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Euro commissioner Rehn warns of EU ‘disintegration’

The EU’s euro commissioner Olli Rehn said Wednesday that leaders must take a leap of faith with meaningful cross-border integration at a summit next week, or see the bloc break up.

“We have arrived at a point in time where serious choices and commitments have to be made,” Rehn told a European Parliament hearing ahead of the December 8-9 summit at which proposals including a rewrite of the European Union treaty will be debated.

“Economic and monetary union will either have to be completed through much deeper integration or we will have to accept a gradual disintegration of over half a century of European integration,” Rehn underlined.

Despite a call from within the parliament’s executive for a six-month public consultation if it is “kept aside” from negotiations being piloted by German Chancellor Angela Merkel and French President Nicolas Sarkozy, diplomats believe the EU will avoid a risky endeavour.

“If forced to have a referendum in Britain on a full treaty among the 27 states, let’s face it, it would be very difficult to win,” one diplomat said in explaining how even a eurozone-only treaty change could still pose problems.

As a result, a series of “inter-governmental agreements” among individual eurozone members of the EU could instead provide a framework for changes.

Sources attribute the recent drift from a previous summit mandate given to EU president Herman Van Rompuy to draw up “limited” treaty change to British Prime Minister David Cameron’s November 18 trip to see Merkel in Berlin.

With euroscepticism rising within Cameron’s government as well as opposition forces, Merkel was warned that Britain would need to obtain meaty concessions in order to get any new treaty offering substantial power transfer past lawmakers.

Also in the EU parliamentary debate, former Belgian prime minister Guy Verhofstadt accused Merkel and Sarkozy of endangering the EU’s survival in order to safeguard narrow national interests.

“Today their differences threaten the EU’s very survival,” Verhofstadt said of competing philosophies in Berlin and Paris over the way forward on the debt crisis now that financial market contagion has hit France, whose banks have suffered hard.

“Sarkozy refuses to accept fiscal union with its implications of a transfer of sovereignty to a collective and objective judge of sound budgetary policy such as the European Commission or European Court of Justice,” Liberal Verhofstadt said in a statement.

“On the other hand, Chancellor Merkel calls one week for closer political union and the next she blocks proposals that go in this direction.” He cited a proposal by a German council of economic advisers to do a collective re-mortgaging of eurozone debts above an EU threshold relative to GDP.

Playing a “very dangerous” game of “chicken” with Europe’s future, he said both had to “lift their opposition to some of the practical options on the table to stabilise the current market turbulence that risks engulfing us all.”

Leaders are to examine proposals centred on the setting of new rules seeking a more centralised drafting of national budgets, sanctions to ensure their enforcement and controls aimed at early detection of asset bubbles.