Addressing the annual congress of her Christian Democratic Union (CDU) in Leipzig on November 14, German Chancellor Angela Merkel called for further political integration within the European Union as a means to ending the sovereign-debt crisis. “The task of our generation now is to complete the economicand currency union in Europe and, step by step, create a political union,” Merkel said in an hour-long speech to more than 1,000 CDU delegates. “It’s time for a breakthrough to a new Europe.”

Merkel’s statement came at a crucial moment for the EU, with the eurozone in constant crisis and the future of the entire Union uncertain. The notion that a tighter political union is the cure is not new, but in view of Germany’s pivotal role and strength Frau Merkel’s words carry special weight. She took pride in the fact that Germany is the “anchor of stability” and “engine of growth in Europe,” but added that Germany cannot be strong without Europe because Europe is the foundation of German prosperity. And yet, she warned, “Europe is now in one of the darkest hours, perhaps in the darkest hour since World War II.” If the euro fails—Europe fails, she said, and her mission is to save the “historic” EU project. Her proposed solution is radical:

The job of our generation is now to complete the economic and monetary union in Europe and to create a political union step by step. […] We need to develop the structure of the European Union which means: not less Europe but means more Europe; which means Europe designed in such a way so the euro has a future.

Merkel also called for automatic sanctions when a country violates the fiscal rules, giving the EU the right to intervene and even institute legal proceedings against such countries. Her finance minister, Wolfgang Schauble, has spoken repeatedly of the need to transfer additional powers to Brussels and to revise both the Lisbon Treaty and the German constitution to make the new, tighter Union possible. He says that Germany will insist on a “quick agreement on the structures for a fiscal union,” to be reached within months rather than years.

Truly, events are now moving at a dizzying speed. “Who would have thought two years ago,” wondered The Daily Mail editorialist on November 19, “that Greece and Italy would be run by unelected EU technocrats and the Irish budget would be passed in advance to the German parliament— presumably for its prior approval. Indeed, given the vice-like grip they have taken on much of Europe, it’s unsurprising that puffed-up allies of Chancellor Merkel are declaring that ‘Europe is talking German’ now.”

“Germany wants a strong European Union with 27 members,” Merkel said, “and a strong 17-member eurozone that inspires confidence. We are prepared to give up a piece of national sovereignty to achieve that.” This is a clear sign that Germany is committed to a two-track Europe, with the eurozone countries surrendering the remaining vestiges of their fiscal independence to the German-dominated European institutions.

Her call for tighter union will likely be on the agenda when European leaders gather for a summit on December 9, and the dividing lines are already known. British Prime Minister David Cameron said on November 14 that the Euro-crisis offers an opportunity for countries to “ebb back” from Europe to nation states. Without mentioning Merkel by name he said, “We should look skeptically at grand plans and utopian visions; we’ve a right to ask what the European Union should and shouldn’t do.” It should have “the flexibility of a network, not the rigidity of a bloc,” he said.

Merkel is known to be impatient with the British lack of integrationist zeal and willing to divide the EU into an inner, tightly integrated core, with the ten member countries outside the eurozone relegated to an unintegrated periphery led by Britain and Denmark, the only two members of the EU with a legal opt-out from the euro. Her two-sped project is supported by EU President Herman van Rompuy who is expected to present the EU summit with a timeframe for the further strengthening of the euro zone that may include possible treaty changes. The EU is thus about to move even further away from the Gaullist concept of l’Europe des patries, a concert of nation-states brought together by common interest but retaining their substance and identity regardless of the institutional arrangements. Merkel views Europe as an organic whole and this whole, to be healthy, prosperous and efficient, requires a single source of decision-making authority.

What Chancellor Merkel is proposing amounts to the most significant quantum leap since the Single European Act (SEA) which came into effect in July 1987. She seeks further centralization of power in the direction of a German-controlled European super-authority, rather than super-state. The distinction is essential. The standard Euroskeptic argument that the proponents of political union are plotting the creation of a single federal state is simply incorrect. Throughout the process of creating an ever-tighter union in terms of institutional mechanisms that have chipped away the power of national governments, the Euro-integralists have never wanted the end result of that process to be a super-state modeled after the United States. In the context of pan-European federal statehood, the institutions and officials running them would be held more accountable and would come under far greater public scrutiny than is currently the case.

For Germany to exercise not only influence but also effective control over the eurozone, the optimal strategy is for the states of the future Inner Core to be gradually drained of the remnants of statehood and the power transferred to various German-dominated European “institutions”—notably the ECB—but without the unwelcome visibility, trappings and limitations of super-statehood itself. In order to “save the euro,” 17 nation-states of Europe will be goaded into political union and a degree of external control unimaginable only a decade ago.

In the long run, however, a two-speed Europe would be but a Pyrrhic victory for the Germans. As I noted in this column last April, “Squaring the circle of operating a single monetary policy and uniform interest rates for a widely different group of countries will continue to produce periodic emergencies all along the periphery. The alarms will take different forms at different times—a fiscal crisis here, a banking collapse there, a property slump everywhere—but like the erupting lava finding its way through the Earth’s crust, the crises will never stop and can never be resolved.” Once it is accepted that the euro has always been a political project not justified by economic considerations, Europe’s historic nations may gather courage to say “no” to Merkel’s latest diktat—and consider the advantages of reverting to the drachma, lira, peso and punt.