Approval of the Minutes
President
The Minutes of yesterday's sitting have been distributed.
Are there any comments?
Mr Schierhuber has the floor.

Schiedermeier
Mr President, my name is Schiedermeier!
Mr President, I only found the Minutes of 19 October, in other words Monday's Minutes, in my pigeon hole yesterday afternoon, and although I was present and signed in, unfortunately my name is not on the list of attendance. Could I ask you to correct that?

President
Mr Schiedermeier, I must apologise to you on two counts. Firstly because due to my age and the distance involved, I had not recognised you, and secondly because there is indeed an error in the Minutes, which will be corrected. Thank you.

Lalumière
Mr President, my name does not appear on yesterday's attendance list, although I was, of course, here. I would like this to be corrected. Thank you.

President
Very well, Mrs Lalumière, that error will be corrected. You will be included in the list.
(The Minutes were approved) Now, following our usual practice, I shall address the House in order to open the debate on the state of the Union.

State of the Union - Meeting of heads of state and government of 24/25 October
President
Mr President-in-Office of the Council, Mr President of the Commission, Commissioners, ladies and gentlemen, this is the last debate on the state of the Union to be held before the end of the current parliamentary term, that is to say, before the elections due in June 1999. I will not, however, succumb to the temptation of summing up the current term. It is too soon to do so, and much can be achieved in eight months.
Nor shall I anticipate Parliament's position in the run-up to the informal meeting of heads of state and government. I should like to express my gratitude to Chancellor Klima for convening it, and for extending an invitation for Parliament to take part in one of these informal summits for the first time. It will provide an opportunity for us to express our initial thoughts on the future of our Union in the coming century. Today's debate will help us to formulate Parliament's contribution.
We are gathered here today at a time when the sunny outlook before us just a few months ago has been overshadowed by two crises - in Asia and Russia - and by the danger of these causing a domino effect which would affect other parts of the world.
In addition, there seemed to be a paucity of leadership at world level for a time. Nevertheless, news received in the last few days does seem to suggest that the mechanisms for responding to the crisis have moved into action and that the danger of a widespread recession is receding. Thanks to the launch of the euro and the process of restructuring and economic convergence leading up it, the Union has withstood the upheavals in the money markets well.
As a result of its union, this part of Europe has become a solid, stable and powerful trading and economic bloc. Such an achievement should not be overlooked or undervalued..
Nevertheless, our union has not made us invulnerable, nor could it. An open economy, as ours in the Union already is, could not continue to expand if the rest of the world went into recession. For our own sake, therefore, we must not remain passive but adopt an active stance, using all our influence to promote stability in those areas where the crisis could affect us most.
I have in mind first Russia, our nearest and most powerful neighbour. We should offer every assistance to enable Russia to make a successful transition to democracy and the market economy. This transition is proving much longer, more painful and more complex than had been anticipated.
We should also give strong support to the processes of unification and liberalisation in Latin America, not only to develop an ever more attractive market, but also to consolidate the progress made along the road back to democracy.
For this active policy to be implemented, the Council must take the necessary measures to ensure the effective external representation of the eleven Member States in the euro area, as agreed at the Cardiff European Council.
There is no need to invent complicated structures or a new Mr Euro. Many-headed giants are only frightening in fairy-tales. Applying the institutional framework of the Treaty of Rome to this area also will suffice. After all, it has so far proved the best suited to the needs of a united Europe.
Certain weaknesses in this framework have of course become evident over the years. Some of these can be remedied without calling another intergovernmental conference, and we have no time to lose. There is an urgent need for the Union to define a political approach.
To start with our own response to the need to review with these weaknesses, Parliament is required to adapt its procedures to the new powers conferred on it by the Treaty of Amsterdam.
In this connection, work on the adjustment of its Rules of Procedure and administrative structures is fairly well advanced. A proposal for a European electoral system based on common principles has been drafted. A draft common Statute for Members should be ready by the beginning of December. Quite clearly, Parliament has not waited for the Treaty to enter into force before outlining the rules needed to make it more efficient and to strengthen the independence and democratic accountability of its Members.
