Schroder calls for federal Europe, with jobs and environment pacts

Chancellor Gerhard Schroder of Germany called yesterday for the European Union to be transformed into a federation and pledged…

Chancellor Gerhard Schroder of Germany called yesterday for the European Union to be transformed into a federation and pledged that he would use Germany's EU presidency, starting in six weeks, to push for greater integration and faster progress towards an EU political union.

In a two-hour address to the newly elected Bundestag or lower house in Bonn, Mr Schroder mapped out his blueprint for the next four years of his coalition of social democrats and Greens.

The European single currency, being launched on January 1st as Germany takes over the rotating EU presidency, was but a stepping stone, he declared, to "a political union . . . a modern Europe of the social market economy and environmental responsibility".

Mr Schroder said he would call a special EU summit early next year to hammer out a new financial dispensation in Brussels which would entail "fundamental changes" to the Common Agricultural Policy. "

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Europe-wide policies aimed at fighting unemployment were a priority, he added, reversing Helmut Kohl's opposition to French calls for an EU jobs pact.

The chancellor pointed out that the historic centre-left ascendancy across almost all EU states meant there was a new consensus of "social modernisers" in power across Europe.

The issue of a European federation has long been a bugbear in Anglo-German relations, not least because the F-word is understood utterly differently in Bonn and London. If the British, especially the Conservatives, equate "federal" with "centralised", the elites in what is formally the Federal Republic of Germany take the contentious word to mean "decentralised". Mr Schroder signalled clearly that the social democrats are every bit as integrationist on Europe as was Dr Kohl.

He stressed that his country's relations with France remained the "foundation" of German European policy. While expanding on Germany's relations with France, with the US, and with Poland, Mr Schroder made only one brief reference to Britain.

He said he wanted the tricky renegotiation of the Brussels budget concluded by the special summit early next year, but also said that he would push for a reduction in Germany's net contribution to the EU budget.

"We are democrats and Europeans today, not because we have to be but because we want to be," he stressed, reflecting the arrival in power in Germany of a younger and more self-confident generation, unscarred by the second World War experiences which marked the Kohl generation and shaped its European policies.

Next year's shift in the seat of government from Bonn to Berlin would signal the birth of a new, more open, more liberal, and more cosmopolitan Germany, with Europe's largest immigrant population given the opportunity to enjoy full civil rights by becoming German citizens, the chancellor promised.

"This is not just a move, it's a new departure," he said of the shift. "We want to make Berlin the capital of a Republic of the New Centre."