I.

This distinguished venue represents for the European Union the voice of Europe's citizens, the centre of democratic policy-making. I am most grateful for the privilege of speaking here of all places on Europe and its future.

To the wider world Europe offers something of a puzzle. Why, so soon after being reunited, is it again so divided? Why, despite the success of the European internal market, does it have so little confidence in the market's merits? Why, despite such strength, such wealth of oppor­tunity, is it so faint-hearted?

During my years at the European Bank for Reconstruction and Development and the Inter­national Monetary Fund I came to know a host of countries around the world. This view from outside gave my perception of Europe a sharper focus, made me more aware of how others see our continent and the European Union. In this part of the world freedom, democracy, prosperity, solidarity and peaceful give-and-take between the twenty-five member states have long been a fact of daily life. This daily reality - just two generations after the end of World War II and half a generation after the lifting of the Iron Curtain - is the result of an extraor­dinary achievement, whose true magnitude can be appreciated far more clearly from outside.

This is an achievement for which Europe is admired by many people all over the world. Their admiration, however, is becoming increasingly mingled with impatience and bewilderment. They find it odd that so many Europeans are overly focused on themselves, full of doubts, lacking courage. And they say kindly: Europe, if you're feeling tired - step aside, please, we want to get on. How do we answer that?

My answer is this:

-Europewill always be in a state of creative unrest.

- We Europeans do not fear challenges, we turn them to good account.

- And that is why the European Union has a bright future.

Let me explain why I believe this is the case.

II.

Anyone who wants to understand Europe must study our history and discover the ideas and ideals that forge the bond between us. At the heart of everything we Europeans believe is the immutable value and uniqueness of every human being, his dignity and freedom. Even in ancient times people in Europe viewed these qualities as a gift, a gift of which only those were truly worthy who put them to good use and were prepared to make sacrifices for if need be. However appalling the setbacks, the Europeans persevered in their efforts. They put their talents to good use, charting unknown depths in philosophy, science and learning, discovering new horizons in the arts. In so doing people in Europe learned to question their own view­points and demand and provide good reasons for any action to be taken. This process of inquiry is ongoing, there will never be an end to it.

People in Europe realized very early on the importance of community and civic spirit, self-determination and autonomy - and acted accordingly, in the Greek city states of ancient times, the Italian republics of the Middle Ages, Spain, France, Poland and England with their specific national traditions or the colourful tapestry that was the Holy Roman Empire of the German Nation.

And all the time the Europeans were as god-fearing as they were industrious. Work they saw as a pious duty to be performed not just in the home but also in the outside world. They engaged in trade and learnt to live and get along with people of different faiths and cultures.

On more than one occasion, it is true, the Europeans committed terrible wrongs against other peoples and cultures and against each other, too. Yet from that experience they have learned the right lesson: an active commitment to human rights, peace and democracy, a commitment they hope others will also share. There is something else, too, that is part of our European heritage: a belief in the value of practical service to our fellow men and women, an active quest for social justice.

Such exemplary qualities are of course to be found in all continents - from which Europe has also learned with great benefit! But this specifically European combination - freedom-loving, truth-seeking, solidarity-practising, creative unrest - this is something quite unique and has much to offer also those who come after us as well as all those outside Europe who expect us to play our part in building a better and more peaceful world.

III.

The European Union and its member states are - once again - facing formidable challenges!

All over the world new growth regions are beginning to emerge, along with new rivalries, new spheres of influence and also new lines of conflict.

In many countries in Europe unemployment remains appallingly high.

Our citizens and voters have become measurably estranged from the European Union. In two of our community's founding states the treaty on a constitution for Europe was rejected by the electorate.

So many challenges - and so many opportunities! We need to recall how often especially in critical situations Europe proved its mettle by demonstrating its capacity for renewal. Just think of the European internal market and the Economic and Monetary Union.

Thirty years ago Max van der Stoel, Dutch Foreign Minister at the time, noted that in stark contrast to the professed intention of completing, deepening and expanding the European Community, the prevailing mood was one of stagnation, retrogression and dissociation. Thirty years ago Europe was in deep economic and institutional crisis.

