The French vote in elections to the European Parliament on Sunday, along with most other EU countries.
In an opinion piece for French weekly Le Point, published on Thursday, Sarkozy said "Schengen I must be immediately suspended and be replaced by a Schengen II, of which member countries can only be a part if they first agree to the same immigration policy".
"Europe is not meant to organise social and migratory dumping, almost systematically at the expense of France," he declared, adding that the EU’s migratory policy had failed and the need to replace Schengen I had become obvious.
The Schengen area comprises 26 European countries that have abolished passport or any other type of border control in-between their common borders.
Schengen encourages the free movement of people and goods.
Non-EU countries like Iceland, Liechtenstein, Norway and Switzerland are part of the area, but EU members Britain, Bulgaria, Croatia, Cyprus, Ireland and Romania are not.
Sarkozy said that without a quick fix in coming years France's social system could break up.
He also called for half of the competences in the hands of Brussels to be returned to national governments.
Sarkozy said the European Union protects its citizens from the "ideological veering off-course of those who govern us and their supporters.”
"If the European Union broke up centuries-old hatred and conflicts of interest would resurface more violently."
"We must correct its excesses but as a project it must be preserved."
A "large, coherent and stable" Franco-German economic bloc at the heart of the eurozone would allow France "to better defend (its) interests in the face of German competition by doing away with fiscal and social disadvantages", he added.
This "would allow us to take over the leadership of the 18 countries that make up our monetary union".
Sarkozy's contribution to Le Point is also be published by Germany's Die Welt newspaper.