I think the idea of Monnet and Schumann and the founders of European integration that economic integration would lead to political integration has reached the end of the road. Further steps toward integration do require political enthusiasm. So, there I agree with you. If European Union is to come about, it has to be done directly through politics and not by economic stealth.
I also agree with you that, at present, the European idea does not have much popular legitimacy. Politics is still focused at the national level. However, my fear is that without progress toward political union, the European project will start to disintegrate. And, in the context of globalization, I am pessimistic about what this means for both democracy and prosperity. I do think that the nation-state has been eroded and that the capacity of governments to fulfill democratic demands is greatly weakened.
My hope is that there is a potential European political identity around ideas about human rights, multiculturalism, and peace. Young people are much more "European" than the older generations. They travel around on Interrail; they do exchanges with European universities under numerous EU schemes. My own students tend to be a real European mixture and to see themselves as Europeans; they are also skeptical about formal politics but enthusiastic about various environmental, human rights, and other causes. Their sense of Europeanness has very little to do with the current European Union, which is seen as bureaucratic and preoccupied with farm prices and interest rates. I think that if the EU were to take an independent and constructive stance on Kosovo, for example, or if it were to extend citizenship to all European residents so that Moroccans in Italy and Turks in Germany were European citizens even if not Italian or German citizens (and I can think of a whole series of similiar policies), the image of Europe would change.
The news about the refugees is awful, isn't it?