Today's Date:

Over the past 10 years, the European Union has made extensive progress in two essential areas : currency, with the progressive establishment of the Economic and Monetary Union (EMU) and, more recently, security in the broad sense, i.e., the second and third pillars (ESDP and Justice and Home Affairs.) Two other projects are also under way : enlargement to the East and the reform of European institutions. These two new challenges put the EU’s very survival at stake.

I/ SINCE THE MAASTRICHT TREATY, THE EU HAS FOCUSED ITS EFFORTS ON MONETARY POLICY AND SECURITY POLICIES.

A/ The Economic and Monetary Union is a real success for European integration. The introduction of the euro marks that achievement.

- The introduction of euro coins and notes on January 1st has generally been seen as a success in the United States. The advantages of the European currency have been widely reported. However, you should not forget that the introduction of Euro notes and coins is actually the final stage in a process that began in 1992. Economic and monetary union only took ten years.

- Two general remarks however : 1/ The economic consequences of the single currency have been overestimated. The euro wasn't invented to compete with the dollar as an international currency of reference. The euro will above all enable Europe to share with the United States certain international financial responsibilities. 2/ The political consequences of the single currency have been underestimated, and some people even think the euro is an abdication of political resolve with the European governments once again favouring economic integration. Those people fail to recognize the symbolic and political significance of the European countries' transfer of a core aspect of their national sovereignty.

- Completion of the EMU is not an end in itself. It is just one more stage on the path to deeper European integration. First, the member states are having to reflect on the institutions that are responsible for monetary and exchange rate policies ("economic government"). Second, the euro zone won't be truly complete until Denmark, Sweden and Britain have joined. In the longer run, the candidate countries for EU membership will also adopt the euro at some point once they meet the criteria. So then 28 countries will be using the new currency.

B/ Security policies, the second and third pillars, have also been considerably improved.

- With regard to the ESDP, the French-British summit in Saint-Malo (1998) relaunched our common defense projects. It is another example of growing integration, in a sphere that directly affects the sovereignty of Member States. We are in the process of rebalancing some major elements of the transatlantic security relationship, with both burdens and responsibilities being shared more equally. The decision of the fifteen countries of the EU to develop a common security and defense policy, met an important milestone last December, at the European Council at Laeken, with the EU formally declaring itself operational. The Union will progressively cover a broader spectrum of increasingly complex operations. An important capabilities milestone has just been met, with the final decision for the procurement of the A400M finally having been taken.

- Furthermore, the European Union is progressively asserting a common foreign policy, at least in certain areas : Balkans, Afghanistan, Middle East, Zimbawe, etc. Common foreign policy is no longer an abstraction. It has substance. It has resources. It proves its effectiveness on a daily basis (common positions, EU special envoys, Solana). These progressive strengthening should not be feared (burden-sharing, sharing of responsibilities). American and European positions may diverge (“ Axis of evil ”). As in trade, there will be disagreements as Europe grows stronger. These differences call for increased cooperation and not an unilateral response. Europe must make its voice heard and the United States must be able to hear it.

- As for the third pillar (JHA), the attacks of September 11 made the Fifteen aware of the efforts that remain to be accomplished. Among recent progress, I would like to cite the European arrest warrant, the transposition into European law of Security Council resolution 1373, the agreement signed between Europol, Eurojust and the United States, the fight against terrorist financial networks. Such efforts will continue under the Spanish presidency, whose top priorities include negotiating an extradition and judicial assistance agreement between the EU and the U.S.

II/ TWO NEW AREAS OF WORK HAVE GOTTEN UNDER WAY AND WILL CALL FOR DIFFICULT AND COURAGEOUS DECISIONS FROM THE EU MEMBER STATES.

A/ Enlargement to the East is an unprecedented challenge.

- The United States has said all along that it supports EU enlargement. But its support seems to me rather skewed at this point. Let me give you four examples. 1/ For a long time, the United States has been favorable to Turkey’s swift accession to the EU, considering that because Turkey is a member of NATO, it should also be quickly a full-fledged member of the EU. This approach underestimates a few important facts : death penalty, economic situation, full implementation of the “ acquis communautaire ”. 2/ The Cyprus question is of considerable interest to the U.S. but less for the difficulties that EU membership might pose for a divided island than for reasons having to do with U.S. relations with Greece and Turkey. 3/ EU enlargement is often presented as being a complement to NATO expansion, if not as an outright substitute. 4/ Finally, the United States is paying less attention to the purely political aspects of enlargement than to the trade aspects in the membership negotiations.

- French view on enlargement. Enlargement is a response to a political necessity that has been acknowledged since the Berlin Wall came down : this is about reconciling Europe with its geography and history, and working for the stability of the reunified continent. It is also an unprecedented historical challenge in terms of the number of candidates, level of development, the gap between the EU's and the situation of the candidate countries. In other words, enlargement this time is quite unlike previous enlargements or the coming NATO expansion (simpler because that deals only with security issues). There is more than a difference of degree among them, they are different in nature. Given the magnitude of the challenges to be addressed, the tensions, traditional in the history of European integration, between widening and what we call deepening will be more acute, the adjustments (especially financial) will be more painful and the transformation more radical. The Union is facing existential choices.

- The progress report is now as follows : Slovenia leads with 26 chapters closed. Then come Cyprus, Hungary, and the Czech Republic (24), Latvia and Lithuania (23), Slovakia (22), Estonia, Malta and Poland (20), Bulgaria (14) and Romania (9).

