The panel suggests that European military ventures should be decided by majority vote, to prevent one country paralysing activity in a crisis. But nations voting against military action would not be expected to contribute combat forces.
An intervention force of 150,000-200,000 should be created "with the necessary command, intelligence and logistical components", the report advocates. Initially the force would just be for intervention outside Europe's borders, in peacekeeping and humanitarian situations, for instance. But eventually Europe should take responsibility for defending itself - a role now shared with the US through Nato.
Drawn up at the request of the EU commissioner Hans van den Broek, the report will dismay British Eurosceptics by advocating a much tighter integration of defence within the European Union. But it will upset federalists by saying existing EU institutionssuch as the Brussels Commission should not be involved with defence. Mr van den Broek, apparently embarrassed by the report, distanced himself rapidly from it.
John Mitchell, a member of the Royal Institute of International Affairs and a panel member, called current efforts "mud -wrestling in the dark". The report argues that defence and security should be centre-stage when the EU rewrites its rules at next year's inter-governmental conference.
The 14-member group is led by Jean Durieux, a former senior official in the Commission. It starts by analysing the enormous challenges which the EU confronts on its borders. "Europe after the Cold War is facing two arcs of crisis: one to the south and one to the east," said Michael Sturmer, director of a leading German think-tank and a panel member. Yet every effort by the EU and the Western European Union, its defence counterpart, has failed.
"There is frankly nothing to show for all this activity, all the fresh starts and `progress'. On the contrary, there is an increasing sense of unease at the impotence and drift," says the report. The Maastricht treaty introduced a Common Foreign and Security Policy for the EU but this has been "poorly planned, hard to implement and disappointing".
The group proposes the immediate creation of a new "central analysis and evaluation capability", a European equivalent to America's National Security Council. This should be headed by a special adviser, reporting to European governments. Ideas like this are already backed by Britain and France.
But more controversially the experts list reforms for the 1996 review of Maastricht. They suggest that the new Security Council should be the basis for a supranational defence body headed by a prominent individual - a cross between Jacques Delors and Henry Kissinger.
Most decisions would be taken by a qualified majority vote, each government having a number of votes corresponding to its defence contribution. That would ensure that Britain and France would usually have the deciding say, but that neither alone could stop other states acting if they wished.