The provisions of the EC Treaty on citizenship of the Union introduce a fundamental democratic element in the process of European political integration. The focus of integration is no longer on an economic factor of production (workers) but on politically self-determined citizens. Citizenship of the Union, however, does not constitute a full status of European citizenship, because of its incompleteness in terms of entitlements and its dependence on Member States' nationality. The development of Union citizenship into a complete status of citizenship depends on Member States' determination to transfer essential aspects of sovereignty to the Community and achieve full political integration. If Union citizenship is to evolve from the current form of derived status of Member States' nationality into a more complete and independent European citizenship, it must be followed by a parallel evolution in the field of collective identity of the citizens. In the EU legal order, citizenship, if taken in its `national meaning', could be a fundamental element in the consolidation of the Union as a `state-like phenomenon'. The current `national understanding' requires the existence of a common national identity (based on culture, language, traditions and in some cases ethnicity) to sustain the legal and political framework made of rights and obligations of membership. At European level, however, this approach is unlikely to work because of the different national and cultural identities of the people of Europe. Alternatively it is argued that Europe needs a radical change in the conception of citizenship and democracy to proceed in the direction of political integration. Only a strictly political European identity based on association and participation could co-ordinate the different allegiances that European citizens already have towards institutions and groups other than the Union, and at the same time create a common political bond among them. Despite this fundamental change, the extension of citizenship beyond the national boundaries should take place without endangering those citizens' rights, which have been developed in the context of the nation-state, in particular the principles of liberty and equality. The great challenge faced by the European Union consists in dissociating those rights from the tie of nationhood. On a point of eligibility, European political identity could not be used to exclude `cultural outsiders' from European citizenship, regardless of whether they come from a Member State or a third country. As European identity would lack a common cultural basis, the same concept of `cultural outsider' would not apply to European citizenship. As a result such type citizenship would be naturally open to non-European immigrants, who already reside in the Union, but who are excluded from national citizenship, and to prospective third country immigrants. The openness of a politically based European citizenship and identity contrasts with the restrictive European Union immigration and asylum policies (fortress Europe). In the absence of cultural or ethnic common grounds, fortress Europe seems to be based mainly on contingent economic reasons, such as the protection of the European labour markets and welfare systems. It appears that in the long term, due to demographic changes, these economic reasons might disappear together with the restrictive immigration policies. In the meanwhile, however, there seems to be no excuse for the non-integration of resident third country nationals into European citizenship.