Former German leader calls for ‘United States of Europe’

BERLIN, (Reuters) – Former German chancellor Gerhard  Schroeder yesterday called for the creation of a “United States  of Europe”, saying the bloc needed a common government to avoid  future economic crises.

Gerhard Schroeder

Schroeder, a Social Democrat who ran the country from 1998  to 2005, said in an interview with Der Spiegel that European  Union leaders were wrong to expect the euro to drive the bloc on  its own.

“The current crisis makes it relentlessly clear that we  cannot have a common currency zone without a common fiscal,  economic and social policy,” Schroeder said.

He added: “We will have to give up national sovereignty.”

“From the European Commission, we should make a government  which would be supervised by the European Parliament. And that  means the United States of Europe.”

Schroeder, who nurtured a close relationship with France  during his leadership, welcomed an initiative launched by German  Chancellor Angela Merkel and French President Nicolas Sarkozy to  move toward a fiscal union in 2012.

Their proposal, which would mean giving up sovereignty over  budgetary policies with the aim to shore up the 17-nation  currency union, has received a lukewarm response from other euro  zone countries.

“Germany and France have sent a strong signal with the plan  for a European economic government, if it is meant seriously and  receives suitable authority such as a European finance  minister,” Schroeder said.

“That is the correct way forward and the precondition for  the correct funding — euro bonds,” he said.

Germany, which enjoys lower costs for issuing debt than its  single currency partners, has led resistance to joint  euro-denominated bonds.

“It is a huge bond market — speculators would no longer  harbour hopes of splitting it up,” Schroeder said.

In order to initiate these changes, Schroeder said EU member  states would have to return to the negotiating table and hammer  out a new treaty to replace the one agreed in Lisbon that  currently serves as the bloc’s institutional framework.

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