Ladies and gentlemen, let me thank you first of all for this very warm welcome and for the very competent audience in this room.  I have had the pleasure to address World Affairs Councils throughout the United States, and I must say that this seems to me to be one of the best-organized organizations.  Congratulations to President Curtis Mack for that and also for the idea of having this event cosponsored with the Council of European American Chambers of Commerce (CEAC), in my view, is also exemplary and could set an example for other places in the United States. 

         Often, I am asked, when speaking somewhere outside Washington, what could be done in order to create some kind of umbrella organization for the many bi-national chambers of commerce or business organizations between European Union states and their American counterparts?  This seems to me to be a wonderful forum to do that. So I feel very much at home and also would like to thank the colleagues from our member-states who are here and in particular my Greek colleague, Elias Thanasas, who has been very helpful in organizing my visit here.  We had a good meeting yesterday morning under his presidency with the Consul Generals and Consuls from our present and future member-states.  I learned that the longer your curriculum gets, the shorter is your time for making remarks, but I would like to congratulate Chairman Hayama for his introduction, leaving apart my boring curriculum.  I never heard such a good synthesis about the European Union from a Japanese interlocutor, I must say you can really rely on the Japanese to understand what is going on in Europe, and this is very good because our bilateral relationship with the United States, while very important, it’s trilateral with Asia and in particular Japan.

Now, my subject today is about the enlargement of the European Union. I’d like to organize my remarks around two focal points.  One is, what does the next wave of enlargement represent for the European Union itself?  And then, because, of course, we have a lot of non-European Union members here in the room, what does it mean for our transatlantic relationship with the United States?

Let me first say a few words about the European Union itself, although Chairman Hayama has so admirably already summed it up.  We are in 2003 some 50 to 60 years after the end of the Second World War at the crossroads of very important developments.  On the European side of the Atlantic, the inception of the European integration process has been, the major development, which, by the way, distinguishes what we would like to call the “new Europe” from the “old Europe.”  The old Europe was the place where a former British Foreign Secretary, Sir Edward Grey, remarked on the eve of the First World War, “The lights are going out all over Europe and I doubt we will see them go on again in our lifetime.”  Tragically, he was right.  The First World War did not remain the only one.  We had, more than fifty years into the 20^th century, several civil wars in Europe, a lot of brutality, and often devastating to our continent from which we recovered only since the early 1950s to be at a point where we are today.  So I would say that if the lights of the Old Europe went out in 1914 the lights of the New Europe went on in stages.  They went on when the process was incepted and there were some important milestones in that:  The speech by Secretary Marshall in 1947 at Harvard, the declaration of Robert Schuman on the 9^th of May 1950, the speech by President Kennedy on the 4^th of July 1962 at Philadelphia when he proposed the concept of a transatlantic partnership of equals between the New Europe when he suggested that if the Europeans are able to implement their agenda, then this would be a good time to exchange declaration of interdependence between the United States and the European Union, as it is called now.

This process has taken time.  We have achieved a number of important things.  We have gone through successive enlargements.  We started with six member states out of which Germany and France were, in fact, the driving engine.  These two countries in the middle of Western Europe reconciled their differences and decided to work together—more than that, to share sovereignty, starting with corn and steel.  Therefore, there would be no new Europe without Germany and France working together and this was known in all parts of the administration in Washington.  It no use to play games with individual member states because they were the building blocks of the new Europe and no other combination or axis between member states, old or new, and replace that.  But they were not alone; they were joined by four other European states, the Benelux countries Belgium, Luxemburg, the Netherlands and Italy. These founding members, in my view, assumed a major responsibility for the future of this process.  We went through successive enlargements—from nine to ten, with Greece in 1981, from ten to 12 with Portugal and Spain in 1986, from 12 to 15 in 1995 with Finland, Sweden and Austria, and, of course, we should not forget the enlargement of 1973, which was the very first one, with Britain, Denmark and Ireland.  Now we are fifteen; we have enlarged and we have deepened.  This is the kind of dialectics of the process. It’s easy to enlarge but it’s more difficult to consolidate the process by sharing even more sovereignty and by making it more solid as a foundation.  It’s like building a house—you add new floors and you have to reinforce the foundation. 

Now we are facing the most massive enlargement, with ten new member states, from 15 to 25.  That is really another kind of quantitative jump and we are very far advanced in this process.  The accession treaties were signed on the 16^th of April in Athens.  The ratification process is on.  The number of referendum in the new member states on this, five, have taken place and they have been positive.  Perhaps the most difficult one will take place on the 8^th of June in Poland, because they need a 50 percent participation of the voters and this will be over by mid-September.  Then we will start an inter-government conference, as we call it, which will follow the constitutional convention, which is taking place right now, in order to take further decisions on how to streamline and consolidate the European process by giving it a constitution.  This will then have to be ratified by 25 member states.  So by January 2006 we may be in a position to answer many of the questions that you may have on your minds today and for which the answers cannot be given as long as these things have not actually happened.  But these are some milestones in the development. 

