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The U.S. and the EU: A Bilateral Partnership for Global Solutions

Speaker: José Manuel Barroso, President, European Commission
Presider: Richard C. Holbrooke, Vice chairman, Perseus LLC
May 13, 2005
Council on Foreign Relations

Council on Foreign Relations
New York, N.Y.


RICHARD HOLBROOKE: Welcome to the Council of Foreign Relations and to this wonderful luncheon. I'm honored to be the introducer of Jose Manuel Durao Barroso. And before you correct my pronunciation, remember, he's from Portugal, not Spain. [Laughter] Jose is the president of Europe. That's not his official title, but it's good enough for us, and in a minute he will explain to you why he isn't really the president of Europe. And we are looking forward to your talking about the U.S.-European relationship.

I just want to say a word about Jose, my friend who comes from a country that I've come to know only in the last ten years and which brings remarkable insight to Europe and to the United States. Jose is part of that generation that fought for the freedom of their country after a long, dark period. And then having marched in the streets, having fought for freedom, rose to the highest political offices. He was prime minister of Portugal. He was one of the leaders of the effort to end the tragedy in East Timor, and— which is where my own personal background in Portugal most overlapped. And now as you all know, he is president of the European Commission.

Well, we are delighted you're here. You're speaking on the record today, so not only his remarks but all of yours will be on the record. And I'm just delighted you could be here. We were— [Council President] Richard Haass and I— were with you in Munich over the weekend at a conference where you spoke very eloquently about these issues. So I know all of us are in for a very important discussion from President Barroso. Thank you. [Applause]

JOSE MANUEL DURAO BARROSO: Ambassador Holbrooke, Dick, dear friend, thank you for your kind introduction. It's indeed very pleasant for me to be with you today, accompanied by Ambassador John Bruton. He represents the European Commission [in] the United States. In Washington, former [inaudible], Ambassador [Fernando M.] Valenzuela, our representative to the United Nations. Thank you Council of Foreign Relations, thank you Richard— thank you Richard Haass for organizing this meeting.

Now, however, my turn has come to speak, demonstrating that there is really no such thing as a free lunch [laughter] and it's also not a free lunch for you. You have to listen to me.

The relationship between the United States and Europe must be the most scrutinized one in the world. Old forests have been cut down to fill the transatlantic relationship industry. Universities, think tanks, journalists are kept busy every day looking for fresh perspectives. At times, it can feel like every possible viewpoint has already been expressed, every amusing quote exhausted, every argument analyzed to death. Nevertheless, we seem to sometimes come up with some brilliant insights or offers construction advice for building or deepening that relationship further.

But sometimes it doesn't. Sometimes important truths and perceptive analysis are buried under overly imaginative generalizations. For instance, generalizations about Roman gods and goddesses. So before giving you my view, let me start with some first principles.

Throughout history, Europe and the United States have enjoyed deep bonds of kinship and shared both culture and values. Our economic relationship has built on these solid foundations to bind us even further together. We are each other's biggest trading partner. In 2003, the overall volume of European Union [EU] and U.S. trade in goods and services totaled some $770 billion. For all the headlines that our trade [disputes] grab, the reality is that they effect less than 2 percent of this volume. The more amazing is our two-way direct-investment stock, which is worth not far short of $2 trillion. As many as 40 million jobs in the European Union and U.S. depend on transatlantic commercial ties. It is therefore entirely normal that we should work together, not because of some mystical sense of brotherhood, even if you add common values, but for the hard-headed practical reason that our interests and perceived threats very often coincide. By acting together, we are stronger and more likely to achieve our shared objectives.

But [inaudible] just one of the many areas where we are cooperating well bilaterally: security and counterterrorism. Doing that in New York, of course [for] specific reasons, understand it is better than any other city in the world. The establishment of a new U.S. government department, the Department of Homeland Security, to take responsibility for a range of border, transport, and related security policies has changed the landscape within the U.S. system. The European Commission has worked hard to build links with this new entity, and this has already born fruit, both in terms of improved dialogue and practical policy-making.

For example, the policy dialogue on border and transport security, established in April last year, has encouraged much greater openness to, and awareness of, each other's interests and concerns, which will meet again next week, 19th of May, to discuss all [inaudible] of security-related issues.

And let no one think that this is just another bureaucratic talking shop. Improved dialogue has led to much greater cooperation. European Union already offers counterterrorism assistance to a wide range of third countries, while financing more targeted work with priority countries like Morocco and Algeria. But in March, European Union experts also participated in a successful visit by the U.S. State Department and FBI [Federal Bureau of Investigation] officials to Tanzania focused on money-laundering. This coordination effort looks set to continue and the U.S. has already asked the European Union to participate in such a visit.

So I just gave this concrete example because sometimes people think that it's just general state speeches, but it's not. We are really actively coordinating work on the ground. Preventing terrorist financing is a high priority for the European Union. We have produced policy recommendations, and a number of terrorism conferences have been held during the past year in which European Union and U.S. shared best practices. Some new workshops on counter-terrorist financing will take place shortly, and the U.S. is invited. In addition, the third money-laundering directive will add specific counterterrorism elements and patent controls on cash movements and wire transfers.

