Thank you very much. I am of course very honored by this award and I have to say that what I look forward to the most is being here next year and handing this award over to someone else. Not that I want to get rid of it but I think that it is a very good idea to have something that you hand on and then a new name will be added to the previous ones and hopefully it will be an impressive collection of different European personalities in the years to come.

Let me say a couple of things on the global role of Europe and on the direction in which we are heading. It is of course imperative, when you do that, to somewhat look back on where we are coming from. You can start - as you often do in these European speeches - with Charlemagne if you want but this seems out of fashion lately. The European Union that we have now is so much bigger than the old concept of just resurrecting the old Frankish empire. You can start with 1957 and 1958 and the Treaty of Rome or even the coal and steel because that was very important in re-building the west of Europe after the devastating wars of the first half of the last century but this is not entirely relevant either. More appropriate I think is to start really in 1989 because that was a true resurrection of Europe.

Sometimes I go back in history to the golden age of the West and of Europe prior to 1914, when we had the first real age of globalization, globalization with a European face that came to such an abrupt end, starting in the Balkans in August of 1914. And you remember those famous words of the then British foreign secretary, Sir Edward Grey, standing in what is still today the office of the UK Foreign Secretary, looking out at Horse Guards' Parade, seeing the lights go out and saying: ‘I see the lights going out all over Europe and I wonder if I will see them coming on again in my lifetime.' And he was of course right. Although the lights came on to a certain extent again in 1918, we know now that it was just an interval and that there was a new war coming. We have witnessed revolutions, depressions; we were faced with the perils of Communism and Fascism. It was a devastating time for Europe.

And after the second of these great convulsions that spread all over the world, half of Europe was still in darkness for more than a generation, behind the Iron Curtain. It was really not until the great European revolution of 1989 that the lights started to come on again all over Europe and we finally were able to start again to build Europe - united and free, democratic and dynamic, active in promoting and preserving the peace and prosperity in our part of the world and then starting to project a positive power towards the rest of the world. Indeed, that was the moment when the true European project started.

We need not forget that Europe is the place where the war started and then spread, where the totalitarian ideas were born and then spread. And now Europe is the global partner when it comes to finding solutions to global problems. We used to spread war and totalitarian ideologies across the world, now we are spreading the ideas of reconciliation, of peaceful integration between nations, of working together and that is truly a change.

Looking ahead - it is common knowledge that we are now facing a very different world. We have just gone through and are beginning to emerge from the most profound economic crisis in a generation. A year ago it was really not clear where we were heading. We bottomed out and now we are beginning to be on our way up, although it has to be quite some time until we can say that we are back where we were a couple of years ago.

When we have emerged from the crisis, we are going to find ourselves in a very different world indeed. Not fundamentally different, but trends that we saw before are going to be even more pronounced in the post-crisis world. Already before the crisis we saw that the demand in the global economy was shifting. For quite some time, for decades in fact, America had been driving innovation and demand for virtually everything. But suddenly we saw that so called "emerging economies" were overtaking the US economy in this field. Additionally, this trend contributed to the development of the European economy because we are one of the most or the most outward-oriented export-driven economy in the world.

After the crisis we will be faced with numerous challenges. Even though the American economy is continuing to do very well in a number of fields, notably in innovation, at the same time it is burdened by the debt stock, which is on an upward trend. On the other hand I was struck in the last few months by the fact that China and India never had any negative growth figures. The same holds for Indonesia - a quarter of a billion people. And they are now growing extremely fast while we are still struggling with negative figures. We are witnessing the emergence of the new world.

I talked about the first phase of globalization, the one that had come to such an abrupt end in August of 1914. It was globalization with a European face. Then it was of course replaced with globalization with an American face, primarily after 1945, with, as said, the innovation potential and the demand of the US economy driving the global economy. The best and the brightest in the world tended to migrate and still do to the superior universities and research institutions that are there - on the North-American continent. But increasingly we are seeing that we are entering a third phase of globalization - globalization with an Asian face. We still have probably 8 out of 10 of the best universities in the world in North America. But we have 8 out of 10 of the biggest container turners in the world in East Asia. Increasingly we see research and development efforts there starting to have an effect. China has overtaken the European Union as an exporter of high-tech equipment in the last few years. Their high tech might not be quite as high tech as our high tech, but still this is the way the Eurostaat measures things. But the significant thing anyhow is that it is not primarily cheap shoes and textiles that we are competing with the emerging China with. It is increasingly medium and high-tech products - the ones that we were supposed to be by far the leading producer of in the world. That is the new world that we are entering.

We should take pride in the spectacular success of creating this European project that Wolfgang mentioned, during the last two decades, since 1989. We have gone from what was then a Europe of 12 to a Europe of 27, to half a billion people. The biggest integrated economy in the world, the biggest trading entity in the world - as a matter of fact bigger than the number two and number three taken together. We give roughly 60% of all official development assistance in the world. We are the biggest market for more than 130 countries all over the world. We are quite something and we have made our part of the world more peaceful and more secure than it had been perhaps ever in the history of our continent.

