My first words are to thank the Florence University Institute, in the person of its president and my dear friend, Professor Yves Mény, for the kind invitation addressed to me to take part in the conferring ceremony, an occasion that marks the life of this house to such an extent.

As you are aware, my country is entrusted with the presidency of the High Council of this Institute this year. It is for this reason that I am accompanied, on this visit, by the Secretary of State for European Affairs and by a number of personalities who have close connections – both affective and functional – with this institution, bearing witness to our keen interest in it.

It is, moreover, with particular pleasure that I would like to point out that the protocol renewing the Vasco da Gama Chair will be signed in a few moments, tangible evidence of our commitment to affirming Portugal’s presence at the Institute in recognition of its value amid the constellation of European initiatives.

This decision of the Portuguese government, taken within a context of budget restrictions, represents an effort and, above all, a conviction: the unquestionable interest of this Chair within the framework of the knowledge handed down by this University Institute. It was taken, too, in the certainty that we shall thus continue to contribute to a more profound study of European history and of Portugal’s role in the construction of what some historians have already called the first globalisation.

Allow me, therefore, to take this opportunity to pay sincere tribute, once again, to all those who work for and co-operate with this institution, making a valuable, ongoing contribution to a deeper and more knowledgeable perception of Europe, in the multiplicity of its aspects.

It is actually about Europe that I would like to share several reflections with you. You will understand that I do so, for it is well known that the European Union is now submerged in a climate of crisis. We must therefore determine as clearly as possible the essential outlines of the present situation so that, in the light of proper diagnosis of the nature and extent of the difficulties, we may then be able to establish possible means of overcoming them.

I shall divide my speech into two parts: I shall first address the present European crisis, one that I consider inescapable and serious, not only because it threatens to impose a prolonged embargo on European construction, but also because it contributes to wearing down the citizens’ confidence in the European project. I shall then endeavour to point out possible paths to relaunch the European construction.

As you shall see, they are mere considerations, of a purely personal nature, taking advantage of an academic audience accustomed to the free debate of ideas. They reflect my concern about making Europe move on, faithful to a vision which, though my own, is shared by many Europeans and is in harmony with the purpose of the Founding Fathers.

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The present European crisis – a reading

Several factors of differing roots come together in this present crisis; they have a multiplicity of dimensions and their origins date back several years.

Some stem from the enlargement and can be classified as “growth problems”, particularly since Europe has expanded a great deal in a relatively short time. This first category of difficulties would not appear to be particularly worrying at the outset for, in principle, after a period of adaptation of the new Member States to a culture of integrationism, they can be overcome with the help of adequate measures and monitoring, provided that we are able to prepare and decide with clear-headedness.

Then there is a second category of problems linked certainly to the evolutionary, open nature of the process of European integration but creating, for their persistence, a disturbing background noise. This is true of the successive and always provisional institutional reforms that, in recent years, have monopolised both attention and efforts. The incessant use and abuse of the revision procedure of the Treaties, in flagrant contrast with the longevity of the founding texts, clearly reflects the existence of this set of problems that have not only been poorly resolved but also attract the citizens’ interest to so little an extent.

We then have problems that stem from the evolution of the international situation and from the mutations that the world has undergone in recent decades, with direct repercussions on the daily lives of the citizens.

We should not forget that the European countries, with an ageing population, reasonably generous welfare states, comfortable social models and production systems losing their competitiveness, are facing the issue of their very sustainability and are being challenged by globalisation, fighting against increasing unemployment and lack of security, striving for the preservation of the level and quality of their citizens’ lives.

Now, it is exactly in the areas in which the negative effects of globalisation are felt – economy, employment, security – that Europe has most clearly revealed its insufficiencies and its inability to sustain the action of the States.

The poor results so far obtained are seen by some as a refutation of the idea that European integration constitutes the right answer to the challenges of globalisation and even leads to calling into question the rightness of the European project and of its emblematic achievements, examples of which include the single market, the euro and the Economic and Monetary Union. These were supposed to have provided the Union with adequate means to carry on the fight more successfully than the national States.

The perception, by public opinion, that both Europe and the States themselves have failed in this goal heightens the feeling of lack of security, discredits the European project and feeds the citizens’ disenchantment in respect of politics in general.

In short, we are faced with a crisis of confidence in Europe and even in the national States themselves, propped up by the mounting difficulties and by the multiplication of signs of the weakening of the spirit of European unity and Community dynamics, of the deterioration of relations between Member States and of the very loss of weight of the European project.

Indeed, to this lack of confidence we must also add, on the one hand, the absence of a clear course for the European project, overshadowed by contradictory debates on its nature and objectives, and, on the other, the lack of a truly shared vision of its goals, of strong, mobilising leadership and of a firm strategy of action.