It is important that we continue to coordinate our activities. In this respect, I would like to mention the U.S. Intelligence Reform and Terrorism Prevention Act passed by Congress last December. It is vital that we consult each other before new rules are introduced which have an external impact.

So a real partnership is there, and it covers a broad range of other issues too. However, to develop our common purpose further, we must have confidence and trust. More than ever in a world that has become complex and unpredictable, our dialogue should be an open and honest one among equals. It should accommodate legitimate disagreement and sometimes necessary compromise. We should probably start by clarifying some delusions. America will not be more successful in achieving its objectives by taking the unilateral path. Europeans need to spend a bit more time matching their words to deeds. And on its [inaudible], unlike some perhaps, I'm optimistic about this relationship.

Obviously, President Bush's visit to the European Commission in February was an important push. President and Secretary of State [Condoleezza] Rice showed they were keen to be in listening modes and to respond to their partner's concern. We have seen evidence of this with evolutions in U.S. policy most recently on Iran.

The EU, for its part, has looked to be worth listening to. We are maturing, speaking with a unified voice more often and on a much broader range of issues than in the past. The European constitution currently being ratified by member states will accelerate this trend. The European Union is ready to play a more substantial strategic role in global affairs to enhance relevance and credibility, which has resulted from this— is reflected not just in President Bush's visit, but also the increasing willingness of U.S. legislators to visit Brussels and engage with both European Commission [inaudible]. I was very happy to receive many of the leader members of the Senate and the House of Representatives.

European Union-U.S. summit in Washington, D.C. on 20th of June should continue this progress. We are looking at ways of using the summit to underline our cooperation and find new ways of working together, particularly facing the challenges of today's world. But while European Union-U.S. join efforts towards common goals of promoting democracy, stability, peace, and security around the world are of paramount importance, this cooperation is not sufficient. The world has changed, and so has its problems. Even with the tightest of partnerships, can Europe and America really stop global epidemics like AIDS alone? Can we halt climate change and environmental degradation in glorious isolation?

The fact is, to address today's global problems effectively and translate noble aspirations on peace and prosperity into reality, we must have an approach based on inclusiveness and the rules by order. And now this is not the conclusion of a frustrated European Lilliputian, trying to tie down the American Gulliver. [Laughter]. It's a pragmatic response to unique problems and opportunities which previous generations simply did not face. Multilateral action resolve in large parts of the international community is often the only way forward if our goal is to find solutions that work rather than to engage in political wishful thinking. And as an aside, let me say that Europe is no Lilliputian.

Today, the 25— and soon to be 27— members of the Union, with 500 million citizens, are by far the world's largest owner of development aid as well as its largest trading block. Let me tell that the other day I was having the meeting that Richard Holbrooke was mentioning; I discussed this point. People sometimes forget about time, how Europe is now. We are always concentrate on difficult moment, but where are we now and where were we 60 years before, 30 years before, or 15 years before?

Sixty years before, it was Auschwitz. Now we have the commemoration of liberation camp of Auschwitz, I was there with many others, paying homage to those who resisted and those who survived. That was Europe sixty years ago. Thirty years ago or so, more or less, my country— and Dick, you referred to it— but those of Spain and [inaudible] under authoritarian regimes. When I was eight years old I could not buy the books I wanted. It was not possible to do that in Portugal or in Spain or in Greece, and now we are four very competitive democracies. Fifteen years ago, half of Europe from Poland, Czechoslovakia, Hungary, Slovenia, Slovakia— Slovakia's part now of former Czechoslovakia— not to speak of the Baltic states. That did not even exist. They were under totalitarian Soviet regimes, and now they are free.

So why are we always pessimistic about Europe when you can see the evolution of this [inaudible] year? And I tell you, that in Europe we have many problems, and I do not exchange this kind of problems with the problems that we face when we see the situation in Africa that needs real courage to be tactful or in other parts of the world. So that's why I'm realistic, but I think, realistically, we have all reasons to be optimistic about Europe.

Several organizations in multilateral framework have proved their worth here. Take the World Trade Organization [WTO]. It offers a forum where countries can come together and agree on rules for free and fair trade. Crucially, these rules are then backed up by a district-settlement system. Willingly submitting to these disciplines has allowed for a massive liberalization of global commerce. This has lifted millions out of poverty, particularly in Asia, while consolidating prosperity in developed countries.

By the way, today we received very good news. I had occasion already to welcome the fact that it seems that my good friend, [Association Notre Europe President] Pascal Lamy now is the consensus candidate to lead the World Trade Organization. It came up today. This is news. It will be formerly endorsed in the next days. That's very good news for the international community, because he's a very able man. He was a former [European] commissioner [for trade] who is able to work the WTO with the perspective of trade and development, and we need such a personality as head of that organization.

Now two specific efforts that were taken by a smaller group of engaged countries on behalf of the international community undermine these arguments. Rather, they illustrate the healthy pragmatism in the global community to search for the most effective solutions. I could cite here the search for solutions to original conflicts under the [inaudible], for example, or African development and debt-relief efforts through the GA [U.N. General Assembly]. Of course, the only truly negotiable multilateral organization is the United Nations. With its inclusive membership and worldwide legitimacy, it remains the most important arena for advancing common solutions to our common problems.

