British prime minister Tony Blair has told the European Union that it will fail "on a grand, strategic scale" unless it changes in response to globalisation.
Addressing the European Parliament ahead of Britain's EU presidency, Mr Blair said the EU's constitutional and budget crisis offered an opportunity for a comprehensive reform of the union.
"This is not a time to accuse those who want Europe to change of betraying Europe. It is a time to recognise that only by change will Europe recover its strength, its relevance, its idealism and therefore its support amongst the people," he said.
MEPs interrupted Mr Blair's speech with applause, although he met a few heckles when he declared that he was "a passionate pro-European".
Mr Blair avoided directly criticising the leaders of France, Germany and Luxembourg, all of whom have accused him of seeking to divide Europe and abolishing its social model. He said there was no conflict between wanting to reform Europe's economic model and embracing a political union.
"I believe in Europe as a political project. I believe in Europe with a strong and caring social dimension. I would never accept a Europe that was simply an economic market," he said.
He said the French and Dutch referendum defeats for the EU constitution were an expression of popular discontent with the policies, rather than the institutions of the EU. People were not convinced that the EU was doing what it set out to do and they wanted stronger political leadership.
"It is time to give ourselves a reality check. To receive the wake-up call. The people are blowing the trumpets round the city walls.
"Are we listening? Have we the political will to go out and meet them so that they regard our leadership as part of the solution not the problem?" he said.
Referring to last weekend's budget row, Mr Blair said he was willing to reduce or even abolish Britain's rebate and insisted that he did not seek to get rid of all EU farm subsidies overnight.
"A modern budget for Europe is not one that, 10 years from now, is still spending 40 per cent of its money on the Common Agricultural Policy," he said.
Although MEPs responded warmly to Mr Blair's speech, the reaction from EU capitals was cooler. German chancellor Gerhard Schröder said Europe faced a choice between two visions, one of which wanted a free trade zone while the other favoured a political Europe.
"The differences in recent days and weeks have shown clearly that Europe faces a choice in the coming months between two poles. The first wants to strip out the core of the European Union and reduce it to a kind of free trade zone. The other wants to preserve a politically active, vital European Union. This is the vision I support," he said.
At a press conference after his speech, Mr Blair said that all European leaders had to take responsibility for choosing the future policy direction of the EU.
He said that the debate he was calling for on the future of the EU was already under way in many member states.
"There is a tendency for Europe sometimes to go back into institutional questions when actually the questions are about policy direction," he said.
Mr Blair acknowledged that the question at the heart of the debate about Europe was about how Europeans could keep their current levels of social protection in the face of competition from China and India. "Let's analyse the reality and deal with it," he said.