Speech

Address by Prime Minister Anders Fogh Rasmussen in “The Knights’ Hall” The Foundation, “Instandhouding Nieuwspoort” The Hague, January, 20, 2004

Check against delivery

Mr. Prime Minister, ladies and gentlemen,

Thank you for inviting me to speak here today at the Knights’ Hall in The Hague. It is a great pleasure for me to be here.

I believe that my presentation falls at the right time. During the coming years we will be faced with a number of challenges - all affecting the status and direction of the European Union and, therefore, us all. It will be up to the Irish and Dutch Presidencies to take up these challenges.

But, of course, the Irish and the Dutch will not be alone, we are all part of the process. So I will, if I may, take this opportunity to address the key European Policy challenges for 2004 onwards as I see them.

The EU is faced with a very compressed agenda. It includes the continuation of the IGC, the future of the EU Budget, elections to the European Parliament, the appointment of the new Commission, the accession of the 10 member states, the continuation of the enlargement process and the question of Turkey; to name but a few.

But - and this is an important but - with all these, mostly, institutional issues we must never lose sight of the most important consideration for our Union - its citizens. Policy for its people - not just its institutions. Policies to create better opportunities for our citizens - and their businesses. Better opportunities lead to public acceptance, support and interest. Without this, how can we place ourselves at the forefront of the global economy in this, the 21st century? That, ladies and gentlemen, is our true challenge.

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I will not try to cover all topics on the European agenda today - such as the “big questions” of the role of the EU in promoting peace and stability, or the challenge of creating an area of justice and home affairs. It would take more than one speech for that! Instead, I will give an outline of areas in which I see a need for greater focus in the months and years to come.

Let me begin by saying a few words on the intergovernmental conference. We all regret not reaching an agreement on the constitutional treaty in December. We were quite close. But in the end the political will to go “the few extra yards” was not present at that particular time and place.

It is meaningless and counterproductive to play the “blame game”. Suffice it to say that it would be utterly wrong to simply place the blame at the feet of the Italian Presidency. They performed well and proposed balanced and sustainable solutions on practically every item on the agenda.

So it is time to stop pointing the finger and to look ahead. There are, after all, two positive elements worth noting:

Firstly, we have a good basis for continued negotiations. The text from the Convention was good and balanced to begin with. And, during the Italian Presidency, a number of items were further clarified. A consensus was emerging on many issues such as the composition of the Commission, the scope for qualified majority voting, and so on. It is important for Denmark that negotiations - when resumed - will continue on the basis of what we have achieved. Going back to square one would be pointless when we are so close to success.

Secondly, December did see an agreement on the next step of the IGC. The incoming Irish Presidency was asked to take stock of the situation at the European Council meeting in March.

It is still too early to say when real negotiations will resume. Though I know the Irish Presidency will do its utmost. And I sense a growing will to get things back on track. Whether will alone is enough is still too early to say. But, if the possibility emerges, the Presidency can count on Danish support in achieving a swift and lasting result.

There is no reason to hide the fact that, without a result in the IGC, the EU is facing a more complicated agenda. But there is no reason for excessive pessimism either.

Historically, the EU has always been able to deal with complicated and complex agendas. So I am sure that in the end we will be able to find solutions acceptable to all, enhancing future European cooperation.

Some argue that with the breakdown in negotiations in the IGC we risk a two, or more, speed Europe. A Europe with an inner core consisting of a small group of countries forging ahead with their own agenda. Some even argue that enlargement makes this inevitable. I cannot agree. Reinforced cooperation, with its risk of creating new divisions, should not become a general tool for developing the EU. Solidarity and unity have always been the mainstays of European cooperation. The secret of our success. A multi-speed Europe would go against the whole idea behind enlargement: To create a unified Europe inside the EU.

So how do we avoid this multi-speed Europe? With concrete progress and practical results. Governments, citizens and business must see that Europe is able to deliver. How else can we ask countries not to go ahead on their own?

In the end, making the enlargement a success depends more than anything on defining a common vision and common projects for the enlarged Union. Visions and projects that unite citizens and member states. That is what has made the Union work in the past. The enlargement is a good example. But now we have to look ahead.

In this task, the Commission has a crucial role to play. Just as the Commission played a key role in the enlargement process from Copenhagen to Copenhagen the Commission will have to take upon itself the role of promoting new, concrete European projects. We need a strong, efficient and visionary Commission that can perform this task. That will be one of the key challenges for the next Commission.

In this context let me briefly comment on the Growth and Stability Pact. The handling of the French and German deficits has been seen as proof of double standards for larger and smaller member states. I do not share this view. Larger and smaller countries were found on both sides of the argument. And now the decision of the Commission to bring the Council before the Court of Justice underlines one important aspect - that the EU is based on the rule of law.

As regards the substance, I believe that the decision taken by the Finance Ministers was, in fact, very close to what had been proposed by the Commission. Which shows that, to a great extent, the rules do work. Some might ask whether it would have been wise to put even more pressure on Germany and France - given the economic situation in Europe. Personally, I am more convinced than ever that - in the end - we must find a political solution for the future. A solution that respects Member States’ primary responsibility for economic policy.

