Mr. Roland Freudenstein:

It is not only an honour but also a pleasure to be here. I thank the joint committee for inviting me to talk about the future of the European Union and will be brief. That is usually a vague promise, but I will try to be serious about it today.

I understand that when talking about the euro crisis as a point of departure here, there is a prize for all foreigners who do not start by quoting W. B. Yeats's line, "Things fall apart," to describe the situation. We have made some good progress in the past few couple of years and are on our way collectively in the European Union to working our way out of it.

I will present the key theses of the policy brief of the Centre for European Studies which begins by addressing the necessary steps in Economic and Monetary Union and derives from it a couple of proposals on political union, especially in addressing the question of democratic legitimacy. If we assume that what we want to achieve in the long run is economic convergence and the reduction of economic imbalances between the eurozone economies and if we want to achieve debt sustainability and a more sustainable banking system, we need not only better policy co-ordination but also the power to overrule national decisions in some cases by the European institutions and probably the Commission. However, there are several possibilities which include not just overruling in the sense of making legislation or budgets impossible but possibly also financial sanctions through the mechanisms of financial solidarity. One needs an orderly default mechanism and, probably in the long run, some debt mutualisation. I know that is a dangerous notion for some member states, including my home country, Germany. In the long run in what we propose this is probably unavoidable in a currency union. Of course, we need the completion of the Single Market and further moves towards greater competitiveness, but I am not going to talk about that issue.

What we will have is a more politicised and, therefore, more politically legitimate European Union. We have behind us 60 years of a widening and deepening European integration process. In a functionalist logic that means taking small steps incrementally, increasing the scope and depth of the integration process and a system of governance according to the Rome treaties which created the system with a Commission, a European Council of Ministers and the Parliament, a system of government which is unique, sui generis. If we want to come to a political union with more democratic legitimacy, we will have to tackle the very system that was created in the treaties of Rome. In other words, we will have to address the treaties of Rome and their basic ideas and that would be the most fundamental change in the set-up of European integration since the 1950s. We want to increase citizens' ownership of decisions taken at European level. That means giving the right of legal initiative to the European Parliament also, not only to the Commission as is the case now. The European Parliament, in turn, would have a role in the formulation of economic policy which is now only the Council's prerogative. We would have to increase the turnout at European elections, which has been decreasing steadily since 1979, when it was 62% for the first direct elections to the European Parliament, down to 43% in the last European elections in 2009. We need to reverse this trend if we want to increase citizens' ownership.

The role of the Commission as an independent body that represents some kind of abstract community interest, vis-à-visthe member states and political forces, will probably have to change. In other words, the Commission will have to be politicised. There will be more party political play within the European Commission. The Council President will also have to have his or her democratic legitimacy increased, possibly through direct election, and national parliaments will have to be better involved in European politics.

In the short term our idea is what we call the strategy of the three Ps. The first is to politicise, in the sense of political parties, the European Parliament. It is not as party political as national parliaments. The second is to polarise, in other words, to have much clearer policy alternatives in the European Parliament. The third is personalise, that is, to put human faces to the different political options. To politicise in our sense means to give a stronger role to the European parties.

I will discuss the four concrete proposals we have. One was mentioned by the Chairman, namely, transnational lists of candidates for the European elections. The report by Andrew Duff in the European Parliament last year proposed for the 2014 elections a modest number of 25 Members of the European Parliament to be elected on a Europe wide list. Very simply, that would give more power to European parties. Unfortunately, it was not accepted and will not happen in the 2014 elections. We may have it at a later date.

Roll call voting would increase the coherence of the political groups in the European Parliament and highlight political differences rather than having the permanent grand coalition we have had over the past number of decades between the two large blocs. We propose that there be some form of direct election of the Commission President.

The Council proposes after the European elections that the treaty for the European Union stipulates that the Council's proposal must take into account the result of the European elections, in other words, the relative balance of power in the European Parliament after the elections. What exactly that means is debatable. So far the expectation has been that the strongest group in the European Parliament - an absolute majority is very improbable - gets the right to propose the Commission President from its ranks. That is how things were handled in 2004 and 2009.

In future, parties will propose the top candidate for the European elections who will become their nominees for the European Commission President. It is putting a human face on political options. We have never had a European election campaign with persons impersonating political options. We will have this in the next election. The socialists and EPP have already pledged to do so. The Greens have done so and other political families will follow. The two big political families are what are really important, namely, the centre-right and the left.

The potential of the Lisbon treaty in regard to an improved dialogue between the European Parliament and national parliaments is something we still have to fully exploit. The conditions are in place to intensify that process but we have to use the potential of the treaty.

In the long term we will need a truly bicameral system of legislation at a European level. The European Parliament will become the lower chamber which is directly elected by the citizens and the upper chamber will represent member states and will be what the Council of Ministers is today. The Heads of Government which will meet at regular intervals will be a part of the executive together with the Commission. The Commission and European Council will be two parts of the executive whereas the legislative will be the Council of Ministers and European Parliament.

The European Parliament needs the right to legal initiative. One might think of merging the Commission and Council Presidents. That is a debated notion because, as I said, the executive and legislative would be merged which is problematic in terms of democratic theory. It is idea which is being discussed and we should explore it further.

That completes our proposal for completing democratic legitimacy in the European Union. I am happy to discuss it with the committee, and answer questions about the role of the United Kingdom and the German perspective on it.