Mr President-in-Office of the Council, Mr President of the Commission, I trust the Council and the Commission will respond to our cooperation and hard work by undertaking to study and discuss these documents as soon as possible.
This same desire to anticipate the entry into force of the Treaty has been evident in our Parliament's relations with the national parliaments. The positive attitude of the latter has facilitated ever closer and stronger cooperation over the past year. Such cooperation has extended to preparations for the planned reform of the Treaties, which will be the subject of an interparliamentary summit immediately prior to the Vienna European Council.
Clearly, this proactive attitude highlights the urgency of ratifying the Treaty of Amsterdam.
Parliament has organised its work so as to make it possible for Agenda 2000 to be debated and approved at second reading, in accordance with the provisions of the Treaty of Amsterdam.
Lastly, I must stress yet again that amendment of the Treaties is not a precondition for an interinstitutional agreement providing for the Parliament to be consulted prior to the major decisions to be taken by ECOFIN in the context of economic and monetary union.
The present situation is obviously undemocratic and unacceptable where such a sensitive issue is concerned. It can only be remedied through the involvement of this House.
In 1958, the Council was a directorate composed of six members. By 1998 it has become a committee of 15 members, soon to be increased to 21 and later to 27 or 30. In other words, it is an amalgamation of committees whose number is also increasing.
For it to operate effectively, certain measures are called for which require the reform of the Treaties. Such measures include a new procedure for taking majority decisions, and the creation of an efficient presidency. The present system of rotation every six months and spreading the presidency among a number of ministers does not seem appropriate.
Nevertheless, there is scope for improving the coordination of the Councils and the preparation of their decisions in advance of the reform. The larger the political bodies, the greater the need for coordination.
A convoluted decision-making structure, involving the proliferation of specialised councils which fail to coordinate their activities, is inefficient by nature. This was proved in sixteenth- century Spain, and we ought to learn from history.
The same could happen to our Union if coordination between the various memberships of the Council is not strengthened. I am delighted that the current presidency has taken the initiative here. However, I do wonder whether it is appropriate for Foreign Ministers to continue coordinating Councils at which decisions with enormous implications for the internal affairs of Member States are being taken.
In practice, the tendency seems to be rather for the European Council to assume this role. Its members alone are empowered to carry out the necessary arbitration, at both internal and Union level.
Improvements to the Council's operation are not all that is required. Prior to the entry into force of the Treaty of Amsterdam, the Council must take some far-reaching decisions, on the integration of the Schengen package into the Union's arrangements, for instance, and on the institutional and organisational aspects of the new framework.
Such decisions are essential to the creation of a European area of freedom, security and justice, and should be taken at the Vienna European Council. This should not be too much toask. If they are postponed, it will probably be too late.
As regards the Commission, it must adopt the new role assigned to it under the Maastricht Treaty and the Treaty of Amsterdam. Its role is now like that of parliamentary governments. On the one hand, it is called upon to take the lead where the budget, legislative and political issues are concerned, and on the other it must, in a spirit of loyalty, fully accept Parliament's control.
Expressed in the clearest possible terms, this amounts to the following. Firstly, implementing, with no prevarication or delay, any corrective measures adopted as a result of control - in the case of mad cow disease, for instance. Secondly, unreserved acceptance of what is a prerequisite for any control procedure, namely that it is the body carrying out the control, in other words Parliament, which decides on the data and documents required to enable it to carry out its task. The data and documents should be handed over without further ado.
It is equally important for the Commission to carry out its duties with the good of the Union as a whole in mind. There has been a tendency of late for the Commissioners to act as representatives of national positions and interests. This duplicates the Council's function, achieves nothing, and could indeed be very dangerous.
I think we should always remember that the Commission is fulfilling its role effectively when it presents European solutions to European problems, outlining a European policy which must not, by definition, favour one state or group of states.
Institutional reforms are not required here either, only a return to the original spirit of the Union.
Mr President-in-Office of the Council, Mr President of the Commission, Commissioners, ladies and gentlemen, the Union came into being because a group of outstanding Europeans realised the need to pool resources and policies in order to overcome the legacy of the war. We have prospered over the last 40 years, through the creation firstly of a common trading area, and later a common currency. Agriculture and much of industry have been run jointly too. We have shaped the future together, and not gained ground at the expense of others.