But since the European Union-U.S. partnership is not enough by itself to tackle global issues, so too, specific U.N. Security Council resolutions or its national conventions alone are insufficient. Yes, the countries of Europe and the United States are all members of the United Nations. Yes, we all subscribe to the U.N. Charter and have obligations under the charter and international law. However, an active commitment to effective multilateralism means more than rhetorical professions of faith; it means having a strong political will to implement international consensus. It means taking global rules, instruments, and commitments seriously. It also means helping other countries to implement and abide by these rules. Above all, it is not about multilateralism per se, but about how effectively it is used to address challenges, and this is where the EU-U.S. partnership can and does pay dividends.

In many of these forums, we are the driving force that makes them work. We formed the nucleus of democratic societies which help and support others in need as well as dealing with challenges. The result is that the entire international community benefits.

Of course, we must be honest since the fact that multilateralism doesn't always work immediately nor as effectively as you might like. More recently, events which preceded the Iraq War have led some Americans to the mistaken conclusion that the United Nations or even the multilateral approach generally is in some way fundamentally flawed and [inaudible]. But they forget that the United Nations is not some unwanted, alien imposition. It is simply the sum of its member states. When U.N. is perceived to have failed, it is more often than not because its members have failed. My message is then don't throw the baby out with the bath water. Despite any imperfections, I remain convinced that a multilateral approach is the only way forward. To paraphrase [Sir Winston] Churchill on democracy, it's our least-worst option. And if we, its members, are responsible for the perceived [inaudible] of the system, we should also be responsible for putting them right. The important thing is that the process of reform of the U.N. is now on the way, and momentum is there to really make a difference. Both EU and U.S. should seize this opportunity and accept the role of front-runners on U.N. reform in order to ensure real change for the better.

We have to bring about necessary direction and engagement required, [inaudible] U.S. to engage fully with us in the U.N. reform process and continue to intensively coordinate with its European partners. For the European Union, U.N. Secretary General Kofi Annan's In Larger Freedom report represents an ambitious, achievable, and balanced agenda for the U.N. summit in September. It will go a long way to strengthen the organization. We support the establishment of a new [inaudible] consensus— for example, in particular, the broad meaning the report as given to the concept of peace and security.

The proposed peace-building commission could fill a very old gap in the U.N. institutional machinery. It should have a broad mandate, covering the old continuum from peace-making and peacekeeping activities to long-term development issues. It should pay particular attention to issues such as how to support democratization, good governments and sanctioning institutions, strengthening the rule of law, insure respect for human rights, all core U.S. and European Union values.

I welcome other proposals, too, for reform. Human rights [inaudible] in particular will render the U.N. human-rights machinery more relevant and efficient. The proposed democracy fund also has strong European Union support. Proposals [inaudible] environmental governments are good, but could be further strengthened to make progress towards the establishment of the United Nations environmental organization.

But we need to make sure that the issue of U.N. Security Council reform, whatever the position of one or the other partner, does not, due to its complexity, block progress on the rest of the summit agenda and all the other reforms. I really hope that U.N. membership will make every effort in this regard. With U.N. in the process of being reformed and reinvigorated, the European Union and U.S. can look forward to even better returns on their joint investment in multilateral action. We can start to take a fresh look at climate change, for example. We should put misgivings about each other's views on the Kyoto Protocol [on climate change] aside and focus on the period beyond 2012.

There are many avenues worth pursuing where cooperation will be fruitful. We should also continue our drive to eradicate poverty and promote development around the world. A speedy conclusion to the [WTO] Doha development agenda will certainly help here. As will further efforts to achieve the Millennium development goals

As the world's biggest owner, responsible for 55 percent of worldwide official development assistance worth $43 billion in 2004, the European Union has an important role in the process of achieving these goals. This is a responsibility we take very seriously. Thus far, we have respected our Monterrey agreements [for development financing]. In 2006, we should surpass the target of spending 0.39 percent of our gross national income [GNI] on overseas development assistance. This effort has to be maintained. The commission, in its development packets to the Council, has suggested that the collective effort of the European Union should reach 0.56 of GNI by 2010— nearly an extra $26 billion in view of reaching 0.7 percent by 2015. So forgive me, Ambassador Holbrooke, this is not just hearsay for the press. And as you so vividly described it here last month. The European Union is deadly serious about hitting the 0.7 target, and we are already more than halfway there. I truly hope the U.S. will join us in this effort because few can doubt that this will have a dramatic impact on the ground.

In conclusion, I think the time has come to move away from the old dichotomies of unilateralism and multilateralism, of Mars and Venus. We need to look at the European Union-U.S. relations in a new light, as a prosperous, free, influential part of the world. The United States and Europe cannot escape their common responsibility for global security and prosperity. Our respective histories show that people of diverse cultural identities can peacefully live and prosper together in a world based on the rule of law and democracy. [Inaudible] today's global and regional challenges, we have to live up to our demanding heritage. I firmly believe that the only way to do so is to develop an ever-stronger bilateral relationship imbedded in an effective multilateral framework. Thank you for your attention. [Applause]

HOLBROOKE: Thank you very much. I have a very simple rule which is to call on people and answer and you will respond. Remember the questions are, also. Would you identify yourself for President Barroso?

