Barroso: Europe federation 'unavoidable'

Federation of states unavoidable?
Federation of states unavoidable?


    Federation of states unavoidable?


Federation of states unavoidable? 04:06

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

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.

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

Plans for EU banking union under way
Plans for EU banking union under way


    Plans for EU banking union under way


Plans for EU banking union under way 01:40

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.

Are central banks doing enough?
Are central banks doing enough?


    Are central banks doing enough?


Are central banks doing enough? 03:35

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.

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