People here in Brussels have cautiously started to use the F word again. Though it has long been banned from people's vocabulary after the traumatic experience of trying to ratify the EU constitution and Lisbon Treaty, ‘federalism’ is again being heard in the corridors of power. The federalist idea – to create a "United States of Europe" – back.
European Commission President Jose Manuel Barroso signalled as much in an impassioned speech to the European Parliament this week in Strasbourg. "What we need now is a new, unifying impulse – a new federalist moment," he told MEPs. "Let’s not be afraid of the word – a federalist moment is indispensable.” Federalist parliamentarians rejoiced. The people may have rejected the idea of a European superstate, but now the markets are stepping in and demanding one. Could it be that the fulfilment of the 'European dream' could be triggered not by Europeans themselves, but by the markets they've created?
The federalist rejoicing may be premature. All that is clear right now is that the EU cannot continue operating the way it has. Europe is at a crossroads, and it is being pulled in two different directions. On one hand, the public has grown weary of the European project and the mood of the day is calling for more local control. There is an increasingly vocal minority in Europe who want to see the EU project walked back or for the institutions Brussels has built up to be dismantled. On the other hand, the economic circumstances and the euro crisis are pushing Europe toward greater federalisation in order to avert a catastrophe. The markets are calling for more integration, and European leaders agree with them.