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If we have learned one thing from the breakdown of the IGC negotiations, it is that the EU cannot be taken for granted. That the EU is no more - and no less - than the common will of 25 individual nations working together. That we all have a responsibility to make things work. If we only learn one lesson, it must be this - if we fail, we all lose. We must reach a compromise on the constitutional treaty sooner rather than later. We need an ambitious treaty, acceptable to all, that will provide an effective, workable framework for the enlarged Union in the years to come.

Which brings me to one of the most important challenges for Danish and - I believe - European policy in 2004 and onwards: To make enlargement work.

The first major event will be the actual accession of the ten member states on May 1st. I am confident that enlargement will be a success. The new member states will bring with them an optimism and will to reform from which we can all learn and benefit. The Union should make full use of these opportunities.

Enlargement is, however, an ongoing process. In Copenhagen, in December 2002, EU heads of State and Government committed themselves to a continuous, inclusive and irreversible enlargement process. This continues to be a major Danish priority. The next stage in the EU enlargement process will involve Bulgaria and Rumania, who have both made promising progress. I expect the Commission to present its proposal regarding the financial package in the beginning of 2004. If the two countries are ready, negotiations should be concluded during 2004.

And Europe is still spreading its wings. The five countries in the Western Balkans must not be forgotten. Their objective of integration into the EU structures must be pursued. Though their aspirations must be matched by willingness to reform. Hard facts must be faced. And difficult decisions must be made. It is for the peoples and governments of these countries to seize the opportunity. But let there be no doubt about our commitment to support their efforts to reform.

In December 2004 the European Council will also have to take an important decision regarding the Turkish candidature for membership. Turkey has made significant progress towards meeting the Copenhagen Criteria. But much remains to be done. Though I am sure that the Dutch Presidency will be able to navigate the EU through any troubled waters.

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But, as with everything else, the success criteria for the englargement of the EU is being able to deliver concrete results to the benefit of its citizens.

One thing is certain. An enlarged Union will have a huge potential for growth. But we need to strengthen reforms if we are to make full use of this potential. In many areas Europe is lagging behind other big economic powers, in particular the US. This is easily illustrated by the following figures.

For many years growth has been higher in the US than in Europe. On average more than a full percentage point higher since 1992. Productivity is also higher in the US than in Europe. Since 1990 we have seen a US productivity growth of 2,1% compared with 1,3% in Europe.

In the area of innovation Europe is also lagging behind the US and the gap is widening. The US spends a greater percentage of its GDP on research and development than the EU. The US has more hich-tech patents pr. citizen than the EU. They have more researchers as part of the total labour force than the EU. The problem is not that the Union is training insufficient numbers of new researchers - on the contrary. The problem is that Europe has difficulties holding on to the best of them. According to some estimates more than 400.000 European science and technology graduates live on the other side of the Atlantic.

Out of the 101 Nobel Prize winners in chemistry, medicine and physics awarded in the last 15 years, 68 went to the US and only 23 to Europe. A fact worth thinking about.

So, if Europe is to be able to measure itself against the United States we have to change our way of thinking. We must be willing to find new pathways. Rethink our strategic choices and priorities.

The history of European cooperation demonstrates that Europe works at its best when we have a common, unifying project and vision. The internal market, the common currency and the enlargement are prime examples. I believe that, post enlargement, we need to define a new project capable of uniting all member states. My proposal is to create a truly European Research, Development and Education Area.

Research, development and education to create a foundation for the Europe of tomorrow. European industry can only develop if we are able to adjust and make full use of skills, technologies and innovation.

That is our challenge if we are to be in the forefront of the global economy of the 21st century. A project for the future that will unify member states in a common vision.

But first we must create the necessary framework conditions for innovation and growth. We must identify the concrete political initiatives – at national and European levels – which will lead to this result.

What, then, are the main elements in a European Research, Development and Education Area? Well, to be more specific.

We must first further strengthen the existing framework programmes for research. The existing programmes have been a success. In the context of the next – the 7th – framework programme for research I propose to increase funding with 33 percent - from 17.5 to approximately 23.5 billion Euro over the period 2007-2010. We must sharpen focus on results. That is, set specific targets for innovation output, patents, the number of highly-qualified researchers, the quality and quantity of students and workers from education systems and the creation of centres of excellence.

Secondly, we must redouble our efforts in the field of basic research. We must become better at creating a basis that supports and promotes research in the technologies of the future. Basic research that can create a foundation for future growth. I therefore propose the creation of a European Fund for Basic Research. Its aim would be the promotion of excellence in basic research, thereby facilitating the creation and support of centres of excellence in European universities and research institutions.

The Fund should, from the outset, have 2 billion Euros at its disposal on an annual basis, becoming more high-profile over time. It should be established by the Union and funded through the Union’s budget, over and above the research framework programme. Funding should be awarded according to scientific criteria making use of rigorous and transparent peer review processes. Furthermore, the fund should be managed by an autonomous European Research Council.

