The conference of today gives me an excellent and highly appreciated opportunity to discuss with you the state of play in the enlargement process, and to present my views on the way how we can succeed with the most ambitious project on our agenda, the accession of ten new member states to the EU in 2004.

The clock is running, the count-down has started. We are very close, but the deal is not yet done. The final round of negotiations is far from being concluded. Today, the position of the member states and of the acceding countries are not compatible. Severe gaps have to be bridged during the next ten days. If somebody believes that the Copenhagen European Council will be an event where we can celebrate and nothing else - I must tell him, that he is wrong. I do not expect the final compromise before Copenhagen, and in order to get it, a lot of political courage and strong leadership is required.

We have come a long way. Enlargement was put on the historical agenda with the dismantling of the Iron Curtain in 1989. The democratic movement in Central and Eastern Europe offered us the opportunity to complete European integration and to unite a Europe that has been politically divided as a result of the Second World War. The peaceful revolutions offered the unique chance to enhance democracy and common values in Europe, and to strengthen and join our forces to tackle the challenges of globalisation in a European way.

Equally important, however, is the fact that at the same time new challenges and risks emerged due to the opening up of borders, the significant welfare gap and the process of system transformation as such. Most of these new risks remain at the centre of current public debate: Illegal migration, illegal employment, growing international organised crime, unfair conditions of competition, corruption. And most people attribute these risks to the enlargement process. All these problems exist. But they do not exist because of enlargement; they exist because of the dramatic changes in the European landscape in 1989/90.

Enlargement is the only way to address and to solve these problems: by giving us common rules; by defending common values together; by creating prosperity and equal chances and opportunities on both sides of the former Iron Curtain. Enlargement is not the problem, it is the solution.

The developments during the last twelve years already prove that the enlargement strategy is the right strategy. Why will it be possible to conclude the negotiations in the next couple of days with so many countries? There is one simple answer to this: we profit from peace, stability and growth in this part of Europe. We see clearly success-stories as regards the system transformation. The Central and Eastern European candidate countries transformed themselves into stable democracies and market economies that are growing even faster than the average of the present EU. They were able to set new rules and new legislation based on EU law and learned to implement it properly. Human rights were respected and minorities protected. Nothing within this process is self-evident but is a fantastic result of a human driving-force for reform, mainly driven forward by the enlargement perspective.

Some benefits are already visible. Others will become visible soon. I firmly believe that the enlarged EU will be better positioned to pursue projects such as security, liberty and justice and the development of Europe's common foreign and security policy. Our capacity to protect Europe's environment, to combat crime and terrorism, to improve social conditions and to manage migration pressures will be stronger. The enlarged EU will be an even better and safer place for all its citizens.

The immediate economic impact of enlargement, however, will be limited, since the ten Central and Eastern European countries account for only 5% of the EU-GDP and the markets are more or less open. What has already taken place is an impressive integration of the candidate countries into the EU economy. Today, nearly two thirds of the candidate countries' trade is with the EU and they became important EU-trading partners as well. Moreover, foreign direct investment from the EU constitutes over 20% of total investment in the candidate countries. Both sides already profit from this economic integration. Therefore we can safely state that future EU Member States represent significant long-term business opportunities. Ensuring a level playing field across the enlarged Union is crucial in this regard and only with full integration can the full benefits of enlargement be reaped.

To sum up: there are very strong political, strategic and even moral reasons for enlarging the EU. Moreover we have already started to benefit from it. Therefore I am firmly convinced that we will master the most difficult piece of the negotiations the so- called end game in time for Copenhagen.

Let me now take stock of the results of the Brussels European Council and the ensuing negotiations:

In Brussels the Heads of State and government have endorsed the European Commission's findings and recommendations on enlargement. Ten candidate countries were therefore invited to conclude the negotiations by the end of this year and could become members before the European Elections in June 2004. The date is already decided: accession day will be the 1st of May 2004.

The reccommendations of the Commission are based on merits. The ten new member states will proudly use the front door. Nobody will be smuggled in, nobody comes through the back door. The ten countries meet our accession criteria, they will be able to exercise the full rights and obligations of membership. The present round of enlargement of the EU is unique not only in its scope and historical importance. It is also unique, because we have developed a completely new methodology. In all modesty I have to say: the present round of enlargement is the best prepared in the history of the EU. It is not finished in Copenhagen.

The present round will be completed only when Romania and Bulgaria join. The decision to prepare these two countries for full membership, taken 1999 in Helsinki, was far-sighted and a clear strategic choice. We need these countries if we want to achieve stability in the South-East of Europe. Both countries contribute already now a lot to this goal.

