Barroso sees treaty change for euro's future

(BRUSSELS) - Greater EU integration through changes to its basic treaties, though likely to prove hugely controversial, is the long-term answer to the crisis undermining growth and jobs, European Commission head Jose Manuel Barroso said Wednesday.

Presenting a "blueprint for a deep and genuine Economic and Monetary Union," Barroso said Europe had to show it could "move forward decisively" to put in place a common financial, fiscal, economic and political architecture.

The result would be that "all major economic and fiscal policy choices by member states would be subject to deeper coordination, endorsement and surveillance at the European level," he said.

To arrive at this point, some changes could be introduced under existing treaties, he said, but others would need treaty change -- a step which could run into fierce opposition, especially from states suspicious of handing any more power to Brussels.

Barroso said in the short-term of up to 18 months, immediate priority should be given to measures already agreed to tackle the debt crisis, among them setting up a single bank regulator and a system for closing down failed banks.

These could be implemented by legal changes.

In the medium-term up to five years, the euro area should further strengthen "the collective conduct of budgetary and economic policy -- including tax and employment policy," which would sit alongside "an enhanced fiscal capacity."

Additionally, Barroso said the eurozone could consider the issue of eurobills "to help with debt reduction and stabilise financial markets," a potentially key step towards the pooling of eurozone debt opposed by Germany, the bloc's most powerful economy and paymaster.

These measures "would benefit from new and specific treaty bases," Barroso said.

Beyond five years, Barroso went further, saying that with an "adequate pooling of sovereignty, responsibility and solidarity at the European level, it should be possible to establish an autonomous euro area budget.

"A deeply integrated economic and fiscal governance framework could allow for the common issuance of public debt, which would enhance the functioning of the markets and the conduct of monetary policy.

"This would be the final stage in EMU," Barroso said, with all these longer-term measures listed in a statement as requiring treaty change.

Signficantly, he also noted that while some treaty rules apply only to eurozone states, this was only temporary "since all member states but two (Denmark and the UK) are destined to become full members under the treaties."

The EU's founding treaties were modified by the Lisbon Treaty adopted in 2007 and which came into effect in 2009 after years of tough negotiations and close-run votes in several countries.

Blueprint for a deep and genuine 
Economic and Monetary Union (EMU) 
- background guide