Twenty years ago the Single European Act proclaimed the goal of creating a true internal market. At the time there were still so many obstacles to the free movement of persons, goods, services and capital that Philips, for example, had to produce seven different versions of the same electric razor for the European market and Siemens had to produce twenty-five different electric plugs.

Ten years ago the internal market had in many important respects been completed. That helped consolidate the European Union's institutions and strengthen economic and social cohesion between the member states. Since then European industry has been producing for a domestic market which now numbers some 450 million customers. This offers especially suppliers from smaller member states exciting prospects, for economies of scale make them more competitive. Most importantly the internal market is an excellent fitness programme for companies in Europe, a highly effective way to get them into shape for the world market. Those who hold their own here need fear no competition from elsewhere in the world.

The Economic and Monetary Union was and is the logical extension of the internal market. It protects the market from once again being fragmented by arbitrary devalua­tions. It offers protection against monetary crises and speculative surges of the kind we were still all too familiar with in Europe in the early nineties. It gives companies a solid basis on which to plan, makes it easy for consumers to compare prices and does away with high exchange costs and the costs of hedging exchange risks. That is why - like the internal market - the euro, too, has long been a success story. Its strength on the foreign exchange markets demonstrates that the world believes, in the light of long experience, that its confidence is well-placed: Europe has the capacity to turn the challenges it faces into opportunities to be grasped. This is some­thing we should always bear in mind.

IV.

And we will once again succeed - on two conditions. We must not allow our tried and trusted principles or hard-won achievements to be compromised. And we must make a serious and honest effort to correct what has gone wrong and put our house in order where necessary.

On the first let me make just a brief comment. Anyone who weakens the European internal market through protectionism is ultimately shooting himself in the foot. Anyone who reverts to old habits and suggests we can simply tend our own garden is ignoring the whole dimen­sion of global competition and offering citizens no more than a semblance of security. Any­one so doing is in the long run curbing Europe's capacity to hold its own in the world, create jobs with a real future and generate the resources necessary to ensure all members of society get a fair deal.

That means there is only one way forward: Europe must do whatever needs to be done to get back into shape!

For such a programme to be effective, everyone has to start with themselves. Some member states have already made considerable progress on structural reforms and are reaping the benefits. Others still have to make major efforts. But there is plenty of evidence to show that all the effort pays off.

The European Union, too, must get into shape. It must start by asking itself what areas it should be active in as the EU. It should not after all be doing everything possible, but every­thing necessary. And things that can adequately be done at local, regional or national level are not necessary. Respecting the principle of subsidiarity means respecting the autonomy and identity of EU citizens wherever it possibly can. And, as anyone who is familiar with the reality of policy-making in the European Union will be aware, this reminder is directed at least as much at the Governments of the member states as at the EU institutions.

Where, however, the European Union is rightly active, it must be so with a minimum of bureaucracy and in a comprehensible way. We are after all the heirs of one of the world's greatest legal and administrative traditions. This should spur us to finally slash through the mounds of red tape we have created in our past enthusiasm for rule-making. It is therefore very much to be welcomed that the European Commission has launched a major programme to reduce over-regulation and to simplify EC law.

The citizens will also appreciate greater transparency in European policy-making. Decision-making processes at EU level are today often everything but close to the citizens. Many people can barely understand who is actually responsible for any given measure in Europe and who is accountable for it. This leads to indifference, or worse, distrust, both of which are highly damaging.

But the citizens do not just want to be comprehending observers, they also want to be demo­cratic players, participating in European elections and more. They want to be heard, they want to be able to take the initiative, to influence the behaviour of the European institutions.

You will respond by saying that subsidiarity, transparency, democratic participation and citi­zens' initiatives are all in the European Constitutional Treaty. Indeed they are, along with many other proper and valuable concepts. And these should not be thrown overboard lightly, especially since 14 member states have already approved the Treaty.

Europehas granted itself a "period of reflection". This could, in German at least, be under­stood as a "period in which to reflect" or as a "period spent in reflection". However we look at it, we should use this period to think carefully about basics, and thereafter at the latest talk seriously and objectively with one another - both within the European institutions and polit­ical parties as well as in public within the member states. This requires untiring commitment, especially from the members of this assembly.