In this connection, I must evoke the failure of the June European Council in respect of the approval of the 2007-2013 Community Budget. The fact that it was not even possible to uphold, at this Summit, the argument of the “political cost” arising from non-agreement clearly shows, in my view, the extent to which the present crisis stands at a most serious threshold.

For me, this crisis of confidence in Europe is a cause for profound concern, convinced as I am that only the re-establishment of this basic, essential relationship - which lies at the heart of the Social Pact that sustains our democratic societies, as well as the very International Community itself -, will in fact allow us to shape among Europeans a community with a shared destiny and to build the future of progress that both Monet and Schuman dreamed about.

How to staunch this crisis therefore? How to restore confidence in the European project? Should we reopen the discussions and re-edit the debates on the so-called “future of Europe” that, since the Laeken Declaration, have monopolised attention and channelled energies? “Close for balance” and wrap ourselves in a timorous period of reflection?

My Friends,

It seems to me be that the path is a different one, that the time has come to be pragmatic and to stop and think, but to … act!

Reflection is indispensable. It must, however, be directed at an obligation of result. At this time, we specially need a strategic vision, priorities and, above all, concrete actions, particularly in the fields that affect the citizens’ lives, so as to improve the power of attraction of European construction and to strengthen its legitimacy.

We shall restore confidence in the European project only if we fully use its instruments and, with them, begin to solve the problems afflicting the citizens, if we are able to meet their expectations, if we are able to extinguish concern, doubt and insecurity.

Our framework will naturally have to be the Treaty of Nice. I recall this because the uncertainties that weigh on the future of the Constitutional Treaty cannot be a pretext to justify lack of action.

About this latter point, which I do not wish to go into in depth, my position is as follows: we ought to be able to make use of the setback suffered with the Constitutional Treaty to turn it into an opportunity.

It must be admitted that something has gone wrong in this whole process, defrauding the great expectations created by the work of the Convention, by the cycles of public debate of unprecedented scope and openness, and by the will expressed within the Member States that ratified the constitutional text.

We are therefore faced with deadlock. Overcoming it will require a collective effort involving national concessions to defend the essential aspects of the integration project, without allowing it to move to a level that would reduce its political component.

Although I am well aware of the difficulties and even of the sensitivities at stake (particularly taking into account the ratifications that have already taken place), the possible course suggests that full advantage be taken of the moratorium decided by the European Council in an endeavour to perfect the existing Treaty. Taking into account its rejection by the French and Dutch, we are faced with a reality to which a pragmatic answer must be given. Therefore, it might well be useful, in a first stage, to set up a small task force, with a mandate to present a revised text that would subsequently be discussed and approved at an IGC and, desirably, submitted at a later date to a single European referendum, provided the conditions to do so are fulfilled.

This committee could look into a possible division of the present Treaty into two blocks, focusing separately on parts I and II thereof, and avoiding, in the provisions on institutional reform, falling into national egoisms of power sharing and of surgical selection of the rules that can sustain them. For my part, I still think that we should make use of the opportunity to dare to reopen a serious discussion on the introduction of the two-chamber system within the field of European architecture, for the checks and balances that it would provide and for the ability to respond to the various concerns expressed in some Member States.

What I have just said surely stands on the border of useful provocation, though I would also like to remind you of a past moment of the European adventure, not because history repeats itself but because its evocation sometimes helps to build the future. When, in 1952, the French Parliament rejected the Treaty on the European Defence Community and the European project skidded, the Messina Conference was organised to relaunch European construction, leading in the end to the Treaties of Rome.

I dare to hope that today, too, we may turn the present deadlock into an opportunity for Europe. But for this to be possible it is essential that we know how to pave the way, working on several fronts, to be able, in the first place, to reconquer the citizens’ confidence. Without this essential confidence, we shall not, I believe, be in a position to propose to the electorate any treaty – the same or another one – for it will always seem to be a dead letter, unless we first demonstrate, by presenting concrete proofs and tangible results, that European Union is worthwhile and that only by focusing on strengthening Political Union will we be in a position to master the future. This is our priority, our urgent task, one that should mobilise all.

The future of European Construction

Faced with the complexity of this European stage, I believe that, more than ever before, one must follow the maxims of the old, but ever timely Descartes, proceeding methodically, solving the problems one by one, advancing gradually in keeping with an established order of priorities.

To this end, we must start by asking ourselves what the European Union has left without adequate answer, in the light of the legitimate expectations created by its evolution and economic power.