In this way, it has been possible to maintain and consolidate the European social and economic model, a model which is strongly cohesive, based on the concepts of social and territorial solidarity.
We are now called upon to rise to great challenges: the enlargement of the Union to Central and Eastern Europe, Cyprus and Malta, the strengthening of internal security to create that great area of freedom and justice, and the development of our external action.
If we depart from the approach which has proved so successful and let ourselves be guided by the demands of poorly understood national interests, allowing the mechanisms for solidarity to be downgraded and policies and resources to be renationalised, we shall be unable to rise to these challenges.
I sincerely hope that Parliament will continue to be the guardian of that philosophy of joint progress and that it will tackle the difficult issues of Agenda 2000, the changed financial outlook and the fight against unemployment in a spirit of social and fiscal justice. We should work towards a Union financed by each and every one of its citizens, in proportion to their means.
That will enable enlargement to strengthen rather than loosen the links in the Community.
An effort of political will is required to offer Europeans a more clearly defined and better future. This Parliament hopes that the will to do so will be displayed at the Pörtschach meeting.
It is my firm belief, however, that we can do a great deal, starting here and now, to ensure that the European Union takes a lead, as it should do, in world politics. We can also ensure that it remains an area of stability and economic development, whilst continuing to uphold the principles of solidarity and cohesion.
Thank you for your attention.
I now give the floor to the President-in-Office of the European Council, Mr Klima.

Klima
Mr President, Mr President of the Commission, Commissioners, ladies and gentlemen, it is a great pleasure and honour to address you for the first time in this House in the debate on the state of the Union, about the present and future state of our Union a few days before the informal meeting of the heads of state and government in Pörtschach.
Mr President, I am also pleased that you have accepted my invitation to discuss the European Parliament's views with the EU heads of state and government, something I was very much in favour of, since I believe that good cooperation between the European institutions is most important to our common success. And we have achieved important successes in recent years. Allow me at this point, as President-in-Office of the European Council, also to thank Helmut Kohl for contributing so much to our common Europe.
They are successes we would never have thought possible only a few years ago: economic convergence and the participation of a broad group of states in economic and monetary union, the beginning of the accession process for new Member States, the first steps in implementing a common employment strategy. This has given European integration a new quality, one which also presents our common policy with new challenges and means that we must redefine our future journey along the road to integration.
One thing is clear when we look at the final destination: the process of economic integration that is now nearing completion cannot be the end of the project of European unification. From the outset this was a political project, a project to guarantee peace and to realise the values that are so characteristic of Europe: the values of democracy, social balance and cultural diversity.
So the road towards a new Europe is not a road into the unknown, for these European values act as clear signposts. I am firmly convinced that the European economic and social model is the best basis for pursuing the further development of our continent. However, this means that we must also muster the necessary resolve to innovate, and to adapt this model to the challenges of our time. It is especially important, at a time when undertakings are operating on an international basis and the economy has become global, to act at supranational level in political terms too, so as to ensure that the harmonisation of social and environmental standards improves rather than worsens the human condition; one instance would be for Europe to adopt common positions at the WTO negotiations.
The successes of the past show that we have good reason to be optimistic for the future. They have shown that it is possible to achieve ambitious aims, provided the necessary political will is there. We are not the victims of international economic events, even though we do of course all know that individual countries now have less political room for manoeuvre than in the past. But by acting together, at national, European and global level, we can take effective measures, which we must indeed do for the sake of employment and our people.
Let me now address some of the main challenges. We can rightly say that, even before its official introduction, the euro has already gone through its baptism of fire. It has proved a pole of stability in the international monetary system in regard to the financial crises in Asia and Russia, and now also in Latin America. However, we cannot simply assume that Europe will not be affected at all if the situation on the financial markets worsens. So Europe will have to take on its international economic responsibility and make its contribution to combating the financial crisis and strengthening international economic growth. That is also in our own interest and will ensure that we have the conditions for stability and growth in the Union. To that end, we need to make the appropriate reforms to the international financial architecture. Several proposals are now on the table and we should reach agreement on them quickly. I am confident that the Finance Ministers will soon put recommendations on the matter before us. But we also need an economic policy mix that is effective enough to fully exploit the potential for growth in Europe.
