Over the years, the European University Institute has been discreetly but convincingly providing advice and suggestions to the European Union for more democratic participation, more freedom, better economic governance and greater social inclusiveness. The positive fallout from the Institute could have been remarkable for all of us, if Europe had listened more attentively to its words. We need to pay closer attention to those elements of our society coming up with inspiring ideas for reforms. We can no longer leave change and the future of Europe in the hands of intergovernmental players alone. Indeed, I deeply believe that the collective interest has more to gain from innovative and bold ideas than from the latest turns and twists of national interests.

I am well aware of the weaknesses of the European Union. But, for all those weaknesses, developments such as the recent agreement between Serbia and Kosovo have confirmed that the European Union is still acting as a “magnet”, attracting its external neighbours and transforming and integrating them. Thanks to its prospects for EU membership, the whole Balkan area has become more stable and secure. All over the world there is a pressing demand for more Europe. Unfortunately, this virtuous magnetism no longer exerts the same force of attraction on our citizens.

With every passing day, the founding fathers’ dream of peace and freedom, a dream that had become a reality for my generation, seems to be turning into a nightmare for many. With every passing day, the European Union is being associated with austerity policies that lead to recession, unemployment and social despair. More worryingly, there are signs that the crisis of the European Union is not limited to the economic sphere but also encompasses – and even more fully – its fundamental values.

Everywhere in Europe we see rising intolerance; growing support for xenophobic and populist parties; discrimination and a weakening of the rule of law; entire populations of undocumented migrants, virtually without rights, who are victims of their unwanted status rather than their individual behaviour. Our inclusive and open community is threatened by destructive actions pursued by nationalistic and demagogic groups. But they are not the only ones. In some countries, and I refer to Italy too, we see too many violations of the rule of law and of international and European treaties, an unreliable justice system, inhumane and degrading conditions in prisons, serious infringements of human rights and grave cases of lack of accountability. How can we preach respect for universal values abroad, if we are among the countries most condemned by the European Court of human rights?

It is in our vital interest to react to all these alarming trends. To defend the European construction, we need to rediscover its mission. Its founding fathers had to discard a whole world of prejudice and fear. They knew from their tragic experience that it was an illusion to ensure peace and security by building fortresses and walls. They chose integration, and rejected barriers. And they understood that all freedoms are closely linked with each other: one cannot want free trade yet hinder the free movement of people.

These principles should guide us now that unreasonable prejudices and unjustified fears are paralyzing political leaders. For example, we know – the data are incontrovertible! – that migration enriches countries, both of origin and destination. But fear and prejudice prevent some countries from accepting long-term residents in Europe as full citizens. All too often, Europe remains a terra incognita for migrants, who are not treated equally by the law and do not have a say in making that law. Europe should always prefer persuasion to compulsion as regards its resident population. A principle that was also stated by a group of eminent personalities, set up by the Council of Europe, in which I took part. Protecting and promoting the rights of resident workers is not only in line with our values, it is also in our own interest, since it prevents the social backlash and economic costs produced by the development of an underclass.

Fear and prejudice are being spread across Europe mainly by nationalistic and demagogic groups, who are exploiting the current malaise and social despair of the all too many people without a job and without faith in their future. As the ECB President Mario Draghi stressed: “it is of particular importance at this juncture to address the current high long-term and youth unemployment”. This is a fundamental mission of the new Italian government. The data flow is still depressing, urging us to adopt new measures in coordination with our partners and in full respect of our fiscal commitments.

However, I believe that the choice is not simply between fiscal tightening and freewheeling spending, nor can fear of and disaffection with Europe be tackled with economic measures or financial engineering alone. No solution is credible without a political dimension and without encompassing the whole European architecture. The music, rather than the words, has to change. It is not possible anymore to play by ear, fiddling away to patched up solutions. We need a new score: a federal solution.

I have spent a lot of time, passion and energy supporting the creation of a federal Europe; not out of ideology but simply because I do not know any other system capable of allowing 500 million people – belonging to different nations, cultures, religions and speaking a multitude of languages – to live together in freedom and diversity in the 21st century. Political leaders are also starting to see federalism as a necessity. As a matter of fact, this development was presciently understood by Margaret Thatcher. In 1990, the Iron Lady told the British Parliament that “economic and monetary union is really the backdoor to a federal Europe”. I cannot but agree with her words. But with one huge difference: what for her was a warning, for me is the goal of my life.

Federalism does not mean that the central European government should become a Leviathan, as described by the frightening words of the eurofobics. A couple of years ago, long before taking office as Minister of Foreign Affairs, I proposed a “light Federation”, an institutional model that would absorb not more than 5% of European GDP in order to finance precise government functions such as foreign and security policy, scientific research, trans-European networks, safety of commercial transactions.

Let me give you just two examples. How can European governments provide adequate security, with fewer financial resources? Only a fully shared European defence, with common, integrated armed forces, would enable us to get out of the corner into which tight budgetary constraints are confining us. European governments are reluctant to take decisive steps towards this goal. The consequences of that reluctance are fragmented initiatives, wasted resources and a growing irrelevance of European influence on the world stage. The same applies to scientific research, a field where national programmes are often too small to be productive and compete successfully with the huge projects of the other global powers.

The 2014 European Parliamentary elections will be a significant test. If we want to prevent the risk of an over-representation of populist parties, we need to put federal Europe at the centre stage of the electoral campaign. The pro-Europe political families should present their own candidate for the Presidency of the European Commission and submit political agendas for the future of the EU, stressing that a federal solution would save significant financial resources. So, the federalist perspective could assume a concrete meaning for all citizens, avoiding the risk of being perceived as an abstract juridical matter.

In 2014, exactly a century after the murder of Franz Ferdinand in Sarajevo that led to the destruction of Europe, we will have another opportunity to give a new impetus to the federal project, under the Italian Presidency of the European Union. And after 2014, a review of the Treaties could give European citizens a stronger sense of ownership of our common institutions and ensure an easier coexistence between countries in the eurozone and the other member states. History is the best early-warning mechanism. Let us never forget what happened to our countries when nationalism and demagogy prevailed. If Europe does not solve its problems of recession and populism, we could lose all that we have achieved since the ’50s, and nobody would know how long it will take to regain the same level of democracy, prosperity and stability as before. But if we adopt a new vision, engage our citizens and unite our governments, we could start a new phase of boosting growth and fostering democratic legitimacy and global influence.

¹ The speech was delivered at the State of the Union Conference in Florence on 9 May 2013