From the outset, and with no intention of being exhaustive, I would list the following points, to quote just some of those that appear to be particularly significant:

- at economic level, despite the realisation of the internal market and of Economic and Monetary Union, the growth of the economy of the euro area continues to lag behind that of the USA and even of the United Kingdom;

- the Stability and Growth Pact, by not taking into account the composition of public spending, has not favoured the public investments required to increase the growth potential of the economies;

- the Lisbon Strategy, designed to make the economy of the Fifteen more competitive in the global marketplace, continues to reveal limitations and lack of operationality, and it has failed to mobilise governments towards fulfilling its goals, particularly for want of incentives to undertake the necessary reforms and their real co-ordination within the European Union;

- at social level, unemployment stands at an intolerable level, and both Europe and its Member States seem to lack the political determination or the instruments required to fight it;

- at security level, despite some progress, Europe has not shown a capacity for co-operation sufficient to foster a climate of greater confidence and mutual assistance, at a time when terrorist attacks spread panic among the people and threaten their daily lives, while on the other hand feeding racist, xenophobe attitudes that generate tensions between the communities that make up the greater part of our multi-ethnic societies;

- at political level, the Community institutions are not seen to have been able to provide a clear strategy to respond to the multiple, often unprecedented challenges of our century, while the States or their citizens have been unable to trigger the traditional mechanisms of democratic control (the problem of the accountability of Community instances);

and

- at the level of relations between Member States there has been a clear erosion of unity around the European project and of the essential climate of mutual trust between partners – eloquent evidence of this has been provided by the latest European Council.

Indeed, the debate born within the context of the referenda held in France and in the Netherlands, the opinion polls then carried out and the very Eurobarometers that are published on a regular basis clearly indicate, on the one hand, that these concerns are shared by increasingly larger fringes of European societies, and, on the other, that there is a great expectation about Europe, to which we have as yet been unable to provide a satisfactory answer. I believe that this twofold lesson represents a warning that we must not ignore.

“Better Europe” seems to be the common demand of the Europeans. In my view, we must focus on this citizens’ desire for Europe so as to relaunch European construction, especially since the States, in most cases, are no longer in a position to respond adequately, at strictly national level, to the pressure of globalisation and to the mutations brought about by the information era.

While, at the beginning, peace was the prompting motive of European construction, to which prosperity and democracy must naturally be added, we now have to double another headland, that of a markedly political and social Europe, which will also be charged with defending the public goods of security, freedoms and social and economic progress, as well as the values of humanism.

We need policies that create new solidarity links between the partners – as did the projects of the coal and steel community, the implementation of the single market or the Economic and Monetary Union – without them, we may enter a long period of near economic stagnation, in which the alternative would be the reappearance of inappropriate nationalisms and of protectionism of all kinds, with their inherent instability, tensions and conflicts.

I personally think that it is essential to focus on two or three powerful projects that will contribute to a significant improvement of the performance of the European economy, to a reduction of unemployment and to a strengthening of security in Europe that would really restore the credibility of and confidence in the European political project.

Nevertheless, I am not unaware of the difficulties raised by the goal of relaunching European construction. In the first place, because the prior condition for the programming of any initiative is the existence of a multi-year budget that is sufficient, one which the European Union does not yet have; then, because, taking into account the scarcity of the resources budgeted and the predicted spending structure of the European budget for 2007-2013, there is the question of how to meet the new needs and to finance the decisions already made; thirdly, because a persistence of disagreement between the European Union’s partners as to the path and the pace to be followed is to be expected, and for this reason the question cannot be ignored of the so-called “strengthened co-operation”. I shall now address this set of problems.

With regard to the issue of the Financial Perspectives, I would like, in the first place, to launch an appeal for the adoption of the 2007-2013 Community Budget by the end of this year. Not only because this would provide a positive signal for European public opinion but also because of the extremely negative consequences of yet another postponement on the entire dynamics of the Community and on our economies. A favourable decision on this matter, based on the proposals made by the Luxembourgeois Presidency would, in addition to strong symbolic value, have a considerable political, economic and social impact.

Furthermore, I would also like to underscore a need for a start to a broader debate on the limits of the present budgetary system, clear to see in the growing lag between the budget discussions and the decisions on the political priorities of the Union.

In this connection, the Union would do well were its leaders to assume, together with the approval of the 2007-2013 Budget, a commitment to make a start, in the future, to a discussion of a Community budget adapted to the challenges of the 21st century. It is an urgent debate that must be undertaken, thus creating greater awareness of States and citizens alike as to the fallacy and prejudicial nature of the “net national balances” as well as the need to make a clear distinction between the question of financing and that of the goals that determine the expenditure.