Bulgaria and Romania's efforts to achieve the objective of membership in 2007 will benefit from increased support, based on individual detailed roadmaps and increased pre-accession assistance.

The Brussels Summit also adopted common negotiation positions on the last remaining financial and budgetary and agricultural issues. These issues are:

•       The total budget for enlargement,

•       The agreement that the financial net position of candidate countries shall not be worse than in the year before accession,

•       A means of phasing in candidate countries into the EU system of direct payments, starting with 25% in 2004, 30% in 2005 and 35% in 2006 and lasting until 2013, combined with the agreement to stabilise the costs for agricultural spending in the period between 2007 and 2013.

On the basis of the agreement reached in Brussels and in reaction to the discussions with candidate countries afterwards, the Danish Presidency has tabled last week a final negotiation offer, in order to seek a compromise between the EU and the 10 negotiating countries. This Presidency proposal strikes a fair balance between the interests of the EU and its future Member States and should allow us to find a mutually acceptable compromise at the very end.

Therefore I would like to present you with some more details of this package, which is however still under discussion.

First of all it translates the Brussels agreement into the negotiation position. First and foremost this concerns the net position of candidate countries after accession. As you know, most countries express their concern, that they would become net-contributors after accession. Following the decision of the European Council in Brussels this is definitely excluded. Nobody will be in net financial terms worse off than in the year before accession. Moreover I would also like to highlight the explicit commitment to provide substantial additional assistance for the decommissioning efforts of Lithuania and Slovakia since both countries will have to close down their unsafe nuclear power plans and shall not be left alone with this challenging task.

Secondly, the proposal takes the foreseen accession date of 1 May 2004 into account, since this has an impact both on the expenditure of the Union and on the contributions of the new Member States to the Community budget. The most important thing is certainly that -due to the foreseen date of accession- the contribution of new Member States to the EU budget will be reduced by one third in the first year of membership.

Finally, the Presidency proposal recognises and takes account of legitimate concerns of candidate countries and helps them in particular to solve their cash flow problem which most of them will experience in particular in the first year of accession.

Another two elements of the new proposal relate to agriculture. The Presidency suggests in particular considerable improvements as regards important quotas such as Sugar and Milk. By doing so the special circumstances of the development of agriculture in transformation countries and in particular the negative impact of the Russian crisis were taken into account.

Overall I believe the package is balanced and at the same time beneficial both for the EU and for candidate countries. It keeps the costs for enlargement fully under control and does not even reach the financial ceiling established in Berlin in 1999. According to this package net costs for the EU 15 expressed in percentage of the EU GDP would be around 0.015 % in 2004, 0.033% of GDP in 2005 and 0.047% in 2006. This is certainly a reasonable amd modest price for peace and stability in Europe. The World War was certainly more expensive.

On the basis of this final offer the Presidency is preparing the final negotiations and I truly hope that both sides will stick to the pragmatic, realistic and flexible approach in the negotiations that will allow for a compromise.

The problems, which we still have on the table, have a bilateral and a horizontal dimension. Bilaterally, we still have a lot of individual requests, we have even a handful of normal chapters, socalled left-overs, which we could not close. But I expect positive results during this week and I am convinced, that we can solve the huge majority of these bilateral problems before Copenhagen.

The horizontal issues are more complicated. Due to the difficult budgetary situation in the member states, their flexibility in financial matters is limited. But I must say: nobody can accept the responsibility for failure. The political momentum is too strong. We have already achieved so much, that the risk-assessment is crystal-clear. The costs of non-enlargement will be much higher than the costs of enlargement. Under the Berlin ceilings we have enough possibilities to find a solution. It has to be a solution that cannot be expresed in terms of winners and losers. It has to be a win-win situation for both sides.

Next year the Parliaments and the people will have their say. First of all the entire European Parliament. It is the only Parliament which will have to decide upon the membership of each single candidate country. Once this has happened, the Treaty can be signed, most likely by the end of April 2003. After the signature of the Treaty the process of ratification can start both in Member States and in candidate countries.

The coming accession treaty will need ratification in 25 countries. Ratification of EU treaties is, as we are well aware since Maastricht and Nice, certainly not a formality. Accidents may happen. Member states should be aware that enlargement will be the top issue on their domestic agendas in 2003. Public opinion has to be carefully and properly prepared. That is not an easy task and it must start now.