Let me again say that there was a very strong meeting of minds between the Europeans and the Americans on this major geo-political development.  The European unification process would not have been started if there had not been an encouragement by the United States.  Of course, it was a decision by the Europeans, but in a very fragile historic context it needed the support of the power, which had helped to end the war in Europe. 

Let me remind you that when Secretary Marshall made his famous commencement speech, he did not only propose the Marshall Plan, for which this speech is remembered in the first place, but he said three things about how to approach international relations and which I think any Secretary of State in Washington and any President should get in his briefing book before he starts his term of office.  He said (1) a peace policy or a security policy cannot be just a war policy, he said that you can’t teach people democracy if they have an empty stomach--and that, of course, was very much directed to the Europeans after the Second World War; and he said our enemies are not countries, our enemies are poverty and desperation.  This points to a number for problems we have around the globe still, perhaps even more today than we had at the time.

Then there was the Schuman Declaration which was a kind of reminder to Americans about the way one should set ambitious political goals for which a lot of time will be needed in order to achieve them.  In the Declaration of Independence you can find this description of the goal being “life, liberty and the pursuit of happiness.”  Today this includes the right to possess an SUV.  Some people derive from the constitution today the right for some luxury, which would seem to someone on the European side a little bit overdone, but still, it’s your decision.

When Schuman and Jean Monnet defined the goals of the unified Europe they said, “peace, prosperity and Europe [will] play a role in international relations again.”  Peace was in the first place.  Peace among those Europeans who had waged war, and the motto was “never war again between us.”  I think we can say that we have reached that goal, we have implemented that goal, and there is nobody in Europe who would have the idea that in order to solve a dispute between member states one should go to war.  To use Edward Grey’s metaphor: the light which has gone on again will not go out again during our lifetime, and I hope the lifetime of the next generation as well. 

While we have some problems in our economy, not with the value of the euro, but some structure problems which we all know, there are some problems in this country running high deficits.  So never the economic situation is never ideal.  But we can say that we have reached a high level of prosperity for the European people.  We play an increasingly important role as the European Union in those areas where we have common policies, for instance, in economic relations, trade, competition—Europe is fully there.  There are other areas where our member states are much more reticent to sacrifice large parts of their sovereignty, and there is a certain “ring fencing” when it comes to foreign policy and defense. 

So these are matters which will take much more time and work in order to find out what policies and on what issues the European Union should act as a European union and on what issues member states would continue to act individually.  But there are much less satisfying situations, as we could all see when it came to questions like war as a means to achieve objectives in Iraq.  So we have to do better there, we have to do our homework, we have to persevere on our agenda and I hope that the European convention will provide us with more solid tools to do that.

I’m sure that some people in Washington might not quite like the idea, which is an old Europe recipe of divide et imperia, divide and rule, invented by the Romans.  Well, I hope that the new Romans in North America are not too much in love with that idea because at the very critical moment of the European integration process it may not be too difficult to tempt some of our member states into a coalition of willings, instead of dealing with the European Union.  As Churchill said, “having allies sometimes means that they might have other opinions.”  So I would see the future of that political relationship, between an enlarged European Union and the United States, as a relationship where we have a lot of respect for each other, where neither of the two partners believes it has the monopoly of wisdom or believes that there’s only one country of choice, almost God-given or by Divine Providence, but that we really have to sit together and to argue out our ideas before we come to a conclusion.  We may disagree on whether this or that tool needs to be used at that moment but that is quite legitimate.  I would [hope] that we would make, whenever there’s an important issue, a very honest and serious attempt to consult each other at the level of the European Union and the United States, and then pursue in a complementary fashion those objectives.

I do not see the European Union in the foreseeable future wanting to duplicate the United States by spending 400 billion euros a year on defense.  We are spending 160 billion euros a year right now—just the fifteen member states.  Probably a little bit more money might be needed, but we should view our relationship as one.

If we agree on the objectives we should use to the fullest each other’s capabilities in a complementary way so that we can achieve the objective, each of us acting according to the best of our abilities.  If that means that the European Union for some time may be a kind of junior partner of the United States on issues of foreign policy and defense I would have no problem, as long as we agree on our common objectives.  I would prefer a junior partner situation to a situation where some countries are seen as followers together on a list of coalition of willings and adversaries because they do not share the same opinion.  This again would require a lot of respect and humility on both sides and I can only advocate strong doses of that. 

Now this applies to the European Union as it is today and as it will be tomorrow.  If we achieve this enlargement, becoming 25 member states by 2006, and then prepare the ground as we did for those ten member states of the past decade in order to get in Bulgaria and Romania, deciding later on whether we would be able to afford the membership of Turkey and whether Turkey is fulfilling the conditions for membership, well we will continue to grow.  There are some of the Balkan countries, other than Slovenia which is already part of the process, who might want to join at a later stage. 

