You may have heard the story about the tourist in Poland. Having lost his way in the beautiful Tatras mountains he stops at a farm and asks the farmer “How do I get to Warsaw?”

The farmer scratches his head and says:

“Well, if I were you, I wouldn’t start from here!”

European politics sometimes feels rather like that!

But “here” is where we must start.

So... Where are we? What is our situation today?

The founding fathers of the European Union – people like Schuman and Monnet – dreamed of building a peaceful and prosperous, free and democratic Europe in which there would be unity and solidarity between the member states.

That dream has very largely come true.

Peace and prosperity within the EU are taken for granted.

Economic solidarity – expressed through the EU’s Structural Funds – has boosted the economies of poorer countries and regions. Look at how it has transformed Ireland and Spain!

The Single Market, the single currency and passport-free travel have made life much easier for business people and tourists.

Air travel and phone calls are cheaper, the environment is cleaner and our food is safer.

The eight former communist countries – including Poland – that joined in 2004 are now vibrant democracies with booming economies, thanks to unprecedented reforms that they undertook. These countries are rapidly catching up with the the older EU members – and in some cases overtaking them in terms of per capita GDP.

The old Member States have also benefited in terms of increased trade and investment opportunities. This has helped European firms to stay globally competitive.

So enlargement benefits both old and new member states: it is a ‘win-win’ process – and its benefits will continue to be felt when other countries join our family: soon Bulgaria and Romania; later Croatia and Turkey.

The EU also suppports economic and democratic progress in the countries on our doorstep. They are our new neighbours, but for you – very old neighbours, whom you know well.

Ukraine is a good example. The Orange Revolution shows clearly that Ukraine’s future lies in Europe, and we are working to develop a good, close partnership with this country – one of our largest neighbours.

The situation in Belarus gives us greater cause for concern – but the same approach is needed: a strong and united EU stance and constructive and sustained engagement in order to bring about change.

EU neighbourhood policy is designed to extend the benefits of EU enlargement across our continent – promoting democracy and human rights as well as boosting prosperity.

So the EU has achieved important things and is set to achieve a lot more.

But it is also facing new challenges.

Economic growth in many EU countries is sluggish and we face tough competition from China, India, Japan and the United States. We have 20 million unemployed – many of them young people. Poland and Slovakia set the sad record in the EU, with 18% unemployment.

Our population is ageing.

In 40 years’ time there will be only two potential workers to every pensioner!

A frontier-free Europe makes life easier for drug smugglers, human trafficking and terrorists.

There are other cross-border issues too: the environment, energy and transport, for example. These Europe-wide issues can only be addressed by action at EU level.

Finally, there are global challenges that call for global action. Challenges like world poverty and global climate change that the EU cannot tackle on its own.

So my second question today is “How should we act to meet those challenges?”

We have no magical formula to make our problems disappear overnight. Harry Potter is not yet a member of the European Commission!

Nor is he a government minister – and it is, in the end, the national governments which are responsible for implementing EU policies.

So... What kind of action do governments need to take?

First, they need to invest much more in research and technological development.

The current figure is less than 2% of our collective GDP – compared with around 3% in the US.

Today’s research will create tomorrow’s jobs in high-tech sectors like biotechnology and nanotechnology – which will help Europe face the global competition.

Secondly, EU countries must make their labour markets more flexible – so that employers can more easily take on workers when and where they are needed.

EU governments also have to reform their social security systems and make them sustainable, so that future generations can enjoy their benefits.

Solidarity with future generations means exercising economic self-discipline.

Government overspending today is equivalent to stealing from our children. That’s why the European Commission insists that all EU countries, big and small, keep to the rules on fiscal stability.

Third, the EU needs to tackle cross-border crime and terrorism, and harmonise the way we handle asylum seekers and combat illegal immigration.

The member states are already working together to ensure full cooperation between their police forces, border guards, immigration and customs services and their judicial systems.

But if we are to deal effectively with these problems we have to tackle their underlying causes:

•poverty and persecution,

•hardship and hopelessness,

•injustice and oppression

in many countries around the world.

If the EU is to make real progress in dealing with these issues, we have to speak with one voice and act in unison on the world stage. It is not enough to be the world’s biggest donor of development aid. Our aid strategies need to be coordinated with our trade and other external policies.

Only by standing together as the EU can we be strong and influential in the world.

That means rejecting a narrowly national attitude.

The nation state alone is too small to face the challenges of the global economy and global geopolitics.

Economic and other types of nationalism are not the way forward!

On the contrary, what we need are solidarity and unity.

We need strong common policies.

We need, for example, an EU energy policy to ensure that our energy supplies are stable and secure – and, as far as possible, renewable.

We are already very dependent on external suppliers of oil and gas – such as Russia and the Middle East. In 20 to 30 years’ time, we shall be importing as much as 70% of our energy requirements.

So we urgently need a co-ordinated approach to our external relations.

A single EU Minister for Foreign Affairs would be a big help. So would a simpler way of taking joint decisions.

That’s why, in 2004, EU leaders signed a new Treaty for the European Union.

We call it our “Constitutional” Treaty because it sets out the ground rules for how the EU should function.

It is very long: 448 articles plus annexes! But it does have some very real advantages over the present treaties.

First, simplicity. Instead of several treaties and 36 types of legal instrument, there would be a single Treaty and just six legal instruments.

