Wednesday, November 16, 2011

EU's Barroso: euro zone must integrate to survive

The euro zone faces a systemic crisis and will not survive unless it becomes more integrated and disciplined, possibly through a change of the European Union's treaty, European Commission President Jose Manuel Barroso said.

The 17-nation bloc has entered what may be a critical phase of the two-year-long sovereign debt crisis with France, the region's second largest economy, now the target of intense bond market pressure and its borrowing costs soaring.

"We are indeed now facing a truly systemic crisis that requires an even stronger commitment from all and that may require additional and very important measures," Barroso told the European Parliament in Strasbourg.

"Without ... increased integration, convergence and discipline, we will not be able to sustain a common currency.

"Either member states accept it - to complete the monetary union with an economic union that requires full discipline, full convergence, full integration - or if they don't accept this we will put at risk our goal," he said.

Barroso said such deeper integration would require changes to the European Union's treaty, and therefore may take some time to achieve.

"Any revision of the treaty should be for deeper integration of the euro area but also for a stronger European Union," Barroso said.

"But let's not fool ourselves. Treaty change takes time and should not be seen as the immediate solution for the current crisis."

Barroso said deeper economic integration among euro zone members should not put the remaining 10 members of the European Union at a disadvantage.

"Reinforcing the governance of the euro is also reinforcing our union," Barroso said.

"There should not be any divide between the current 17 member states on one side and 10 on the other. Most of them, almost all of them, have a vocation to join the euro."