By Nicholas Vinocur
PARIS, May 22 (Reuters) - Former French President Nicolas Sarkozy weighed into the European Parliament election campaign on Thursday, calling for tighter controls on immigration and a two-speed Europe with a powerful Franco-German economic zone at its heart.
The conservative former leader, who is widely expected to seek re-election in 2017, argued for a profound overhaul of EU institutions ahead of a May 25 European Parliament election in which the Eurosceptic National Front is currently tipped by polls to emerge as France's leading party.
The mainstream conservative UMP party to which Sarkozy belongs is deeply divided between a broadly pro-European camp and an increasingly Eurosceptic faction, and Sarkozy's backers said his intervention could allow a reconciliation of the two sides and form the basis of its future European policy.
In an editorial in Le Point weekly, he said Europe's borderless Schengen travel zone should be suspended and revamped to prevent foreigners who enter the bloc from then shopping around for generous welfare benefits in any member state.
"We are up against the clear failure of Europe's immigration policy," he wrote. "Schengen I must be suspended and replaced with a Schengen II."
He also pressed for changes to the bloc's structure, arguing that the idea of all euro zone countries being of equal weight was "a myth" and that the list of policies to be coordinated at EU-level should be reduced to key areas such as agriculture, energy, trade and competition law.
"There is not one Europe but two ... In the euro zone, we must stop believing in the myth of equal rights between all members."
"I am arguing for the creation of a large Franco-German economic zone at the heart of the euro zone that will allow us to better defend our interests while eradicating our fiscal and social handicaps," he wrote.
Channeling frustration with Europe's executive arm, Sarkozy said the European Commission should no longer have legislative powers, and that these should become the exclusive domain of the European parliament.
UNITING THE RIGHT
President Francois Hollande's Socialist Party, still smarting from its rout in local elections in March, is seen coming in third place behind Sarkozy's former center-right UMP party and the National Front.
Although he officially retired from politics after being beaten by Hollande in 2012, Sarkozy has fired off a number of salvos from the sidelines of politics, including a major speech setting out similar ideas on Europe in Berlin this February.
"This (latest) intervention unites us because it brings together the Eurosceptics and those that want to keep on building up Europe," said Brice Hortefeux, a former minister in Sarkozy's 2007-2012 government and a long-time ally.
"This is something on which we can build for the future," he told France Info radio.
Jean-Francois Cope, the current leader of the UMP but who is struggling with low popularity levels, said it showed that Sarkozy was, unlike Hollande, able to give Europe the leadership it needed in economic and political crises.
"Remember when Nicolas Sarkozy was president, as soon as there was a crisis in Georgia, he got immediately involved. Now look at this disaster, the complete absence of France in the Ukrainian crisis," he told RTL radio, referring to Sarkozy's shuttle diplomacy over the brief 2008 conflict in Georgia. (Additional reporting by Mark John; Editing by Andrew Callus)