Conceding that the EU lacked sufficient powers to stop the devastating 1992-95 Bosnia war, European Commission President Jose Manuel Barroso said that the absence of such authority at the time is "one of the most powerful arguments for a stronger European Union."
Barroso spoke to reporters with EU Council President Herman Van Rompuy and the president of the EU Parliament, Martin Schulz, in Oslo, where the three leaders were to receive this year's award, granted to the European Union for fostering peace on a continent ravaged by war.
Nobel committee chairman Thorbjoern Jagland will present the prize, worth $1.2 million, at a ceremony in Oslo City Hall, followed by a banquet at the Grand Hotel, against a backdrop of demonstrations in this EU-skeptic country that has twice rejected joining the union.
About 20 European government leaders, including German Chancellor Angela Merkel, French President Francois Hollande and British Deputy Prime Minister Nick Clegg, will be joining the ceremonies. They will be celebrating far away from the EU's financial woes in a prosperous, oil-rich nation of 5 million on the outskirts of Europe that voted in 1972 and 1994 in referendums to stay out of the union.
The decision to award the prize to the EU has sparked harsh criticism, including from three peace laureates -- South African Archbishop Desmond Tutu, Mairead Maguire of Northern Ireland and Adolfo Perez Esquivel from Argentina -- who have demanded the prize money not be paid out this year. They say the bloc contradicts the values associated with the prize because it relies on military force to ensure security.
The leader of Britain's Independence Party, Nigel Farage, in a statement described rewarding the EU as "a ridiculous act which blows the reputation of the Nobel prize committee to smithereens."
Hundreds of people demonstrated against this year's prize winners in a peaceful torch-lit protest that meandered through the dark city streets to Parliament, including Tomas Magnusson from the International Peace Bureau, the 1910 prize winner.
"This is totally against the idea of Alfred Nobel who wanted disarmament," he said, accusing the Nobel committee of being "too close to the power" elite.
Dimitris Kodelas, a Greek lawmaker from the main opposition Radical Left party, or Syriza, said a humanitarian crisis in his country and EU policies could cause major rifts in Europe. He thought it was a joke when he heard the peace prize was awarded to the EU. "It challenges even our logic and it is also insulting," he said.
The EU is being granted the prize as it grapples with a debt crisis that has stirred deep tensions between north and south, caused soaring unemployment and sent hundreds of thousands into the streets to protest austerity measures.
It is also threatening the euro -- the common currency used by 17 of its members -- and even the structure of the union itself, and is fuelling extremist movements such as Golden Dawn in Greece, which opponents brand as neo-Nazi.
Barroso acknowledged that the current crisis showed the union was "not fully equipped to deal with a crisis of this magnitude."
"We do not have all the instruments for a true and genuine economic union ... so we need to complete our economic and monetary union," he said, adding that the new measures, including on a banking and fiscal union, would be agreed on in coming weeks.
He stressed that despite the crisis all steps taken had been toward "more, not less integration."
Van Rompuy was optimistic saying that EU would come out of the crisis stronger than before. "We want Europe to become again a symbol of hope," he said.
The EU says it will donate the prize money to projects that help children in conflict zones and will double it with EU funds.
The European Union grew from the conviction that ever-closer economic ties would ensure century-old enemies like Germany and France never turned on each other again, starting with the creation in 1951 of the European Coal and Steel Community, declared as "a first step in the federation of Europe."
In 60 years it has grown into a 27-nation bloc with a population of 500 million, with other nations eagerly waiting to join, even as its unity is being threatened by the financial woes.
While there have never been wars inside EU territory, the confederation has not been able to prevent European wars outside its borders. When the deadly Balkans wars erupted in the 1990s, the EU was unable by itself to stop them. It was only with the help of the United States and after over 100,000 lives were lost in Bosnia was peace eventually restored there, and several years later, to Kosovo.
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