QUESTIONER: Yes, I'm Peter Garber from Deutsche Bank. There has been a push to end the arms embargo of, the sale of arms from Europe to China, which has— seems to have been somewhat stifled lately, and the arguments that I've heard for why this might be happening, or what the push is for this is that it ranges from anywhere from petty commercial reasons to— all the way to the organization of a new balance of power. I just wondered if you might comment on what you think the basis of this push for an end to the embargo is?

BARROSO: I don't think it will be agreed soon, that lifting of the arms embargo. The truth is that there are differences among member states. There are conflicting views. So it does not seem to me very likely to ever come to be finding a consensus in the next, let's say, months.

No, the commission is such, we don't— we are not interfering on that. That's a matter for the member states. That's not our competence. And if you ask my opinion, that is my assessment of the situation. By the way, the European Parliament also now passed a resolution very, very strongly against the lifting of the arms embargo. But of course, those countries that are thinking about pushing this last arms embargo, are not doing it, to answer your question, on a [inaudible] basis. If I may, they are not pushing it in terms of balance of power, not at all. On the contrary, they are— how can I say— receptive to the Chinese argument that this is discriminatory against them because other countries do not have the same approach to human rights that we have, the United States has, and there is no arms embargo against them.

So the Chinese point is that [they] feel this as a discrimination against them. And this is an argument that some people in Europe accept as the need to change the approach. And with a code of conduct or reinforced code of conduct, the goal is not to increase the sale, but to avoid what is a very strong irritant in the relations between Europe and China. So those are the arguments. I personally, as president of the Commission, have to be very prudent on that matter. This is for the member states to decide. But I try to give you a fair assessment of the situation. There are conflicting views in Europe. It's quite known on that matter. But I don't expect a decision to be taken in, let's say, the next months on that issue.

QUESTIONER: Charles Grant, from a European think tank called the Center for European Reform. President Barroso, the EU has had a very strong influence on the countries around it, which have moved towards accession. But it hasn't done so well at influencing the next ring of countries that don't have much prospect of joining the EU. And it's been rather hard to push those countries toward more democracy and economic reform. I'm thinking particularly the Arab countries. There is the [Euro-Mediterranean Partnership, also know as the] Barcelona Process, so-called, 10 years old. I'm not sure what it's achieved. You now have the EU Neighborhood Policy, which the EU has agreed upon, which is supposed to push the countries around the EU in the right direction, democracy, human rights and so on. Are you confident that the new Neighborhood Policy is going to work better? Are you going to use conditionality more strongly than in the past? And do you think that the EU and the U.S. can work together better to promote reform in the Arab world in particular?

BARROSO: Yes. I believe it's an important task to promote freedom and democracy. Those are our common values. We should do that in a sensitive, sensible way. And the new Neighborhood Policy precisely answers that question, in part. So the idea is to promote stability and democracy in the immediate neighborhood of European Union. And it goes from Ukraine— where, by the way, the United States and Europe has been cooperating very well. People usually concentrate on difficult issues. But they forget that, for instance, the Ukraine, there was— I received a phone call from [former Secretary of State] Colin Powell during that crisis. We were following very much the same line. The European Union sent some envoys to Ukraine. And I believe it was a very good cooperation.

Of course, you were not interfering. That was a decision of the Ukrainian people. But it was good that at the very crucial moment when there were half a million people in the streets of Kiev demonstrating for democracy, the signal that was sent by Brussels, the European Union, and by the Americans were exactly the same. I can tell you, because I was engaged with that discussion with [Russian] President [Vladimir] Putin during the European Union summit with Russia, during the Dutch presidency. And I remember, it was very important that European Union and United States had the same position.

But I was sating that from Ukraine to the Mediterranean, Maghreb countries, we are seeking to promote democracy. And we have been doing it. It's true that this style, it's the classical distinctions between soft and hard power. But the style of the European Union member states is sometimes very different from the American one. But I believe the goals, I think, are exactly the same. What do we want? What do we, as Europeans, want? We want stable, democratic societies. What the Americans want, I believe it's the same. We like those countries to be democratic and stable countries.

So we are working in the same direction, and sometimes the so-called greater Middle East initiative is not very different from the kind of dialogue we are already having with some Maghreb countries. But as I say, some European countries. Because, you know, first there is the so-called Mediterranean dialogue, where the southern European countries of France, Spain, Portugal, Italy, and Malta are engaging Maghreb. Because, as a former foreign minister and prime minister of my country, I participated in many of those meetings [and] I can tell you that the human rights issue was always present. Sometimes it wasn't publicly present, but it was present in our dialogue with those countries. So we are already having a beneficial role in that direction, and I believe we should do more. Yes.

So this year is the 10th anniversary of the Barcelona process. We hope to commemorate it just for the sake of commemoration, but for giving a new impetus to promoting democracy in the Arab countries and in our immediate neighbors.

HOLBROOKE: In that regard, I want to express my personal concern that you're being much too conciliatory with Belgrade in terms of their relationships with Brussels prior to their really delivering on [former Bosnian Serb leader] Radovan Karadzic, [Karadzic's army chief during the Bosnian war] Ratko Mladic, and commitments for stability.