Special encouragement should be given to activities with the potential for broad commercial and consumer use. The key is to look for investments with strong spill-overs. Research into nano, hydrogen and environmental technologies is a good example. They are all cutting-edge technologies which could revolutionize future products and industries. By establishing a fund for basic research we can promote a common European framework for our initiatives in these and other areas.

Thirdly, I propose to create a European Innovation Award. The purpose would be to encourage the entrepreneurial spirit of European researchers. This Award would recognise and underline the crucial importance of research and innovation in Europe. Such an award would also encourage young Europeans to pursue careers in the field of research.

All in all, these proposals imply close to a doubling of the EU financial commitment in the field of research and development on an annual basis. It would significantly strengthen Europe’s position and opportunities in the field of research and development.

Fourthly, in the field of education, I propose the introduction of the benchmarking of universities throughout Europe. Already broadly-accepted in America, benchmarking has proved itself to be a useful tool in generating competition and improving competences in universities. But we will do more. An ongoing comprehensive European benchmarking of universities at a European level will highlight those universities carrying out cutting-edge research. The best universities will then have a proven record of excellence and will be thus be better able to attract students from all over the world.

Fifthly, we must improve EU student-exchange programmes both within the EU and with other parts of the world. Using the Socrates, Erasmus and Erasmus-mundo programmes, we should aim to attract more students and researchers from near and far. We should increase both the number and the duration of scholarships so as to stimulate the development of a European education and research environment. We must renew our endeavours to reach the 10 percent target of European students studying abroad as part of their education.

And we must improve mutual recognition of certificates and diplomas and increase transparency within the European Education and Training systems. Finally, We should use education as a tool for the global promotion of European culture and values. We have had a European College in Bruges for many years. And we have also established a College in Warsaw. But I believe our ambitions should have broader horizons. I therefore propose that we establish European Colleges in the US, Russia, Asia and the Arab world. This would provide a superb opportunity to increase interest in and knowledge about Europe throughout the world. It would also clearly demonstrate an ambitious and active European approach to education.

These are some of the key elements in my vision for establishing a European Research, Development and Education Area.

Creating a European Research, Development and Education area is part of an overall strategy to increase European competitiveness. But this alone will not do the trick. We must strengthen structural reforms within the Lisbon process. Much remains to be done at national level. The Netherlands is a good example of just what can be achieved through structural reforms of both labour and product markets. The present cyclical circumstances in no way detract from these underlying achievements. The Netherlands is a good example for the rest of us to follow.

Creating a European Research, Development and Education Area and doubling EU financial commitments in this area will require a strategic decision in the context of the next financial perspectives. EU funds will have to be redirected towards this objective. But such a redirection is crucial if we aim to close the economic, technology and education gap between the EU and the most dynamic global economies.

This does not necessarily mean increasing the overall EU budget. In view of the consolidation required of all Member States our citizens will have little sympathy for a lack of similar restrictions in the case of the EU budget. So, in the context of coming financial perspectives, we will have to closely examine the main areas of EU spending.

When it comes to the structural funds, Denmark is deeply committed to the principle of European solidarity and to maintaining cohesion in an enlarged Union. Accordingly, expenditure should be refocused on those areas that need it most.

And, over time, structural funds should be directed towards investments aimed at creating a knowledge-based society. More focus on brains – less on brawn. Super-highways - not concrete ones.

We must also continue to reform the common agricultural policy and make it more market-oriented. I think we all realise that increased support to the agricultural sector is not the way of the future. If we are sincere in our commitment to combating poverty in the developing world, liberalisation of the agricultural sector is the best weapon. I fully-realise that we cannot introduce comprehensive reforms overnight, but the direction must be clear to all. An important step has been taken with the midterm review of the Common Agricultural Policy but further reforms are needed.

Pursuing reforms in the areas of structural funds and the common agricultural policy will allow for the increase in spending necessary for the creation of a European Research, Development and Education Area. This will be a major Danish objective for the future.

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The Dutch Presidency in the second half of 2004 will be confronted with significant challenges. I am confident that you will rise to them. Historically, Dutch Presidencies have performed well. And you can be sure that Denmark will do its utmost to support your endeavours.

Looking back, progress in the EU has been the result of visions and countries that were willing to go the extra distance to achieve worthwhile results - of benefit to all.

Once again we stand at a crossroad. The choice of direction and distance is ours. This goes for the IGC. But it is also relevant when looking at the economic challenges confronting the enlarged EU. We must be ambitious.

Ladies and gentlemen. I have tried to indicate areas in which I see a need for increased effort. A commitment that enlargement will be a success and that an enlarged Europe will be able to deliver on its potential for growth and prosperity. We must develop a European knowledge-based society founded on a truly European Research, Development and Education Area. Our aim should be an enlarged Union at the forefront of the global economy in the 21st century. Because, to return to my starting point, when we do well our citizens do well. Which is, after all, what we are all working for.

Thank you for your attention.