But we should also look at some of the failures and the mistakes. After having mastered some of the very difficult political issues of the 1990's - some of them good: the reunification of Germany, the possibility for the three Baltic nations to emerge not only out of the Soviet empire as central Europe did, but out of the Soviet Union itself and then to enter the European Union and the Atlantic Alliance. But we must not forget the failures of that horrible decade of war in the Balkans.

Another failure was the implementation of the Lisbon Agenda. The European leaders set an ambitious goal in the year 2000. Europe was to become by the year 2010 the most competitive economy in the world. We have to note the fact that we have not succeeded in this respect. One of the things that disturbed me the most is that some years ago a perfectly achievable goal was set up, saying that the EU should spend 3% of GDP on research and development. The reason for that was fairly obvious: if you are not ahead or at least in the upper league in terms of R&D, you are sooner or later losing the future because the others are racing ahead of you. If you look at the situation today you can see that there are only two countries that are above 3% of GDP, while if you look at the EU as a whole, I think the last figure is 1.9% of GDP. And if there is an improvement in the next set of statistics it will only be due to the fact that the GDP contracted, not because R&D spending went up.

That means that we have not invested in the future and we have not done enough to assure the long-term competitiveness of our economy and I would argue that our standing in the world in the future, our ability to project our influence and be respected in our values is going to be a function of the way we handle two things. The first one is the economy - if you are not seen as a successful economy, you are not going to be seen as a successful society, and consequently not a successful model to follow. It's as simple as that, but it requires that we see it like this and we act accordingly.

The second issue is enlargement. It has always been seen as a controversial part of the European agenda. There is a lot of debate these days about the ‘enlargement fatigue' (and I'm quite certain there is an ‘enlargement fatigue‘), but we should not forget that there has always been ‘enlargement fatigue‘. Every single enlargement in the history of the European Union has been characterized by two things: the first one is that it has been opposed. It started with the most famous of all ‘niet's' - of course at the time pronounced in French (‘non') by the President of France who didn't want Britain in. He said that Britain was too different, too big, that it had a different perspective. Most of his arguments were probably fairly correct, but of course we can say today that it was a good thing to have Britain in. The different perspective and tradition that Britain added did enrich the European Union and no one would question that today. So it has been the case that every enlargement was opposed before it happened and every enlargement was a success after it happened.

It is fairly obvious that the European Union of 6, 9, 12, 15 or even of 25 would have been a less significant, less credible and less powerful global actor than the Union of 27 that we have today. So we have to understand that it is also in our interest to look at the possibilities of carrying this process forward. Behind us is the enlargement with 100 million people of 10 nations in Central Europe: from Estonia down to Bulgaria. A very big thing, indeed.

Ahead of us are a further 100 million people that are knocking at our door in South-Eastern Europe, i.e., Turkey and the countries of the Western Balkans. And we all know that this is going to be a far more complicated enlargement than the previous ones. They are starting from a lower level (or, as a matter of fact, the GDP of Turkey is ahead of some present members of the European Union) and of course the process of state building in some of the countries of the Western Balkans is somewhat fragile. Turkey as a matter of fact has the reverse problem - too much of too strong a state, so there is a question of rolling back some of the State. In the Western Balkans on the other hand it is a process of building the state structures that would make this society governable. Both are complicated processes that will take some time and will not be possible without an input of the European reform process and the inspiration that the model and the magnetism of the European Union still represents. These countries are different. Some are opposed because they are too big, some because they are too small (although I'm fond of pointing out that Article 49 of the Treaty of Rome does not have any criteria saying that we cannot take the small ones or we cannot take the big ones).

Beyond that, the power of attraction of the European Union extends also to other areas. We have launched two major strategic initiatives in the last two years aiming at gaining a greater influence and meeting more of the aspirations of our part of the world: the Union for the Mediterranean towards the South and the Eastern Partnership towards the East. And they are of as great importance for the future of our Union as the process of enlargement. Were the process of enlargement to be completed one day, with all the countries of the Western Balkans, complicated as that would be, we would then be a Union of 600 million people. And with the demographic dynamism that would come into us, we would assure that we are the biggest economy in the world for a longer period than would otherwise be the case. We would also truly demonstrate that we are a Union that can bridge all of the divisions of the past.

I come from a Northern country called Sweden where the previous generation used to read all of the stories from the 30 years war, when we saved the people of Germany from the evils of the Pope. We truly did that. The evil of the Vatican had to be fought with a sword. That division between the Protestants and the Catholics led at that particular time, though there were other facts as well, to the most devastating war that we have seen in European history. If you take the number of people killed as a percentage of the population, the 30 years war was worse than what we saw during the 20th century and that was caused by the division of religions. We also had other issues that were devastating to European identity, countries and history: the division between the Western and Eastern Christianity which runs right through the Balkans with those particular wars, as well as the co-existence of the Jews within European society with all the dark sides of our history in this respect.

