The European Commission President, Mr Romano Prodi, last night warned that Europe's single market could break up unless EU governments co-ordinate budget policies more closely. He then expressed support for proposals to introduce an EU-wide tax to finance the European institutions.
"National budgetary policies are still too often designed on the basis of national interests, even though the euro puts us in a position to share risks," said Mr Prodi. "Questions have to be asked. Are all countries taking the right measures to sustain convergence? Without continuous convergence and integration, the large market will break up and the euro will be unable to play the global role we have planned for it."
Commission officials insisted that Mr Prodi was not echoing a call this week by the French Prime Minister, Mr Lionel Jospin, for tax harmonisation throughout the EU. The Commission repeated last week that the issue of tax harmonisation was swept off the EU agenda at last December's Nice summit.
Speaking to students at the Institut d'Etudes Politiques in Paris last night, Mr Prodi praised Mr Jospin's contribution to the debate on Europe. The principle of social solidarity must remain at the heart of the European project, he said.
"Our societies cannot with impunity just stand by and watch some people `get rich quick' while others are left by the wayside. For ethical and economic reasons alike, we must combat the inequalities which are destroying the fabric of society," he said.
But the Commission President outlined a very different vision of Europe's future to that proposed by the French Prime Minister. Mr Prodi wants the Commission to assume responsibility for foreign policy and share management of the euro with the European Central Bank.
Although he praised the performance of the EU's High Representative on Foreign Policy, Mr Javier Solana, Mr Prodi said that the foreign policy chief would be more effective if he was a member of the Commission. As the EU's common foreign policy finds its feet and its military capability takes shape, Mr Prodi said Europeans must ask themselves tough questions.
"What cause would we all be willing to die for? How far can the efforts of technocrats `export stability'? When should human lives be put at risk? Can an entity with no political unity take action in the long term primarily by the allocation of funds? Does the Union have the financial and technological resources to guarantee its security?" Criticising the management of Economic and Monetary Union as neither effective nor coherent, Mr Prodi said the ECB should remain independent but needed an interlocutor to convey an overview of economic policy in the EU.
"The latest broad economic policy guidelines are a step in the right direction, but much remains to be done before we have a genuine `economic government'. Only the Commission, acting within terms of reference laid down by the Council, can function as the counterpart of the Central Bank," he said.
Financial reform was central to the EU's future and Mr Prodi expressed muted support for Belgian calls for an EU tax.
"In the run-up to enlargement, the introduction of a European tax (to be defined) in place of the current system of national contributions that generate endless conflicts between member-states has often been put forward and could well be a sound solution," he said.
Describing the EU as "a potential power", Mr Prodi said Europe must learn to speak with one voice on the world stage. "Within the Union, the influence of individual states is not the only criterion, alliances have no role to play. In a word, power politics have lost their influence. This is a considerable achievement which could facilitate the establishment, at international level, of the ground rules that globalisation demands. We have also been able to develop voting systems, fundamental to democratic processes, where many international organisations have stalled because of the need for unanimity," he said.