You have the biggest carrot, the biggest incentive. And in my honest view, and I say this with great respect for the European project, you're giving it away for a fraction of the price you ought to charge for it, and risking stability in the Balkans.

BARROSO: Look, what we are set to do now with Serbia and Montenegro with Belgrade, was just to start for the possibility of a stabilization agreement, not for membership. Our position was very tough with Croatia, because Croatia insists— one general is missing as you know, only one. All the others were given up to the Hague tribunal. But only because one general was missing, the European Union decision was not to start negotiations with Croatia, even if Croatia was much more advanced than Serbia.

But Serbia is for another phase of the process. So I can tell you, it's been very [inaudible] in the commission, myself and Commissioner [inaudible], we are following this with great attention, and we try to have a very, very demanding standard in terms of human rights to Croatia, to Turkey, also, Turkey. And to the other Balkan countries.

As you said, and I fully agree with you, we have an opinion as to the solution for this, to a large extent. Because what those countries more than nothing else is to become members of the European Union. And one thing they want is visa facilitation, so that their young people can go and study and work. So we are decided to use this leverage in a positive way. Sometimes you may disagree on timing. But let me tell you that the goal is the same, and that is our determination.

QUESTIONER: Paula DiPerna of the Chicago Climate Exchange. I couldn't help but noticing, I know that Richard noticed, that you mentioned climate change twice. And I'd like to talk with you a little bit about what we're doing, and I was very involved in trying to harmonize post-2012, et cetera. However, I wonder if you could speak to the role— and this is what Richard and I have talked a little bit about— the role of issues like climate change in the trade-off process, soft power, hard power. Surrogate issues with respect to broader, quote, more strategic, foreign-policy issues. [Inaudible] commented about it at the U.N. the other day, how Condoleezza Rice had brought back the message that when she was in Europe she heard so much about climate change. So I wonder if you could speak to that.

BARROSO: [Inaudible] think there is a thing called climate change. Because I think that some people believe it's not true. But we believe that the latest, let's say, scientific evidence goes in favor of those who believe there is a problem called climate change. In Alaska we already feel it, and it exists. So there are different views so far, between America and Europe on that matter. America does not accept Kyoto Protocol. We were leading in accepting and promoting the Kyoto Protocol.

But the Kyoto Protocol [is] until 2012 [and] you have to think afterwards. We discussed this very seriously and [were] very concerned with President Bush when he visited Brussels sometime ago. And we understood that the American president, and the American administration now, is giving much more attention to this problem, not accepting Kyoto Protocol, but accepting that a lot of investment has to be done, and it's already being done in terms of technologies to face that problem.

So we are looking forward to a positive conclusion for the G-8 [Group of Eight] meeting in Gleneagles. I will be happy to participate also in that meeting with the G-8 countries. And I know that [British Prime Minister] Tony Blair, the current president of the G-8, is pushing this very high on the agenda. So we hope that we can, because if you cannot agree about the past, let's agree on the future. Let's agree on what we can do together, both America and Europe, but also, engaging, because we need them engaged, others like China, like developing India. They are very important, also, and they— what they will be spending in terms of energy in the future will be really very, very important.

So I believe now there are better conditions. And I can tell you, when I mention in my speech the better atmosphere between the American administration and the European officials, we also find it about climate change. So there is a change of climate when we discuss climate change with America.

QUESTIONER: Bill Drozdiak, president of the American Council on Germany. Mr. President, the European Union has taken the lead on negotiations with Iran. They issued a toughly worded statement the other day that if Iran does proceed with its highly enriched facilities, that they would be ready to go to the U.N. for sanctions. If the sanctions would not work, would Europe be willing to endorse the use of force to prevent Iran from acquiring nuclear weapons?

BARROSO: Don't go too fast. We should not engage at this moment with this— I cannot really engage on that kind of scenarios. What is important to take note of is that, in fact, some member states of Europe, three member states, plus the high representative [of the Common Foreign and Security Policy if the European Union Javier] Solana, with the support of European Union has been engaging in what we think could be a constructive dialogue with Iran. If Iran does not respect what we consider their obligations, definitely we will take a harder position, that's clear.

And I believe that also in that matter today we are witnessing a good cooperation between United States and Europe. The United States did not say, just, "Don't do that." No, they were informed about the initiative by some of the member states of the European Union, and we are exchanging information. We are working constructively on that matter.

So now let's hope— let's hope— that Iranians do respect their obligations, and that other options have not to be considered. At least at this moment that's what I can tell you about.

QUESTIONER: Jeff Laurenti at the Century Foundation. President Barroso, in your speech which focused on global security, multilateral cooperation, I was struck that you never once mentioned NATO [North Atlantic Treaty Organization], and that the one reference to the U.N. Security Council was simply on the deadlock among Europeans over how to expand it. I wonder if you could tell us, under what kinds of frameworks the Europeans are prepared now and in the future to commit military forces for peace maintenance, et cetera, if not through these? Since they no longer do— contribute troops to U.N. operations and NATO appears to be the subject of indifference by both Washington and a lot of EU countries. And what [does] the evolution of a common European security and defense policy mean in terms of a shift to Brussels of decision-making authority for being able to commit some troops for international operations, and how they're represented here in New York?