If the euro is to succeed, we will have to use the opportunities we have to carry out further economic reforms, coordinate economic policy more closely with all the players involved, hold a dialogue on monetary policy too - which I consider most important, although we must not, of course, call the independence of the European Central Bank into question - find a rapid solution to the external representation of the euro zone and, last but not least, of course, continue working towards stable exchange rates. We will be discussing the questions and expectations of the heads of state and government in relation to this subject in detail in Pörtschach.
Without exaggeration, we can say that 1998 will enter into the history of the Union. With the accession process that began under the UK Presidency in March, the citizens of the European Union and the citizens of the future Member States now have a chance for the first time to bring Europe together in peace and freedom, after all the countless conflicts. Today, only a few years after the opening-up eastwards, it already seems a matter of course that democracy and the rule of law have been established in the Central and Eastern European countries. There is no doubt that the people of these countries are primarily responsible for their democracy and stability. But I believe that the prospect of joining our European Union has also played its part.
We must now promote this process rapidly and with the necessary care. Austria is very proud that it will manage during its presidency - in fact as early as 10 November - to start practical negotiations on the first chapters with six applicant states. We regard that as an important signal, a signal also called for by the European Parliament. But we must also ensure that this process is an open one and obeys objective criteria: open for those states that satisfy the conditions of the Luxembourg decisions in the light of the Copenhagen criteria; objective in relation to the extent to which the performance of the individual candidates satisfies the accession criteria. In that context, the European Council in Vienna will also be looking into the progress made by all applicants for accession in fulfilling the accession criteria.
The applicant countries are our partners in the enlargement process and our colleagues in tomorrow's Union. They have already achieved a great deal but there remain difficult tasks to tackle, for which they need our common support. Here we must always bear in mind that enlargement of the Union benefits both us and the applicant countries. We must not disappoint the hopes of the citizens of the applicant countries, but at the same time we should remain honest and realistic in the aims we set. Everyone must realise that enlargement of the European Union must be carefully planned, so that both the existing Member States and the applicant states can prepare for it. I am assuming that the appropriate transitional periods will be fixed in sensitive areas, such as the free movement of workers and services, in the interests of the applicant countries but also in the Member States' interests.
The Union of tomorrow which the applicants will join must and will look quite different from today's Union. The negotiations on the future of the common agricultural policy, on a balanced structural policy, on financial support for the applicant countries and on the efficient use of financial resources for the Union for the first seven years of the next century are without doubt a touchstone for the solidarity of our Community. In Cardiff, we undertook to make considerable progress on the main components of the package by the next European Council in Vienna. The Austrian Presidency is working very hard to carry forward the negotiations in order to achieve this objective. Let me strongly emphasise, however, that this will require the necessary will and solidarity on the part of all the Member States.
I also know that you in this Parliament are taking a very close look at all the aspects of Agenda 2000, to help ensure that it can be concluded in good time, and let me stress how important cooperation between the Council and Parliament is in this particular process if Agenda 2000 is to be achieved during the current parliamentary term.
Our citizens probably regard a successful employment policy as the biggest challenge on the road towards further integration. Anyone who remembers how strongly some Member States resisted a common employment policy before the Luxembourg summit will, I hope, be glad to note the very definite swing in opinion today. Employment policy has now become a fixed component of European economic policy.
(Applause) And we are becoming ever more persuaded that we must pursue an employment policy at all levels, at global level just as at European and national level. What we must do now, and what the citizens of Europe expect of us, is to show the same resolve and consistent approach we demonstrated when we the adopted the convergence criteria. As you know, the structure and the problems of the national employment markets differ. Accordingly, the draft report on employment which the Commission submitted last week shows that the Member States have prepared very different packages of measures, in each case adapted to their particular problems. But in my view that still means that we must develop a monitoring system to clearly reflect how seriously we take the whole process; here too the Commission's report on employment offers very positive suggestions.