Second, efficiency. The Constitution would streamline decision-making in the Council, reduce the number of Commissioners and have foreign policy coordinated by a single EU Foreign Affairs Minister.

Third, transparency.

•The Constitution would make EU citizens’ fundamental rights visible and enforceable.

•Moreover, the Council of Ministers would hold its legislative meetings in public.

Finally, democracy.

•The Constitution gives more legislative power to the European Parliament – which would also be able to elect the President of the European Commission.

•Under the “European Citizens’ Initiative”, the people would have the right to petition the Commission to propose a new law or policy. It would require the signatures of only one million EU citizens – out of half a billion.

Moreover, national parliaments would be given a greater role in ensuring that Commission proposals comply with the principle of subsidiarity.

So the Constitution would make the EU simpler and more efficient, more transparent and more democratic.

However, it cannot come into force without being ratified by all 25 EU countries. And the people of France and the Netherlands have said “NO”.

Why? For many reasons.

Some felt the Constitution was too market-oriented.

Not “social” enough.

Some see the the EU as a superstate, threatening to take away their national sovereignty.

Many people are afraid of globalization and immigration, and they see the EU as part of the problem rather than part of the solution.

So... what will happen to the Constitution?

More than half the EU countries have now ratified it, and some would like it to be adopted in its present form.

Others would like to see it shortened or amended.

Chancellor Merkel of Germany has suggested adding a ‘social protocol’ to the present text.

President Chirac of France and Prime Minister Verhofstadt of Belgium have proposed that a ‘hard core’ of Euro area countries should go ahead with the Constitution’s provisions on economic and social matters, or on foreign and defence policies.

Prime Minister Juncker of Luxembourg has suggested the EU as a whole should implement selected ideas from the Constitution.

The fact is, different politicians have different ideas but there is no agreement among the 25 governments.

We in the European Commission would like to see an institutional settlement before the end of our mandate in 2009. But the most important thing is to have a text that can be adopted by all 25 member states and their citizens. Approval is more important than an exact date.

So what do we do next? EU leaders have spent the past 12 months reflecting on this question. There never was a ‘Plan B’ – but the European Commission has proposed a ‘Plan D’ – where D stands for democracy, dialogue and debate.

We believe that before turning again to institutional and constitutional questions, we need to agree on the kind of Europe we all want.

There has to be a real public debate about this, in each EU country. Including Poland!

I want you to play an active role in the period of reflection. Not only the Polish government but also to the opposition parties, NGOs and citizens in general.

You say in Poland: “NIC o NAS BEZ NAS” {NITZ O NAAS BEZ NAAS}. Make it a reality in this debate!

When the European Council meets later this month it will probably decide to prolong the period of reflection on our future. I would welcome this: we all need time for real discussion.

Lively debates have certainly been taking place recently – on the internet, on TV, at public meetings.

The Commission President and I have been taking part by visiting as many EU countries as possible, along with the commissioner from the country concerned.

We have been listening to the views and concerns of ordinary citizens.

We have seen that Europeans everywhere are concerned about the challenges I have already outlined: unemployment, globalisation, the European social model and cross-border issues such as organized crime and the environment.

The whole question of Europe’s borders has been an issue too: where the borders should be drawn and how they should be secured.

People also want the European institutions to be more transparent and they want a greater say in the EU decision- making process.

Above all, citizens want tangible results affecting daily life.

There are interested not in the process of Europe but the product.

The EU has to deliver practical benefits for everyone.

People want jobs: 20 million unemployed is totally unacceptable.

People want economic growth that builds prosperity.

People want security; a just and caring society; a cleaner, greener environment; a safer and fairer world.

And they want the leaders of the EU to listen to their wishes and to act on them.

That is why the Commission has recently proposed a Citizens’ Agenda – a very practical agenda, focused on delivering results.

Let me stress again: this is a Commission proposal, but it is the citizens who have set the agenda. You may want to call it an Elvis Presley strategy: a little less conversation, a little more action...

Now politicians must show leadership – and governments must deliver the goods! That includes the Polish government, of course.

I really would like to see Poland playing an active and positive role in Europe.

It always seems to me a paradox that the political leaders of this country should be euro-sceptical when Poland has gained so much – and has much more still to gain – from EU membership.

You are full members of the EU, secure and increasingly prosperous. Membership brings responsibility. It calls for commitment to working together, and commitment to our common values.

I am reassured to see that most of the citizens of this great country are euro-enthusiasts. Three years ago, 78% of Poles voted in favour of EU membership, clearly signalling that they wanted Poland to “return to Europe” and play an active and positive role in the European Union.

So let me urge you, whatever your age or profession, to get actively involved in political life and in continuing to set the EU agenda.

Don’t let others decide it for you!

Finally, to all you young people here today, and all over this country, I want to say this.

Make the most of your rights and opportunities as EU citizens.

You have – for example – the right to live, study and work in any EU country you choose.

To help you exercise those rights, the European Commission runs programmes like Erasmus and Leonardo da Vinci. They enable young people from any EU country to study or train abroad.

So take full advantage of these opportunities!

You are the scientists, inventors, business people and politicians of tomorrow.

The future of Europe is in your hands.

Make it a great future!

Thank you for meeting with me today. I hear from Polish friends that Swedes in Krakow may get a tough reception, since one of them, a certain Mr Vasa, has moved the capital of Poland from Krakow to Warsaw. I am sure that he would think twice today, having seen the magnificent blossoming of your historic city in the recent decade or so!

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