BARROSO: I'm sorry, I did not mention that, because my subject was European Union. I am representative of European Union, not NATO. Even if you know I am very committed personally to NATO values, and my country is a member, a founding member of NATO. So this— this is not because there is any kind of reluctance regarding NATO. On the contrary, we have a good cooperation, also, European Union and NATO. And by the way, the European constitution, when we were drafting it, it was considered maybe the most difficult issue at the beginning: How can France and Britain, to be very frank, agree on that? In fact it was agreed.

So one of the good things about the constitution is that it clarifies that the European— so-called European identity in defense and security is not against NATO. It's the kind of European pillar of a transatlantic security system. So there is none at all, I can tell you on my part, and I say on behalf of European Union and the European Commission, not a reluctant position on NATO. NATO has been a provider of security. All the achievements, important achievements we had during all these years, would not have been possible without that very valuable organization.

Now, European Union is also trying to assert itself more on those matters. We are now taking the responsibility of some missions like in the Balkans. We are taking them, taking that responsibility. And not only with NATO, but also the United Nations. Yesterday and today I was in a meeting. Yesterday, in a very nice dinner, working dinner, and today in a meeting with Secretary General Kofi Annan. One of the issues he's asking from us is to be more cooperative to African Union [AU]. And we are doing a lot with African Union. We are trying to enhance the capabilities of the African Union, and also for them to have a good role, a positive role in some peacekeeping and peace-enforcing conflict situations in Africa.

HOLBROOKE: Excuse me for interrupting, but what specific things is the European Union going to do to support the AU in Darfur?

BARROSO: Oh, we are doing, we are by far the largest donor to Darfur. Once again, I'm sorry to speak about dollars or euros, but we are by far the biggest contributor now to Sudan and to Darfur in terms of aid. And we are supporting that process. We are supporting generally that process.

Now, we are doing it directly to those involved, and also to enhancing the capability— institutional capabilities— of the African Union. So they can provide themselves security. So, we are not considering at this stage foreign troops sent by the European Union, as the operation that is taking place in Congo, in Democratic Republic of Congo. So we are very much in favor of working in the framework of the United Nations or of the international organizations on those— or the regional organizations on providing security. Because security is the first issue.

Or if you want another case of NATO, Afghanistan. Yesterday, I was [in a] working breakfast with— it was in Brussels at 8:00 o'clock in the morning with President [Hamid] Karzai of Afghanistan. As you know, once again European Union member states are the biggest now in terms of number contributor to that operation in Afghanistan. And we are working very closely with America in Afghanistan. And so I believe there is room for increased cooperation also between European Union and United States, also, on those peacekeeping and peace-enforcing activities.

QUESTIONER: Thank you, President Barroso. I'm Catherine Hauser with the Transatlantic Business Dialogue. I'd like to take you back to some economic questions. You began your speech talking about the very broad and deep investment and trade relationship between Europe and the U.S. What do you think the two countries can do together to expand economic growth, particularly in the area of innovation?

HOLBROOKE: Before you answer that, are there any other economic questions? Because we ought to group them. Because I know there are several other issues that haven't come up yet.

BARROSO: It's the only economic issue.

HOLBROOKE: Well, why don't you— if it's related, let's get them so the president can deal with them together.

QUESTIONER: Emily Altman from Morgan Stanley, I did want it not to be overlooked that another area of great cooperation between the European Union and the United States over the last month, and it's in large part due to the commissioners that you've put into place, is in the financial services. And I think that's very important, just to bring to the attention of the group.

HOLBROOKE: Any economic issues?

QUESTIONER: Reba Carruth [inaudible], World Health Organization. I'd like to know how you foresee transatlantic cooperation in the area of regulatory capacity-building across the sectors— food and drug, financial services, transport.

HOLBROOKE: Tom, was your question economic? We'll come back then.

BARROSO: So can I— in fact, that question answers almost the two others. That's precisely one issue we are working now. We are— I cannot yet give you a formal answer, because we are now in the decision process for a communication inside the commission. It will be taken very— one of the next meetings of the college of the commission [inaudible] communication on the United States-European Union relations, our position on economic issues mainly. And one of the ideas is precisely about regulatory convergence, if not common regulatory systems, for many issues. That will be our proposal, but we are still finalizing.

One is, of course— it's the financial services. It's one of the important issues that we are looking at, trying to have a common ground, common rules, for the transatlantic community. And I believe it to be helpful to have it. Of course, it could not be 100 percent what Americans prefer, nor what Europeans prefer. But I believe it was in both sides' interest to have a common regulatory framework in many of those issues.

Now the first question was, what can we do to stimulate growth in Europe? We are now trying to stimulate growth. We know that this commission— the new commission, I have the honor to preside— we launched the so-called re-launch. There is a so-called revision of Lisbon strategy that was adopted in 2000, in a European Council 2000 in Lisbon.

And we were making two proposals that were endorsed by the European Council. The European Council [inaudible] better focusing that strategy in terms of the growth and jobs, and knowledge for growth, where innovation plays— has a more important role. Innovation in many matters also relating to your experiences here in the United States, it's clearly a subject where the United States are leading, information technologies, and communication technologies. United States are performing much better than, generally, Europe. So we have to, to also, to do better.