But I hope that in future we will embark on a road that takes us beyond what we have achieved so far. As you know, in Luxembourg last year not all the Member States endorsed the practical definition of quantitative aims. At the time, some states argued that one should not arouse unrealistic expectations and that employment policy did not lie only within the governments' sphere of influence, but is also strongly influenced by the social partners. I can understand these arguments, but would point out that clear aims can also be realistic aims. The Member States have already demonstrated that with their national action plans for employment. Clear aims can also be self-chosen aims that can relate to each Member State's specific problems. Clear aims must guarantee an efficient and transparent monitoring procedure, without restricting the Member States' right to choose their specific package of measures. Clear aims by no means preclude the need to include the social partners in the responsibility for employment policy. On the contrary: in my view an effective employment policy also means an effective social dialogue, it means realising that cooperation offers both parties more than conflict does, which is why it will also become necessary; it is our common intention to promote and strengthen this social dialogue in Europe.
(Applause) You know that employment policy must be broadly based, that there are no longer any patent remedies and that we must therefore examine the impact on employment of all policy areas. That includes, for instance, the key area of enhanced support for research and technology. Europe has a great potential in research and technology. We must simply make better use of that potential in future. We must use it by creating the right conditions for translating the research findings of the universities into new products and processes, and hence into new jobs. We must make better use of the dimensions and of the synergies of our common Europe, our common market. That is why I hope we will soon manage to find a solution that enables us to conclude the fifth framework programme on research and technology, in which we emphasise this need. It is not just a question of technology, it is a question of future jobs.
Mr President, I have listened to your statement with great interest. When we meet you, the heads of state and government and the President of the Commission in Pörtschach in four days' time, you will have a chance to take stock and to consider the improvements needed in order to make Europe more acceptable to the citizens of the Union. We began to discuss the future of Europe in Cardiff; this process should be intensified in Pörtschach and be continued at the Vienna European Council and during the forthcoming presidencies. In my view - and all the heads of state and government I visited during my tour of the capitals in the last few days agree - Pörtschach will send out the signal that a single market and currency are not the be-all and end-all of European integration.
(Applause) We will have to discuss a timetable for enhancing economic stability and employment, internal security and Europe's political role in the world. These are matters that directly affect the citizens, where they expect us to make progress. That is what is meant by a policy close to the people. And of course that means that we need viable institutions that promote policies that bring Europe closer to the interests of the people in an efficient and democratically credible manner. That is my understanding of subsidiarity.
Let me now address two points that I am sure will not be raised at Pörtschach. There will be no question of halting or even reversing the process of integration and attacking or weakening the institutions. Nor can there be any question at this point of embarking on those institutional reforms on which no agreement could be reached in Amsterdam until all the Member States have ratified the Amsterdam Treaty. What must be discussed at Pörtschach is our institutional future and, even more importantly, how to breathe life into the Amsterdam Treaty, which of course already contains a number of new measures to bring the Union closer to the people. As President-in-Office of the European Council, I have invited you, Mr President, to Pörtschach because I am convinced that it is up to all of us together to determine this new road for Europe to follow, for I am sure that the European Parliament can and will make a significant contribution here.
In the next millennium Europe must acquire more political power alongside its economic power. Of course we are still far from achieving a viable foreign and security policy today. But we should remember that other major integration projects, such as the single currency, were also rejected as utopian in the early days. I personally am convinced that in future the European Union will need a stronger common foreign and security policy. That will serve as an important instrument for securing peace in the world.
Europe must be visible to the outside world and manage to speak with one voice if it is to be able to take common action with its partners. That is why we have decided to take a first step in the right direction and if possible to appoint the official referred to in the Amsterdam Treaty, Herr or Frau GASP, Monsieur or Madame PESC or Mr or Mrs CFSP, during the Vienna Council. This must and will be followed by further steps, because the development of a common foreign and security policy will determine the future quality of the Union. Transatlantic relations will always play an important role here. But we also need a European dimension, for only then can and will Europe be a strong partner for its friends.