This process requires time. And this was exactly the reason why the Member States have chosen the 1. May as the Accession date rather than 1 January. However, the necessary ratification of the enlargement negotiations is also one of the reasons why I continue to urgently call for more communication and discussion about enlargement. People must speak out and discuss. People must be informed. People should know that enlargement is one of the responses to problems they experience and that overall enlargement is a win-win situation.

In parallel the reform efforts and the preparations for accession in candidate countries must continue with full speed. The ten countries have made enormous progress in the last few years. I have already referred to this. However, the Commission's Regular Reports also presented the weak points and outstanding problems in a very detailed way. In particular, certain issues have to be addressed further in agriculture, regional policy, financial control and the customs union.

Therefore the Commission will continue to carefully monitor developments in these and other areas in the individual candidate countries and has announced to present a final comprehensive monitoring report six months before accession.

After accession, the Commission, as the guardian of the Treaties, will continue to ensure that EU law is being properly implemented in the new Member States. That is why we have introduced specific safeguard clauses, enabling us to rapidly intervene if the acquis is not implemented or in case of "disturbances" in the internal market. This instrument is designed as a kind of a rapid reaction facility and is a means of ensuring that we can tackle unforeseen developments to protect the functioning of the enlarged EU. For exactly the same reason the EU will continue with its administrative assistance to these candidate countries until the year 2006 to further strengthen their institutions, mainly those dealing with justice, border controls, the customs union, veterinary services, nuclear safety and food safety.

Ladies and gentlemen,

Most obstacles of the enlargement process have already been successfully tackled. Particularly, the year 2002 was a demanding steeple-chase. And the rules of the game are different. New obstacles appeared during the process. In 2002 we solved the extremely difficult issues of Kaliningrad, Ignalina, Benes-Decrees, acquisition of land and conversion of incompatible state aid systems. We had difficult and potentially dangerous elections, particularly in Slovakia. We had the Irish referendum. Only one really serious political obstacle is not yet solved, the Cyprus problem. Now we hope that this long lasting conflict may be settled in parallel with the enlargement process. Following the UN proposal for a comprehensive settlement for Cyprus the window of opportunity is open and I hope that all parties concerned will do their utmost to come to a settlement before the Copenhagen summit. It is still possible. If there is enough political will, it can be done.

The European Union has repeatedly expressed its preference for a reunited Cyprus to join the European Union on the basis of a comprehensive settlement. We are now indeed entering a decisive phase as the accession negotiations are coming to an end. Cyprus is among the ten countries for which the conclusion of the negotiations is recommended. The key reference for the EU in relation to the decision on Cyprus' accession is the conclusions of the Helsinki European Council in 1999. All efforts should be undertaken to make use of the very limited time left and to bring the process to a positive outcome so that the accession negotiations would indeed have served as a catalyst for a settlement.

The new Turkish government shows an encouraging and promising attitude. It is clear that the citizens in the northern part of Cyprus want both: a settlement of the conflict and at the same time EU membership. They know exactly, what they can achieve and what they can lose. It would be useful, if the international community would now express its willingness to help the Cypriots to deal with the financial consequences of a settlement. Re-housing for thousands of people will need to be financed. Cyprus will need strong international support. It is time to make clear commitments.

Ladies and gentlemen,

I would like to add a final remark. It is important that Europe as a whole benefits from stability and welfare. Therefore we need an architecture of Europe's security arrangements that is not too fragmented. Following the NATO summit future EU members in central and eastern Europe will join in to NATO, which is in the interest of the EU. Moreover the countries bordering on the Western Balkans Slovenia, Hungary, Romania and Bulgaria have a special role to play. We hope that their EU-membership will have an integrating and stabilising effect on the entire region. And that is exactly the role they are called on to play under the Balkan stability pact. It is not an unrealistic expectation. And one day we can expect Romania, as an EU Member State, to exert a positive influence beyond the Balkans on problematic Moldova.

Enlargement brings us also much closer to Russia, Ukraine and Belarus. One of the strategic questions for the future therefore is to build up the closest possible relations with these new neighbours. We have no interest of becoming a Fortress Europe. On the contrary, we would want our neighbours to enjoy the benefits of enlargement -- political stability and economic success in particular. We do not want new division lines Europe. To this end, we need more ties, more common interests, more co-operation, in all areas. This does not mean joining the EU, at least not for the foreseeable future. It means finding ways to achieve the same positive results we experienced with the enlargement preparations without putting the question of EU Membership on the table. The key word for me is clearly co-operation as close as possible for both sides. Enlargement will certainly help us to find the right answers as to how to master this challenge.

Thank your for your attention.