In order to keep the UK in, EU leaders should stop talking the federalist talk. Whenever German chancellor Angela Merkel speaks about "more Europe" and "political union", a British audience hears "superstate" and feels a strong inclination to hurry to the exit. And there is no need to scare the Brits off. In reality, not even the Germans want to take a "great leap" towards a federal state. Merkel has always been a proponent of De Gaulle's "Europe of the fatherlands" and she regularly sidelines Brussels. And it is Berlin that is now delaying and watering down the "banking union".
Germany has no roadmap towards a federal Europe. Merkel is using the federalist rhetoric as a tactic. The "more Europe" buzz phrase is directed towards several audiences. It is meant to regain the trust of investors and partners around the world: trust us, we're going to bring our house in order, you can buy European bonds and count on us. Secondly, euro-federalism has been an essential part of Germany's political culture since its first post-war chancellor, Konrad Adenauer. Embedding Germany in Europe was always a way to recover from the Nazi past and make sure that history wouldn't repeat itself; "more Europe" simply sounds reassuring to German ears. And thirdly, in today's political debate in Germany, "more Europe" is often translated into "more control for Germany over debtor countries". Which is of course an illusion. In a federalist eurozone of 332 million people, 82 million Germans would be easily outvoted. Berlin's power in the EU today is not only based on the fact that it is an economic powerhouse, but also on the fact that it is a sovereign nation state. A federalist eurozone would probably have introduced Eurobonds long ago - something that Germany strongly opposes.
After over twenty crisis summits, it is now clear that the European house is not going to be fundamentally rebuilt - the EU will not turn into a state. The limits of integration have been reached, more or less. Peer pressure and the threat of withholding funds remain the only serious tools EU governments are going to have to enforce discipline and encourage reform. In key areas the powerful member states will always be able to cast a veto, formally or if necessary informally. Brussels will never be empowered by member states to exert central control. And Berlin cannot, even by default, play the role of an imperial centre. Germans don't want it. And should they try to obtain it there would be a massive backlash. Smaller neighbours would immediately build coalitions against Germany and isolate Berlin.
That leaves only one way ahead: improving the efficiency of the current framework. This means better cooperation and coordination among largely sovereign states. And leaders should focus less on institutions and more on growth, by removing obstacles to the single market, by pushing for trade deals, with Asia, the United States and others, and by investing in cross-border infrastructure.