Now we face the challenge of our relationship with the wider Muslim world - a billion people out there. That world is not only our immediate neighbor on the global map, but also a neighbor across the street in most of the big cities in Europe. We must show that we can reconcile the divisions of the past also in this respect - both for our internal tranquility and peace, but also because of our external powers of attraction. We have a very obvious interest in what is going to happen in North Africa and the Middle East. The Mediterranean is not very big but on the other hand, if you look at the demographic figures there, these countries will add within the next 15-20 years roughly 160 million people to their population. That's two new Egypt's that are going to appear on the southern shore of the Mediterranean.

Simplifying, two different things could happen there. On the one hand we might manage to stimulate, together with other forces and those countries themselves, a process of opening up of their economies and societies, which might trigger an economic boom there, obviously benefiting us too. But the reverse is also possible - the opening up of the economies and societies might not occur and the only thing that happens is that you will have millions of very disappointed and increasingly angry young people. In turn, it is going to cause other political and ideological challenges. We have a very obvious strategic interest in developing the relationship with the South so as to be able to do whatever we can to influence the direction in which those societies will be developing over the next few decades.

As for the eastern direction, between Europe and China there are 12 very different nations. There are 6 countries of the Eastern Partnership, i.e., the three countries of the Southern Caucasus: Moldova, Ukraine and Belarus. There is Russia that spans over 11 time zones. There are 5 countries of Central Asia - all of them are more fragile now than 5 years ago. I would have been more certain talking about the future of each and every one of these countries 5 years ago than I am now. I don't need to spell out too much about what developments they are going to mean for us in the long term.

You can extend the perspective somewhat and see that to the east of our present Union there are three big countries: Turkey, Russia, Iran. If you look at their economic trends, Turkey is going to be the most dynamic of these economies. Then Iran - very much depending on whether it continues to go down or whether there is going to be a change and opening up of Iran. Iran could well be another regime - a new, rapidly-developing emerging economy and rapidly emerging society with nearly a hundred million people and the second oldest culture, tradition and a rich pool of talent. The constellation between these three countries is of course of fundamental importance in the long term and that is also why the Turkish relationship for us is so crucial. In our interest is that Turkey stays with us rather than with Russia or Iran. The same is valid for the future of the Eastern Partnership countries, as for the future of the very fragile Central Asian nations in between Russia and China. These are areas that are of utmost importance not only for the EU, but also for global stability. If things go wrong there, if we have any implosion in the Middle East or North Africa, it will impact not only upon European security, but also upon global security in a lot of different respects.

All of these issues need to be taken into account while devising our policies for the future. As said, the number one lesson that should be drawn from the past is that our global credibility is a function of our success at home, with our own economies, and with the way in which we can assure peace and prosperity for the increasingly large part of the continent of Europe. If we cannot do that, no one will care what we say or what we try to do concerning the rest of the world. Whether we are able to project the rule of law and stability and open economies in the wider circles around Europe will be extremely important.

Here we are, having the instrument of enlargement. We are also developing a new instrument which I consider to be of extreme importance. My favorite new instrument is called DCFTA. DCFTA stands for Deep and Comprehensive Free-Trade Agreement. We see how the customs union has transformed Turkey during a decade. It was a fundamental transformation, enabling the emergence of a middle class, the development of a financial sector and all of those things that didn't really exist before. DCFTA goes further. That is what we are now trying to do with Ukraine: not only the free-trade area, not quite yet the customs union, but a free-trade area compounded with a comprehensive co-operation when it comes to regulatory regimes. We will have a meeting here shortly concerning bringing those countries into the European energy community (as we are doing with the Balkan countries). We extend all of the energy legislation, all of the competition legislation in that area into the Ukraine, into Moldova, into Serbia and that has transformative effects that are fairly fundamental in the long run. These are examples of the new instruments that we need to develop in order to be a global actor.

We must also be able to develop the strategic dialogues with the emerging world in a much more comprehensive way. I talked about China, but it is not only China, it is not only China and India. To take two other examples: Brazil where the economy has been booming throughout the crises years in Europe and North America, and Indonesia - with a quarter of a billion people with a rapidly growing economy and with a larger number of Muslims than any other nation in the world and with enormous potential in terms of raw materials. They are demanding, they are asking for far more of a European voice in an increasingly multi-polar world and we must develop now the Lisbon institutions in a way that answers their need for those deep dialogues on the different global challenges that they do not want to have monopolized by only the Americans or the Chinese and a few others. There is an enormous demand for Europe out there that we must meet. We must be able to supply it.

Concluding, there are quite a number of tasks ahead. We used to be the "consumer" of security provided by others - primarily by the Americans since 1945. We are now beginning to act as an "exporter" of values, concepts, social models, ideas of reconciliation and integration. Increasingly we will also be a provider of stability and security. We start close to our boundaries but we start to extend that by concentric circles and accordingly we will be an increasingly relevant global player. These are the perspectives that are important and should be present in the political and public discourse in our respective countries.

Sometimes I feel, when I'm here in Brussels, that this is a city that is somewhat too inward-looking. Particularly these days when you cannot move a meter here without hearing how that unit is going to be connected to that unit. I think that the organizational charts seem to be the main preoccupation of the city while the rest of the world is changing very rapidly. We must make Brussels a far more outward-looking place when we are through with the phase of institutional evolution connected with the Lisbon Treaty. Because there is a big demand for Europe out in the world.


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