Now we have a plan. The European Commission is now putting forward this plan to the member states. It depends also on the financial perspectives. It's the financial perspectives, the budget of the European Community that we hope to be approved next June for the period 2007-2014.

But if it gets approved, as I hope, we will be doing much more in terms of support for our knowledge-for-growth strategy in terms of innovation. So we believe in Europe we can do more for growth. And we are doing more to a large extent because of the new members of the European Union.

And I want to say this here. The enlargement of the European Union so far has been a success, a success. Those ten new members, they have higher growth. Some of those countries are among the highest growing in the world, some of the new members of the European Union.

And I believe that that's also good for all of European Union, because that already is having some impact in terms of competitiveness of Europe. So in that matter, we can do more, and that could be our contribution also to growth in the general arena, in the more global community.

HOLBROOKE: Tom.

QUESTIONER: Thank you. Tom Schick with American Express Company. Speaking of enlargement, I want to take you back to a reference you make— a very quick reference— to Turkey. To what extent are you and other members concerned about the impact within Turkey if in fact they are not admitted to the EU? And what role will that concern play in the decision whether or not to admit them?

BARROSO: So far, the decision is that we start negotiations October 3rd. It was approved by European Council. Now we hope Turkey will sign the so-called Ankara Protocol. It's a protocol that is very important. It was agreed that they should sign it before. And so we hope to start negotiations formally for their membership October 3rd under the British presidency. That will be the next presidency of the European Union.

As you know, we have a rotating presidency. And now it is the British time. The truth is that there are some— and we are saying this very frankly and very friendly to the Turkish friends, namely to Prime Minister [Recep Tayyip] Erdogan. I've met him several times. The problem is that we have some concerns, in some sectors of the European public opinion, with Turkey; that's true. Because in some countries in Europe, there is a feeling of over-stretching, that we have enlarged too much.

Now— we were 15, now we are 25. In 2007, if everything goes right, we will have two more members, Romania and Bulgaria. They just signed agreements of accession some days ago in Luxembourg. So we will be 27 countries in 2007 with more than 500 million people. That's a huge thing.

I always say that never in the history of mankind it happened— never— to have such a group of countries together. In the past, you have an empire with a capital by a dictate imposing. That's the first time independent countries— it's the first time in the history of mankind, that you have 25 or whatever number of independent countries with very different cultures, very different identities, pooling their sovereignties, building something together.

I know it's not perfect, and that's the problem. Because sometimes here in the United States, they say, "Oh, they cannot deliver as we do." That's true. We are not the United States of Europe. We are not a federal country. We are by far the most integrated case of countries that ever, ever happened, without the imposition of a center to the others. So that's why it's complex. Yes, it is complex. It's not an easy job. But my job and the job of the European Union, it's a very complex system, but so far, as I said before, when you compare how it was in Europe, 50 years ago, or 20, or 15 years ago, we are doing the right job.

So I hope Turkey will become a member of the European Union. But [inaudible?] Turkey also has to make some reforms, and Turkey has to convince the partners, the current partners, that they are bringing some value to our project. At the same time, those who are resisting the idea of Turkey in Europe should also understand how important it will be for Europe, not only from an economic point of view, but from a political and cultural point of view, to embrace that very important country. So that will be the goal, and we hope that it will be achieved. When, it's not yet decided. It will be not an easy negotiation, but we hope it will be concluded with success.

HOLBROOKE: And what about Ukraine?

BARROSO: Ukraine is not on the agenda. We have a great sympathy for the reforms in Ukraine. I received President [Viktor] Yushchenko when I was prime minister in my country well before he was president. So I really give a great value to the courageous reforms they are taking in Ukraine.

But one of the last European councils, the summit of European Union, for the first time signaled that for now we also have to look at the absorption capacity of the European Union. We cannot, like in the past, say that all European countries— and Ukraine, it's true, is a European country— that respects our common values and an open economy and human rights become members. We cannot say that now. So it will not be honest to tell them they are going to become members. This is not on the agenda now.

In fact, they have to do a lot of things. They have to have first the status, market-economy status, become members of the World Trade Organization— they are not even— and to consider some reforms internally. It is also important to tell our Ukrainian friends that not everything depends on the European Union. They have to do their homework themselves. What we can do to them, it's in the framework of the so-called Neighborhood Policy that was referred to before. It's precisely to support those reforms, to have trade liberalization, to have technical assistance, all kind of things. We are ready to be as generous as possible, but not with membership in the near future. Because we in the European Union, we are a community of democratic countries. To do that we need the support of the European Union public. And so far, the European public wants to consolidate these enlargements.

Now we are 25. We will become 27. We have promised Turkey. That's why we are keeping that promise to Turkey. But so far we don't— we are open also to the prospective of accession to the Balkan states. But so far, in European Union, there are not the conditions to work with new initiatives for new membership.

HOLBROOKE: We're down to just a few minutes, so make them very short questions. I'm sorry, there was somebody else over here. Yes?

