Ladies and Gentlemen:

I am very pleased to be here and pleased to be in Frankfurt again. I had a bit of a bumpy flight from Sweden this morning, so I came to think of a Bob Dylan song, that could also be a metaphor for the candidate countries on their way to membership:

'...landed in Brussels on a plane ride so bumpy that I almost cried,
clergymen in uniforms and young girls pulling muscles
- everyone was there to greet me when I stepped inside'

The candidate countries, on that bumpy road, why are they so eager to get inside? Because they have seen how European integration has ended conflicts and wars, how it has brought peace and prosperity, how it has taught large and small countries to live and work together. The enlargement of the European Union is nothing more, and nothing less, than the final historic step in this integration.

Enlargement will also add strength to our economy. The addition of more than 100 million people, in rapidly growing economies, to the EU's market of 370 million, will boost economic growth and investments and create jobs in both old and new Member States. Enlargement might be the necessary economic stimulus need in the coming years, when we frighten a downturn in the economy.

Enlargement will add political weight to the Union. Enlargement will add cultural richness and diversity. On enlargement, the European Union will not become less European, it will become more European.

We now need to build on the momentum from the Summit in Göteborg, which agreed that negotiations should be finalised by the end of 2002, for the next accession to take place in 2004, and explain the benefits of a united Europe to our citizens.

I look forward to welcoming the first new members in 2004! But we must not forget the principle of differentiation: Each candidate country must be assessed on its own merits. No one can be allowed to slow down another. If ten countries are ready 2004 -so much the better. If not - those that are ready should join. The worst we could do is to let them down, after all their efforts, and to not keep to the timetable, to not welcome them in time. I don't dare to think about the reactions among the citizens in Eastern Europe. As politicians we have the responsibility to fully explain the benefits of a united Europe to our citizens,

Simultaneously with enlargement, the EU is developing its relations with all its neighbouring countries, not to create new borders in Europe.

The Common European Economic Space, conceived during the Swedish Presidency, will link Russia economically to the Union. Together with a free trade area around the Mediterranean, and developed relations with Ukraine, we could in a few years time have a market of nearly one billion people trading freely with each other.

The single most spectacular event in the near future is of course the introduction of the euro coins and bills. I am convinced that this last stage of the Economic and Monetary Union will be a success. That is as important for Sweden as for the twelve countries participating from the start.

Personally, I hope that it will pave the way for a positive outcome of the future Swedish referendum on the euro. For my own part, I am convinced that Sweden should join the monetary union because:

- it makes economic sense: it reduces costs, increases trade and provides shelter in times of crisis.

-it makes political sense: it is an integral part of the Union, where we want to play our full part.

- it makes democratic sense: it is decisive also for our monetary and exchange rate policies, so we should participate where decisions are taken.

After enlargement, the Union will carry even greater weight in the world. And our responsibilities and possibilities will grow.

We have both responsibilities and possibilities in foreign policy - a foreign policy bulit on our values - democracy, human rights, solidarity.

Had the EU had a common foreign policy ten years ago, we could have avoided a decade of war in the Balkans. Today,s global challenges are numerous. We are now discussing how to deal with anti-globalisation. But the EU needs a strategy for globalisation much more than it needs a strategy for anti-globalisation.

In many ways we are much better off than ten years ago: We are developing military and civilian capacities for crises management; we are more active and influential in the Balkans, in the Middle East, in Africa. And in the world after September 11, the EU, when acting as one, is effective and influential. But we should do much more:

- We should strengthen our military capacity for crisis management by setting up, as President Chirac has proposed, a Rapid Reaction Force which, on behalf of the UN, could cover the critical early phase of a peace operation, before a regular UN led peace keeping force could be deployed. And also for UN's regular peace keeping EU should offer military capacity.

- We should strengthen our civilian capacity for tasks like police, demining and small arms destruction.

- We should prevent violent conflicts by using our many political, diplomatic, military and economic instruments, as we have done in Macedonia. We might need to develop a conflict prevention strategy for Central Asia, in close co-operation with the countries and with international organisations.

