Schroder proposes overhaul of EU bodies to create a central government for Europe

The German Chancellor, Mr Gerhard Schroder, has proposed an overhaul of EU institutions to create a central European government.

Mr Schroder has also suggested that the European Parliament take over responsibility for the EU budget, according to a draft policy document seen by the news magazine Der Spiegel.

The draft paper, confirmed yesterday by the SPD, proposes the European Commission be turned into a European government.

Meanwhile, the leaders of the EU member states who currently sit in the Council of Ministers would instead sit in a second parliamentary chamber similar to Germany's Bundesrat, according to the draft document.

Mr Schroder's proposals echo those of his Foreign Minister, Mr Joschka Fischer, who is in Dublin today to address the Institute of European Affairs.

Until now, Mr Schroder has been happy to let Mr Fischer do most of the talking about the future of the EU. The draft paper seems to show that Mr Schroder now wants to make the issue his own.

Under Mr Schroder's proposals, the European Parliament would have increased authority, including full independent responsibility over the European budget, including the €40 billion agricultural spend that constitutes some 46 per cent of the entire EU budget.

In the paper, the Chancellor comes out in favour of returning certain authority, such as structural policy, back to the national governments. This will increase the leeway among member states for autonomous regional and structural politics, according to the policy paper.

The proposal has the full support of Mr Schroder's Green Party coalition partners in Berlin and in Europe, according to yesterday's Berliner Morgen post.

Mr Schroder's ideas for a shake-up of the EU will be discussed by a senior SPD working group next Monday. The draft paper will then have to go before other party committees before it is officially presented at the SPD conference in the autumn.

But whatever form the final document takes, it is likely to rank alongside Mr Fischer's speech in Berlin last year as an important contribution to negotiations in the run-up to the next inter-governmental conference in 2004.