QUESTIONER: David Reffkin from Debevoise & Plimpton. You spoke very glowingly about the integration of 27 countries. What will be the effect on that integration and on the effect of the commission if French voters reject the constitution later this month, which seems likely.

HOLBROOKE: President Barroso thought you'd never ask.

BARROSO: I can give you the answer I just gave now to the New York Times board meeting I had.

HOLBROOKE: You mean the non-answer?

BARROSO: Yeah. In the middle of a battle, if you ask the general what you do if you lose a battle, he will not answer. We are doing everything we can to get that ratification in France. I hope that it will take place. It looks much better now than some weeks ago. The [inaudible]--they came more energetically signing that constitution. I believe that constitution is good for Europe, and it's good for France. And France has been a very important member of the European Union since the foundation of the European Union. So we are looking forward to that possibility.

But really, we don't have any plan B, so-called plan B, we don't have. Now we are completely focused on the plan A. The plan A is to get that constitution ratified, and I cannot speculate about what-if. I respect journalists and analysts and commentators and scholars that they can elaborate, but as the political leader of the European Union, I cannot. Because if not, we will not be discussing the constitution itself, but discussing or speculating about alternative scenarios. So let's focus on that.

What I can tell you, not to leave you unhappy, is that there is a declaration annexed to the treaty, the annex is stipulation 10 if my memory is correct, that says that in case, at the end of the process, so it means that the process will continue, in case not all member states ratify the constitution, the matter is referred to the European Council, to the summit of the European Union, that will address the issue. But I cannot say more than that at this stage. But I really hope the French will ratify, because I— I mean it will be really strange that France, so much committed to the European integration from the beginning, does not support it, really.

HOLBROOKE: Yes, sir.

QUESTIONER: Thank you, Mr. Ambassador. Thank you, Mr. Chairman. It's very good for a general in battle or a war to understand who the enemy is.

HOLBROOKE: Your name?

QUESTIONER: I am Johnny [inaudible] with Corriere della Serra. Even if the yes wins barely in France, why is France the founding mother of the union to such a state? And why both reservation from the right and from the left? I wonder sometimes, as a European, is Europe becoming anti-European? Thank you.

BARROSO: To decide if France is the founding mother or father of the European Union will be an interesting debate. Now, about Italy. Italy is not only the father of Europe, or the mother, but the father and mother of all civilization.

HOLBROOKE: Did you tell Greece that?

BARROSO: No, I believe this is true. Now to be very honest with you, we have a bad situation now in Europe in terms of public perception. Why? For several reasons. First, we have a very slow growth. So economics, for the first time in the history of Europe after the Second World War, there really is a possibility that the next generation lives in a worse condition than the previous one. So far it's always been growing. Another is concern about, mainly because of unemployment. This unemployment factor is a very serious factor.

Secondly, there is also in some public opinion polls very clearly a fear— in Germany they say sometimes angst— a fear of globalization, and the so-called delocalization. This enlargement provoked a bit in some sectors of the public opinion, not only in France. We have the same kind of concerns in important countries. Of course now, because there is more visibility in France. But it exists.

And there is also another problem, a more profound problem, is demographics in Europe. We are an aging society in Europe, not only Europe, but we have this problem. So immigration, immigration is needed but is not yet well perceived in some member states. So there are some concerns about this.

So all these issues make it a difficult situation for the public opinion. And it's true that there is some populism, there is some populism in the right and in the left that try to put Europe as responsible of it. When Europe in fact is not the problem; Europe is the solution. I mean European Union is the solution, not the problem, for those perceptions.

Because, of course, France or Germany or Italy, no one of us could alone face the challenges of globalization. It's quite obvious, first in trade negotiations. So there is the risk— I want to be honest with you in this very, very, let's say, qualified gathering— of a populist exploration of those feelings that we acknowledge in people in Europe. There is no optimist— I think this is unfounded. That's why I've made the point before.

Where was Europe some time ago, and where is Europe now? And when you compare our problems in Europe to the problems that other parts of the world are facing, we really feel that it's completely incredible. In Europe you have among the best quality of life in the world, really, if you think globally. But it's true, at the same time, that young people, they are not feeling the same confidence as 20 years ago. I see that also in my country or in other countries. Even if they are really better than 20 years ago.

So that's why we need to make the case for Europe, yes. And we need the European leaders to be more affirmative and state where we were, and where we are, and where we're going. And that's why we need economic dynamism in Europe, more economic reform. That's [why] we put that in the agenda— not because we are economists, as we say sometimes, no, but because I believe the economic not-so-good situation is the reason for some kind of Euro-skepticism that we find in some circles in Europe.

At the end, I believe the rational argument will win this battle against populism. By populism, I mean oversimplified answers to complex problems. And that exists from the far right or the far left, that exists. Both populism against immigration, populism against globalization, left-wing populism against the markets. The integration of the markets is being seen as the challenge instead of the solution. Or the populism of the right against the integration itself. But that's why civilized people, those who believe that European Union is a great progress in terms of our values, should make affirmatively the case for Europe. And that is precisely what we are trying to do now. [Applause]

HOLBROOKE: President Barroso was supposed to talk to 2:00. As the clock turned to 2:00 on this thing, he reached his perfect ending. So I thank you for a very wonderful and candid debate. Thank you. [Applause]

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