"The President of the European Commission has done well to drop his former inhibitions about the 'F-word'. His call in the state of the Union speech for Europe to follow a federal path is absolutely right. He draws the correct conclusion that a banking and fiscal union must have a federal economic government to run it, and that such a federal government must of course be deeply democratic.
"Mr Barroso says he wants no new institutions, and that the present ones will do. I am not so sure. The European Central Bank and the European Banking Authority look to be rapidly transformed with more supervisory powers over the banking sector. Such transformation will alter their institutional character.
"It will have to be decided how a new treasury facility will be created and where it will sit in the inter-institutional mix we have now of Commission, Council and Eurogroup. And proper parliamentary accountability will inevitably involve not only the European Parliament but also national parliaments.
"So a major constitutional shift, involving all EU institutions, is now foreseen in a federal direction by the Commission and the Parliament.
"What matters now is rapid progress on the Commission's legislative proposals on the ECB and the EBA and careful preparation of the October and December meetings of the European Council at which the necessary further steps must be taken.
"At the latter meeting it is important that the heads of government commit themselves to calling a Convention in the spring of 2015, and establish, with Parliamentary involvement, an appropriate preparatory process -- possibly a groupe des sages --which will weed out daft ideas and define the Convention's mandate.
"The precise character of Europe's federal union of states and citizens can only be determined in such a Convention. That negotiation will be about powers, competences and institutions."
Contact: Andrew Duff on 0032 228 47998 @Andrew_Duff_MEP