By Paul Taylor
PARIS (Reuters) - If European policy elites could choose the next head of the EU's executive, Pascal Lamy, the Frenchman who stepped down as head of the World Trade Organisation in July, would be near the top of most people's list.
Lamy, 66, was chief-of-staff to Jacques Delors, the Commission president who pulled Europe out of the doldrums in the 1980s by tearing down internal barriers to create a single market and paving the way for the euro single currency.
Now he says the European Union needs a new dream to revive its sagging fortunes, based on modernizing its "social market" model of tempering economic forces with social protection to keep it sustainable.
That's why he probably won't get the job.
Lamy is not a candidate and says he will support Socialist European Parliament President Martin Schulz for the role, but he makes no secret of his readiness to "serve Europe" again if the opportunity arises.
"I am in agreement with 95 percent of social democrats in Europe. The trouble is the other five percent all live in my country," he joked at the annual conference of the Friends of Europe think-tank in Brussels, where he was guest of honor.
Four years of financial and economic crisis have shattered public confidence in the EU, and the moderate socialist is a bogeyman to many on the left in France, where he is associated with "ultra-liberal" free-trade policies.
Eurosceptical parties are expected to make unprecedented gains in European Parliament elections next May and Lamy's federalist vision of Europe is at odds with the Zeitgeist.
He says EU governments deliberately weakened the European Commission during the euro zone debt crisis by taking decision-making out of its hands but leaving it to enforce austerity policies made elsewhere.
As a result, citizens are confused about who is responsible for what in Europe and "Brussels" takes the blame.
Noting that support for Europe has historically ebbed and flowed with the economic cycle and is now at low tide, Lamy argues that the EU needs a new narrative reconciling economic efficiency with social progress.
"When the cake is getting bigger, people are less reluctant to share it. When it stops growing, there's a sense of crisis amplified by the fact that Europe was long sold to citizens as a protection against a menacing outside world," he told Reuters in an interview.
"Now we have to reformulate the European project," he said.
The "never again" spirit that inspired the EU's founders to pool their coal and steel industries in a common market on the ruins of World War Two no longer resonates with today's Europeans, most of whom have never experienced armed conflict.
Instead, Europe needs a new rationale based on preserving a combination of high living standards, democracy and civil rights, environmental protection, social justice and work-life balance that still make it the envy of many beyond its borders.
"Europeans have to live up to what non-Europeans see as the European identity," Lamy said.
"The 'European way of life' remains an attractive brand... It's a peculiar balance between individual freedom, the market, systems of solidarity and a certain economic dynamism."
Dismantling the 17-nation euro zone, breaking up the EU or re-erecting protectionist barriers would bring economic disaster and make it impossible to go on financing the generous benefits that distinguish the European social model, he said.
Failure to keep Europe's economies competitive could also undermine the ability to fund the welfare state.
"There are no solutions that could resolve today's global challenges better without European integration than with it."
Lamy earned his spurs first at the French Finance Ministry and then at the Commission.
A workaholic who ran marathons and eschewed the Brussels business lunch for a banana and a piece of wholemeal bread at his desk, he made sure the Commission machine delivered an unprecedented wave of single market legislation on schedule. Wags dubbed him the "Dalai Lamy" because of his shaven head and ascetic lifestyle.
After returning to France in 1995 to help rescue stricken Credit Lyonnais bank, he became EU Trade Commissioner in 1999, helping launch the Doha round of global negotiations, before heading the WTO in Geneva for eight years.
Those jobs put him in the cockpit of globalization just as China, India, Brazil and other emerging economies were challenging the pre-eminence of Europe and the United States.
Lamy quoted an Asian statesman as telling him that the world looks to Europe to "civilize globalization" by spreading its rules-based system of governance that smoothes the rough edges of capitalism.
Without directly criticizing outgoing Commission President Jose Manuel Barroso, he says the former Portuguese prime minister was installed by EU leaders because they wanted to call the shots themselves.
"He was put there deliberately. He didn't fall from the moon," Lamy said. "The fact is that in this difficult period, member states took things back into their own hands in the institutional set-up."
Barroso's successor should revert to Delors' method of building a consensus among member states and parliamentarians on one or two major objectives for European reform, Lamy said.
This could involve creating a real single energy market, true liberalization of the internal market for services that make up two-thirds of European output and employment, and the transition to a low-carbon economy.
"I don't have that project and I have no mandate to draw it up. But we need that kind of project," he said.
(Writing by Paul Taylor; Editing by Ruth Pitchford)