Diversity and creativity can only be of benefit to this European debate, in which only one thing should count: the force of a good argument. An intensive debate on the import and sub­stance of European integration will have a positive and enlightening effect, and will per­manently boost acceptance of the EU. I have great confidence in the citizens of the EU! We just need to give them the chance to prove themselves.

We Europeans always demand good reasons and like to provide good reasons. I, for example, see more than one good reason why Europe should speak with a single voice on foreign and security policy in the newly emerging world order. It will lend us more weight, for example when we discuss the international dimension of social responsibility and environmental pro­tection with others around the world.

And the citizens have long known that to survive global competition we must justify our extra cost by providing better quality. Education, training, research and development are thus cru­cial for Europe's future and for all the young people who can find no work - of whom there are far too many. This is reason enough to redeploy considerable European funds in this direction and perhaps even to earn the recognition of our nations for it.

The citizens will also welcome it if the Union sets itself new goals and takes measures that make their lives simpler and safer. A recent, striking example of this is energy policy. It is obvious to all rational people that all member states have a vital interest in a secure and cost-effective supply of environmentally-friendly energy and must work together to achieve this goal as best they can. The European Commission has submitted a Green Paper on Energy Policy. This is much to be welcomed. We need sound decisions on this issue without delay.

V.

The debates I have just mentioned which will secure a bright future for the European Union are already underway.

Here is one small example: A few weeks ago I met in Dresden with six Presidents from other European countries. We continued a dialogue launched by former Portuguese President Jorge Sampaio. And we talked to young people, to one hundred students from seven European countries, and asked them what they think of Europe, what value they believe it has, and what expectations they have of the European Union and its members.

The young people were well prepared. They had held their own debate and produced their own outcome document that they called their "Dresden Manifesto for the Cohesion of Europe". They proposed unified electoral rules and called for a House of European History. They suggested that five percent of GDP should be put aside for research and science. And they wanted a European army and a European voluntary service.

I will lay out the students' "Dresden Manifesto" with this speech. Of course, they were not a representative group, and of course their demands may seem idealistic. But this very idealism is impressive. Or at least it impressed me. In many ways this idealism resembles the enthu­siasm of the people who rebuilt Europe after the war and who fought for its unity in liberty. There it is, this typical creative unrest, and there they are, the Europeans who expect some­thing of Europe and are in return ready to do something for Europe.

By the way, some of the students present had profited from Erasmus exchanges. Let us cele­brate this Erasmus generation and make it grow! And while I'm on the topic, apprentices too should also have more opportunities to learn from their neighbours and experience the value that Europe can bring. Jacques Delors proposed a European "training cheque" for this pur­pose, an idea I find most admirable.

VI.

Let us take the élan of these young people as an example to us all! Let us now prove ourselves to be true Europeans! Let us not be perturbed about the future, but filled by the creative unrest that can shape Europe and the European Union! Let us work together and turn our challenges into opportunities for the good of everyone!

If we do, Europe will remain what it is today - a great place to live and a force for good in our shared world.

Annex

The Dresden Manifesto for the Cohesion of Europe (5 February 2006)

I. Bringing Europe closer to the citizens

1. Exchange programmes for all

2. Unified EU electoral lax

3. A directly elected President to give Europe a face

4. A short and comprehensible EU constitution

5. More symbols to "visibly clothe" Europe, e.g.:

- A House of European History

- A European order of merit

- "Europe Day" as a shared public holiday

- Blue EU passports and much more

6. "European studies" taught at all schools in Europe an a "European Agency for Civic Education" created

7. Expansion of "Euro-News" into a popular "European Channel"

8. A campaign entitled "We are Europe"

9. A "European bus" to physically bring Europe to the citizens

II. Seizing Europe's opportunities

1. 5 % of GDP of the EU member states should be spent on research and science

2. The European Parliament should have full budgetary powers

3. Agricultural subsidies should be reduced and overhauled

4. A European Voluntary Service should be created

III. Working together for security and responsibility

1. Belarus should bei put on the political agenda

2. A "European army" should be established as part of a common foreign and security policy

3. The principle of stustainability should be firmly anchored in European legislation