AM EDT, Mon March 25, 2013
The financial uncertainty in Cyprus is generating images of long lines at ATM machines and anti-European Union protests.
updated 2:15 PM EDT, Mon March 25, 2013
Cyprus will "step up efforts in areas of fiscal consolidation." Where have we heard that before? Oh yes. Greece.
updated 9:39 PM EDT, Fri March 22, 2013
The Cyprus debt crisis is being felt by the banks but also by the people who work at them. Nick Paton Walsh reports.
updated 8:10 PM EDT, Thu March 21, 2013
CNN's Nick Paton Walsh reports on a Russian hotel maid caught up in Cyprus' financial crisis.
updated 12:08 PM EDT, Mon March 18, 2013
Never underestimate the capacity of the Eurozone to shoot itself in both feet, says CNN's Richard Quest.
updated 11:03 AM EST, Thu February 21, 2013
Spain has seen hundreds of protests since the "Indignados" movement erupted in 2011, marches and sit-ins are now common sights in the capital.
ADVERTISEMENT