By Robin Emmott

BRUSSELS (Reuters) - European Union countries should be required to defend each other given the growing conflicts on their borders, center-right EU lawmakers said on Wednesday, urging governments to consider a collective defense policy similar to NATO.

As the EU confronts the failure of its neighborhood policy and faces conflicts in Ukraine and the Middle East, the biggest political grouping in the European Parliament called for an EU equivalent of NATO's Article 5, which considers an attack on one member as an attack against all.

"The security environment necessitates that European defense stops being a paper tiger and becomes a fully-fledged policy providing equal security ... for all member states," the center-right European People's Party (EPP) said in a policy paper.

"To the south and east Europe is facing an arc of instability. The expected ring of friends became a ring of fire," it said, referring to the Ukraine crisis with Russia and wars in the Middle East which have displaced millions of people - hundreds of thousands of whom have sought refuge in Europe.

While the EPP paper is only a proposal, it reflects the growing debate in Brussels over whether the European Union, an economic and trading powerhouse, should pay a greater role in global security and rely less on the United States.

Despite falling defense budgets, EU governments have only limited cooperation between their armed forces. So-called EU Battlegroups of rapidly deployable forces, operational since 2007, have yet to be used.

European Commission President Jean-Claude Juncker, also a conservative, called in March for a common EU army, arguing that NATO was not enough because not all members of the transatlantic defense alliance are in the EU.

Of Europe's major powers, France is sympathetic toward such an idea, backed by eastern Europe governments that fear Russian aggression and want the EU to be able to act military. Britain prefers to act through NATO. Germany, scarred by the legacy of World War Two, is reluctant to take military action overseas.

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"We cannot continue free-riding on the Americans," said Polish EPP lawmaker Jacek Saryusk-Wolski, who authored policy paper. "There are also times when the United States may not wish to act and when Europe needs to."

NATO's article on collective defense has only been invoked once, following the Sept. 11 2001 attacks on the United States.

(Reporting by Robin Emmott; editing by Philip Blenkinsop and Dominic Evans)