- Now, just a quick glimpse down the road : First of all the Spanish will have to negotiate with the applicants on the three most difficult chapters of the acquis, big-budget sectors (agriculture, regional policy and structural funds, budget contribution). As for the Danish presidency, the 15 adopted a "road map" which provides for the end of negotiations for the best-prepared countries in the second half of 2002 and membership around 2004. No definite scenario has been adopted yet. Each country is assessed on its own merits so it's quite possible to envision a first round of enlargement, limited, say, to Slovenia, Hungary, and the Czech Republic, rather than a "big bang" of 10 new members all at once. A few sensible considerations, however, need to be borne in mind : we need to aim for a certain geographic coherence (separating the Baltic states or the Czech Republic from Slovakia would pose problems) ; Poland has special significance and some people think a first wave without Poland wouldn't make much sense (on the other hand it's hard to see us compelling some countries to wait for Poland if that country should be slow making the requisite adjustments).

I'm not going to venture any prognoses. I shall simply state that 2002 is a decisive and sensitive year because of key internal events in several member states (elections in France and Germany in particular, which is not very favourable for difficult decisions), deadlines within the EU (CAP reform) and important dates coming up outside (negotiations at the WTO in particular).

It is particularly important to cross this threshold because other applicants are lining up: Turkey, the Balkans, Moldavia, the Ukraine. There needs to be a thorough discussion about Europe's borders. At this point it's barely started. Speaking personally, I see the movement of EU expansion limited to the south by the Mediterranean and to the east, by Russia. Because of its size and history, Russia does not, I think, have a future in an integrated Europe. Moreover, it is not a candidate. So it becomes more indispensable than ever to keep up the work to strengthen our ties with Russia whether they're political, commercial or security-related.

B/ INSTITUTIONAL REFORMS SHOULD MAKE IT POSSIBLE TO FINALLY STABILIZE THE EU’S INSTITUTIONAL FRAMEWORK.

- When the 15 decided to enlarge, they agreed to reform the EU's institutions first. These had been designed for the six founding members and would be completely unworkable with 25 of 27 members. The reform failed at Amsterdam but was subsequently settled in negotiations that concluded with the (highly controversial) Nice Treaty. All in all, I think the Nice Treaty only partially met its goals. The legitimacy of the decision-making process is restored because the re-weighting of votes in the Council increases the relative weight of the larger states without marginalizing the smaller ones. But the efficiency and transparency of the decision-making process is hardly any better (multiplication of majority rules in particular). The result we finally achieved is the lesser evil given the very determined positions of the member states. Finaly, and this is not the least of its merits, the Nice Treaty allowed the Union to avoid the worst : a complete failure would have ruled out enlargement one year before the launch of fiduciary Euro.

- The Convention and the IGC: In Nice, the European Heads of State and Government decided to convene a Convention composed of representatives of national parliaments, the European Parliament, the Commission, the governments of Member States and Candidate Countries--in total, some 100 people. The mission of that convention, presided over by Mr. Giscard d'Estaing, will be to take stock of European institutions, to isolate their weaknesses and to propose solutions to correct them. It has no decision-making powers ; its job is to offer options. It will meet from Spring 2002 to Spring 2003. Only then, the Member States will convene an Intergovernmental Conference (IGC) consisting of representatives from the Member States. It is this second body that will determine the institutional changes to be implemented.

The Convention's agenda is not formally laid out. It will deal with at least four subjects that appear in the annex to the Conclusions of the Council of Nice : the division of competences between the Member States and the EU and the principle of subsidiarity ; the role of national parliaments ; the simplification of European treaties ; the constitutionalization of those treaties and the status of the Charter of Fundamental Rights. But the Convention's work, and consequently that of the ICG, will very likely go beyond those four subjects. It is a time for democratic debate, without taboos or censure. In 2004, the time for decisions will come.

Nevertheless, one thing is certain : It isn't good for the Union to be in a state of perpetual reform. In 2004, the institutional framework must therefore be stabilized, and half-measures avoided. This is necessary for public opinion, to avoid confusion. It is necessary for the Member States, which must focus their efforts not on the rules of the game, but on the policies they want to develop together. But we mustn't underestimate the difficulty of the exercise. 2004 and 2005 will certainly be a time of turbulence because institutional reform will come at the same time as the enlargement of the Union, European Parliament elections, and the negotiation of the European budget for the post-2006 period.

Europe as a space or Europe as a power ? Since the beginning of European construction, France has chosen the second option. And for two rather simple reasons. First, the EU is the best guarantee of prosperity, stability and security on the European continent (there's no need to remind you here that the EU both grew out of the Franco-German rapprochement and nourishes it). Second, it is the only way for France, a medium-size power, to influence the course of international relations. The moral imperative is consistent with a clear interest. Yet this ambitious conception of European construction must not be seen as taken for granted. It is shared by many Member States, of course, particularly Germany, the Benelux countries or Spain. But it is regularly threatened by another school of thought that is less attached to integration. After half a century of existence, the European Union is today facing essential questions that have been postponed for too long. It must answer them, or slowly lose its coherence and attractiveness.

Is the EU an exportable model ? One hears that idea in relation to the Balkans, or even with regard to the Mideast and other regions in conflict, which see in the reconciliation between France and Germany a path of redemption. The European model, in any case, is the product of long and painful compromises. Its success has depended largely on specific historical circumstances and the enthusiasm of a few visionaries. While it can't be imitated as such, it is certainly possible to take inspiration from it, for its original institutions, a legal system without equivalent, new ways of working, and a strong ability to adapt. Its faults are often denounced, its advantages rarely recognized. But allowing European States to forge a common destiny from centuries of antagonism is not the least of its achievements. Such an alchemy may indeed be a source of inspiration./.