THIS past Friday, November 11th marked Armistice Day, the date when the guns fell silent over the western front and the European 'war to end all wars' came to a close. History has taught us that this Armistice Day was not the end of Europe's blood soaked century but just the opening chapter.

The next installment in the tragedy then yet to be written, would take place in the Great Hall of Versailles, where a small group of countries, urged on by an understandably bitter and near fatally wounded French elite, saddled Europe's losing side with treaty terms so punitive and unjust, that they were to become an explosive vapour seeping across the smoldering embers of Europe's rivalries and discontent, embers that Europe's political elites had convinced themselves, had permanently been extinguished.

It was the grand disaster of World War One that inspired the early founders of the European Union idea, an idea that only began to properly come into being following the disastrous efforts to unite Europe under the not so varied totalitarian jackboots of national socialism, fascism and communism.

Today, as we observe a mini-series of failed European summitry, the uninspiring posturing of Europe's 'leaders', the short-term political risk aversion, leading to chronic errors and splits with potentially dangerous long term consequences, one cannot but wonder to what extent these politicians grasp the magnitude of what they are putting at risk by their petty politicking. For my small part, I have spent some time and resources in trying to draw attention to the sucking wound that that is really ebbing away at Europe's vitality.

That wound is the chronic lack of democracy, accountability and transparency now rupturing the heart of the European project and manifesting itself in everything from the machinations of the Commission and the European Council's Committee of Permanent Representatives, to the board room of the ECB, to the back rooms of Europe's newest self-styled elite, the so called Frankfurt Club encompassing a would be Franco-German axis planning on turning the eurozone into what effectively would be vassal states.

So what are Europe's options? Which path in this historical fork in the road are we to venture down? It would seem in their lack of vision, our leaders want to either go in reverse or continue the practice of strong rhetoric backed by limp action, all of which compounds the growing type of injustice that we see in Ireland effectively being forced to spend billions to make good the losses of bondholders that we at no point ever borrowed money from.

Looking at the consequences of Europe's leaders unwillingness to lead justly, or indeed at all, one is reminded of the words of the great 18th century classical liberal and Irishman, Edmund Burke who said: "Nothing turns out to be so oppressive and unjust as a feeble government."

Given all that has happened, I now see Europe's choice as this: We either fully unite in a democratic and federal union, or we will see this project fall apart. To believe that it can fall apart in an orderly fashion, reverting to a neat trading club; I fear is an over-indulgence in wishful thinking. It is at least as likely that a collapsing of the European project, made more likely by a collapse of the euro, would result in a balkanisation of Europe as a return to some type of trading utopia that will be devoid of internal rivalries and outside threats.

For example, consider this. If the euro's collapse destroys the political credibility of the union in the minds of the average European (and it very well might), what might a sundering of Europe mean for Europe's eastern borders? The issues arising are too many to detail here but they are deadly serious with all the potential to become another Yugoslavia but written on a much bigger map.

The proposition of a fully federal European Union fills many Europeans with deep concerns and I must say that it should. The idea that we would further centralise power to the European Union in its current form should be an anathema to any right-thinking lover of liberty and democracy.

In the words of David Hume, "it is seldom that liberty of any kind is lost all at once," but a further concentration of central power without accountability would be a very mighty step.

So Europe must now grasp the nettle of major reform, of 'Treaty change', to establish a Europe not of the now defunct and near literally bankrupt Lisbon Treaty, but one created 'by the people for the people', a Europe bringing us that only form of temporal governance that should ever be acceptable to free peoples, government by consent of the governed.

In summary this is the federalisation that Europe should implement now:

1. The position of president of the European Commission and president of the European Council should be merged into one office holder and should be made subject of a popular democratic election to be held on November 11th (Armistice Day) 2013. Voters should be weighted in an 'electoral college' type format so that smaller member states voters are not made irrelevant. This president would serve for one six-year term only and would be chairman and chief executive in the same manner as the president of the United States of America.

2. The Commission should become the servants of the Executive arm and be filled by nomination of the democratically elected president, and ratification of a newly created upper house of the European Parliament.

3. An upper house or 'senate' should be created, with four representatives of each member state, each representative holding equal voting power. That is to say, Ireland will have four senators and Germany will have four senators etc. This upper house will be given the co-right to initiate legislation along with the lower house, the current EU Parliament.

4. The European Parliament should be reformed to give greater balance for population (which would favour larger member states) and should be given the power (along with its upper house) to initiate legislation.

5. All lobbying of the executive and legislative branch must be registered and transparent.

6. A full insolvency purge of all European financial institutions should be immediately undertaken. A liquidation and asset sale of all unhealthy institutions should take place forthwith. A write down of significant size (50 per cent plus) should take place on all distressed EU member state debts. The federalising of all remaining state debt incurred before 2008 should immediately follow backed by the issue of Union bonds backed by the entire tax revenue of the eurozone. (This can be altered later but will end market turmoil and establish real stability).

7. The Union civil service will be kept small and highly efficient; this will be enshrined in Europe's new constitutional arrangement. A debt ceiling will also be set constitutionally.

8. The Union should have monopoly of external action both in soft and hard power.

9. The ECB should be guaranteed full independence and a low inflation policy be pursued.

It is to be understood that the above model may be considered unfathomable to many. However it is not unreasonable to suppose that anything less than a democratic federalisation of a similar form to that set out above, will result in failure and a loss of confidence in European unity that may lead to this continent turning back the clock by 100 years. The price is worth paying, the risk is worth taking. As Europeans, we should take it. Fortune favours the bold.

Sunday Indo Business