- We should further increase co-operation with the UN in all these areas

- We should strengthen open trade in the new round of negotiations and get rid of all our tariffs and quotas which undermine the EU's credibility as a promoter of open trade and global development.

- We should develop a common strategy on how the Union should promote human rights globally.

- And all member states should make rapid progress towards the 0.7 per cent target for official development assistance so that the Union can show at next year's Conference on Financing for Development that we are prepared to go from words to deeds.

We need greater coherence in our policies. We cannot speak about a truly coherent Common Foreign and Security policy if trade, development, migration and environment are not integrated. In practical terms, this means better co-ordination between policy areas and pillars, and between the different voices of the Union on foreign policy - the Presidency, the Commission, the High Representative and the Member States.

And let me say that it is not as difficult as some might think to attain an effective common foreign and security policy among 27 countries; even today the candidate countries associate themselves with most EU statements.

Ladies and Gentlemen:

Let's all stop for a second and ask ourselves - what kind of Europe do we want? That should be the point of departure for the debate on the future of the European Union, before the new Inter-governmental Conference in 2004.

To me the challenge is to create a Europe with more and better jobs.

Therefore the EU needs a sustainable development, where economic growth and social cohesion are mutually supportive. We must, despite the uncertain economic outlook, vigorously pursue our economic reform agenda. But we must, at the same time, continue to modernise our social and welfare systems to offer security in times of change, and to promote labour participation. Social welfare systems should be seen as productive factors. The EU is already in need of additional labour force, which will require a sound and humane migration policy. These matters should be discussed during the Union's Spring Summit in Barcelona, next year.

To me the challenge is a Europe with a sound environment.

Therefore in Barcelona we should address the environment, in particular climate change, and make progress on sustainable transport and energy systems. We need to decouple economic growth and increased pressure on our environment. Investing in environmental technology contributes to both growth and employment.

To me the challenge is an efficient and transparent Europe.

Therefore agricultural and regional policy - and with them budgetary policy - will need far-reaching reform. It's not needed because of enlargement - reforms are already long overdue. The Common Agricultural - or should I say Anachronistic - Policy was once conceived for a quite different situation when Europe was threatened by food scarcity. Today, it restricts market access for other countries. Today, its' subsidised products destroy the market in candidate countries and the third world. Today, it is often contrary to sound environmental policies. Today, it is also a heavy financial burden, it costs over 40 billion euro per year, making up almost half of the total EU budget. We can forget about legitimacy among the citizens if we can't create a sound system. They want a system that promotes good environment, animal welfare and biodiversity. I read in the newspaper today that only one third of EU citizens find that the CAP fulfils its' goals. The question is not whether CAP should be reformed, but when and how.

I am sure you have more visions for Europe's future, as have our citizens. And that is where the debate should start. It is obvious that the scope of the upcoming Conference will be wider than the four specific issues already decided and that we will see many radical suggestions. But let us not forget that the present structure has served us rather well, and evolved step by step. I see no need for fundamental changes in the overall balance between the institutions. But with that balance largely intact, there are still plenty of things that can and should be done. We are certainly ready to discuss simplification, a clearer definition of competencies, a Basic Treaty, and we are certainly in favour of more majority decisions in certain areas. Transparency and improved public access to the decision-making process are obviously needed - and we have only made a modest beginning in that area. Changes in the rotation of the presidency should be discussed. Better co-ordination between different presidencies can be introduces promptly and need not wait until the IGC.

A language reform is necessary. Citizens and elected politicians should always be able to use their own language in contacts with the institutions. But diplomats and officials could cope without. If the United Nations can manage with six official languages, the European Union should be able to cope with fewer.

Ladies and Gentlemen:

Europe is more than a market: our Union is based on core values and freedoms and solidarity are encouraged. Our Union is a unique co-operation that serves as an example to others.

Enlargement will make the Union stronger and - to go back to Bob Dylan - even if it is a bumpy ride for the candidates  - I hope everyone will be there to greet them welcome, in two years time.