So enlargement, in a way will never be completely over, because the geographic situation of Europe is not that we are between the “sea and the shining sea.”  We have a big Asian landmass on the other side of the continent and it’s sometimes hard to draw exactly the geographic limits between Europe and Asia.  Now, in North America you have the [oceans], but you also have the north and the south.  Sometimes American friends believe it’s a kind of European North American Free Tree Agreement (NAFTA).  I can only say that if NAFTA were a kind of European Union you would have a NAFTA government somewhere, a directly elected parliament somewhere, a trade commissioner who would be Mexican and a Federal Reserve governor who might be a Canadian.  Maybe the post of Secretary of Defense would be reserved to the Pentagon because of the symmetry of capabilities in that situation and you would spend about three percent of your federal budget for financing structural policy, as we call it, in the poorer parts of North America and you would already have a waste water treatment plant in Tijuana on the border between San Diego and Mexico.

So there would be a much bigger effort in terms of transfer of resources and of accepting sharing sovereignty and accepting a common body of law because that is what the European Union is about. 

Now, this is what we had to do when preparing the membership of the ten future member states.  We had to prepare them not only for a certain level of competition once they are inside the European Union so that they compete on a level playing field with the present members, but we had to prepare them to adopt the legislation of the European Union, which is about 80,000 pages of secondary legislation and required administrative capacity to actually be able to implement it.  This took us from 1989 till now and cost us 3 billion euros a year in terms of financial assistance from our budget.  So this is not just adding to the club for membership, it is sharing the burden and it is investing in our common future.  The result of that with 25 will be that we will then have implemented another concept this time from President Bush, who after the fall of the Berlin Wall, formulated it in the following way.  He said, “We now have to organize Europe whole and free.” 

So let me say that with a successful enlargement from 15 to 25 we will have largely achieved this concept of Europe whole and free, and it will be an almost irreversible concept because so much commonality will be there, best expressed through the single currency between 12 member states.  But I’m sure that the club will become bigger over time of those countries present and future that will adopt the single currency.  And we are not stopping at our borders.  At the same time try to lay out what we would like to call the concept of the wider Europe, which is to organize a European economic area around the internal market of the European Union and its membership which includes Russia, the Ukraine, the southern and the eastern Mediterranean and almost all other successor states of the Soviet Union, including the ones in Central Asia.  So there is a concept of opening up the European single market for a kind of associate membership, free trade zone arrangements, for countries like Turkey, Russia, Norway, and Iceland whose economy is largely oriented towards the European Union economy.  Between 60 and 75 percent of the exports of those countries go to the European Union market; only five to ten percent to the United States.  So this concept works in both the harmonization of legislations, some financial assistance, a free trade area concept in order to create a bigger European market of about one billion consumers.

Now, to describe to you what the potential of those consumers is let me just give you one statistic.  The ten new member states that want to join represent some 20 percent of the present population of the European Union, but only four percent of the GDP of the present European Union and have 17 million people.  Now, four percent is the economy of the Netherlands and they have about 16 million.  If 14 million people can produce four percent of the GDP of the European Union, why should 17 million people not produce more than four percent?  Because they are willing to take it, they’re good work forces, they are intelligent people.  So there’s a huge growth potential for that greater European market of one billion.  Maybe this is the reason why the euro is already gaining weight and the reason for the problems of the deficit in Washington, or both.  I think for some Americans especially those whose roots are in Europe, if life in the United States becomes too difficult—maybe not in California because everybody loves to be here—then the New Europe will provide an alternative.  We are returning the favor after so many Europeans left in order to seek a new life in the United States.

Let me end with a remark on what all this means for business and for citizens here in the United States.  Already the economic relationship between the European Union and the United States is what we would call an indispensable relationship.  It’s strategically the most important relationship in the world.  It’s 40 percent of world trade.  Each other’s economy is a stakeholder or co-owner of a large size of the other’s economy.  American companies who have foreign affiliates make more than half of their foreign earnings in the European Union; 60 percent of all foreign direct investments flowing into the United States is coming from the European Union, and more than half of U.S. foreign direct investment is going into the European Union.  So it is true that Asia becomes very important, that we all diversify, but today twice as much investment is going from the United States into the Netherlands as into Mexico.  The European Union is still the main market for the United States and vise versa, and therefore when we enlarge we create stability and productivity among all member states.  This is good for business. 

The most important thing business needs is a stable framework: its predictability.  This is what Europe offers.  It’s a kind of a free ride situation for the United States.  I know that sometimes Americans look at us and say, “Well, your defense capabilities are very small and in fact you are free riders because you are protected by the American military machinery and in addition to that you are not grateful any more.”  Let me return the offer here of the United States being the free riders of all the good things we are doing in Europe because we are spending our taxpayers money for making Europe more stable and it benefits directly our American friends.  This is good.  We like this but we would like also this to be recognized from time to time.

Let me end with the hope that at the crossroads at which we are we get again our economic and political agendas back on track on the transatlantic basis in order to approach the next 50 years in the same spirit in which we have ended the past 50 years.  We would very much hope that in the new world, the United States, will not be tempted to apply the methods of the old Europe when approaching international issues but do it together in partnership with the European Union.

Thank you very much.