For my part, I am in favour of a Community budget conceived in terms of the European public goods, the expenditure basically resting on the targets pursued by the common policies of the Union. As far as revenues are concerned, though I recognise the difficulties that have prevented an alteration of own funds, the introduction, in the future, of a European tax is not repugnant to me, provided that it constitutes the most effective way of financing any new responsibilities taken on by the Union. Since this expenditure will be amputated from the national budgets, it will be possible to prevent a future European tax from increasing the citizens’ tax burden.

With regard to the second issue – that of determining how to finance initiatives designed to relaunch European construction outside the framework of the 2007-2013 Community Budget – it seems to me that here, too, we would be better off if we were to ally pragmatism with a certain innovative risk. In my way of thinking, one solution could be to make use of extra funding by the Community institutions, such as the European Investment Bank.

In this connection, I would recall that ten years ago the then president, Jacques Delors, presented an ambitious Growth, Competitiveness and Employment Plan, to finance which the proposal was that the European Union itself issue bonds, an idea that met with the opposition of some Member States, preventing the introduction of the plan. Nevertheless, now with the euro, this possibility becomes more feasible. Not only because for the euro countries there is no risk, as there was in the past, of destabilisation through currency speculation, but also because all payments within the euro area are now made in the single European currency. Moreover, the pursuit of programmes of this kind in any Member State of the European Union would also benefit the economies of the others through the growth of income and of trade.

This would therefore appear to me to be a path to explore to respond to the problem of suitable financing of possible new policies that could come to be implemented, for which the 2007-2013 Community Budget could be insufficient. I am thinking, in the first place, of the matters dealt with in the Delors Plan and also of the need for a Technological and Innovation Plan, or programmes in the area of Research and Science that would help greater cohesion within Europe.

With regard to the third and final issue – that of the path to be followed to relaunch European construction – faced with the predictable differences of opinion among the European Union’s partners on some of the measures to be undertaken, it is very likely that the path to be followed will have to involve the adoption of a multi-speed or variable-geometry model of Europe, through future recourse to the use of the open reinforced co-operation instruments. This solution, however, will only be accepted provided it is based on a non-exclusive principle and lies within our current single institutional framework, and does not, therefore, constitute any attempt to formalise the so-called directoires or form any club or avant-garde group.

I know that the risk of this solution will undoubtedly involve a growing heterogeneity of the European construction. Nevertheless, it does provide the opportunity to make Europe advance progressively, without falling into an unacceptable model of an integrating à la carte project, especially if there were a founding commitment by all Member States to take part in the said co-operation when the necessary prerequisites were met.

At this point, I see several possible areas of action: economic governance, innovation and technology, research and science, security and fight against terrorism, immigration, continental overland transport networks, matters linked to foreign policy and common security, and so on.

Of these, I would like to underscore the first in particular, that of economic governance, especially within the euro countries, for these seem to me to be well suited to act as the catalysers of European integration, since the single currency is a powerful federative lever, on the basis of which one could more easily weave a more extensive fabric of political, economic and social solidarity.

Since strengthening of the co-ordination of the economic policies of the Eurogroup constitutes a unanimously recognised need, it seems to me that we should advance along this path right away, by assigning additional responsibilities to the Eurogroup within the scope of the euro area and also in the overall development of economic policies with a view to improving, in this way, the economic governance of Europe and Europe’s economic performance.

I would like to end by very briefly referring to two areas of action in which, in my view, there must be rapid progress – on the one hand, the fight against terrorism, for this summer’s tragic attacks in London have demonstrated Europe’s vulnerability once again, and the absolute need to move progressively to a single region of security and freedoms, which are, after all, public European goods of the first need; on the other hand, that of a different immigration policy, not only because the ageing of our societies, with its well-known problems at economic, social and public finance level, is not compatible with delay, but also because the international framework, the weight of the terrorist threat and the timeliness of security issues make a priority of common integration policies based on cultural pluralism and on the principle of participative citizenship, thus eradicating possible bad reasons justifying xenophobe attitudes, discriminatory acts and racist behaviour.

I would like to close with a final reflection, which has to do with the European Union’s need never to lose sight of the fact that its wealth rests on its diversity, which must continue to be the motor of its ability to renovate and to forge commitments.

It is against a background undergoing profound change that Europe is called upon to offer us a future. I have no doubt that the European values, our model of society and development, based on a social market economy, and the role that we assign to multilateralism on the international stage constitute unfailing weapons that will allow us to pursue a common project and so surmount the challenges of globalisation.

However, to do so we shall have to show ability to adapt, openness and a spirit of innovation, as well as the political will to strengthen European unity, to create new ties of solidarity between Member States and to affirm our real capacity to influence the course of international progress. Only thus shall we be able to relaunch the construction of Europe and restore confidence in its future.