The men and women of Europe expect us to view the challenges of the twenty-first century not so much as a risk but as an opportunity, and to tackle them openly on the basis of our European values. Let us continue to work together on building our great European project, which offers us security and stability. Let us continue to build on the foundations laid down by our founding fathers. Let us jointly build on this opportunity. There is still much work to be done!
(Applause)
Santer
Mr President, Mr President-in-Office of the European Council, ladies and gentlemen, this is the third time that we have met in order to examine the state of the Union together. Today's debate comes just ahead of the informal meeting in Pörtschach on the future of the Union. I am well aware that there is an ongoing and lively debate on the subject in this House. I think that this is a particularly appropriate time to be considering tomorrow's Union: the single market is nearing completion; the euro will be with us in less than 100 days from now, opening the way for a new stage in Community integration; further enlargement is on the horizon; and the reform of our spending policies and the financial perspective are on the agenda.
Looking back over 40 years of European integration, we have to acknowledge the success of the Community method. But it is striking to see just how far the people of Europe, while appreciating the benefits the unification of Europe has provided, are still critical of certain aspects of the Union. If politicians were more honest about what exactly is done in Brussels, Strasbourg and Luxembourg and who does what, political responsibilities would be much clearer. They should not present the Member States and the Union as being always in conflict, they should stop using the Union and its institutions, and in the first instance the Commission, as a convenient scapegoat, and they should stop inventing 'euromyths'. It is time that national politicians assumed their responsibilities.
What is more, a lot of the causes of this unease have nothing to do with the Union, and our national democracies also come in for criticism. Realities such as unemployment and insecurity undermine confidence and have an indirect effect on people's attitudes towards the European Union. But let us be honest: the Community venture is in need of a facelift. This admission in no way detracts from its legitimacy. It means talking about it pragmatically, going beyond professions of faith and appeals to a sense of history on the one hand, and systematic opposition on the other.
We know the usual criticisms: democratic deficit and technocracy. They are often ready-made slogans. They are what people want to hear. They catch on easily, but they are no help in trying to understand the real nature of the unease. Very often, in fact, they hide the real causes. Let us consider the realities. In some areas - employment, external relations, home affairs and justice - Europe needs to be doing more. In others it should be doing less: less niggling interference, less encroachment on matters specific to a given culture, and finding different ways of operating that do not clash with national political cultures.
These are the real challenges I would like us to take up in Pörtschach on 24 and 25 October next. Three questions need to be addressed. How can we adapt our working methods to the high degree of integration the Union has achieved? How can we make real progress on the matters that directly affect individuals in our countries or where they quite rightly fail to understand our inability to act? How can we reform our institutions to make them more effective and prepare them for enlargement?
The first challenge we must rise to is that of managing the high degree of integration achieved by the Union. The most recent Treaties have extended the Union's powers to most areas of public policy, and there can be no question today of asking for more powers at Community level. What is more, we have now completed the bulk of the legislation required to establish the single market. Most of the 300 or so proposals for directives and regulations that were contained in the 1985 White Paper have now been adopted. Between 1995 and 1998 the number of new legislative proposals that the Commission put forward in its work programmes has fallen steadily. The point I am trying to make here is that we should not use yesterday's arguments to criticise today's Union.
Instead we should look at the realities of today and tomorrow. To begin with we must finish the jobs we have started. Thanks to the European Commission's action plan, we have made real progress in completing the single market. The technical preparations for EMU are complete. Now we must make it work in practice. An agreement must be found on the financial perspective for Agenda 2000.
Then we must make the most of the high level of integration achieved by our countries. The euro will arrive on 1 January 1999. The Member States must convince themselves that monetary union has implications for taxation and labour market flexibility. Having decided on monetary union we must now be consistent, including in matters of external representation, which I will be coming back to later. Finally, we must look at ways of modernising the methods used for Community action. Legislation is still possible and frequently necessary, but it is not the only option, nor the most effective in all cases.
Take the example of the European strategy for employment. The European guidelines have generated momentum that no directive could have done. Why? Because this is an area where powers are and will remain very much in the hands of the national authorities. Because it is an area where situations vary greatly from one country to another, where a single, harmonised objective would make no sense. Other areas of European action are similar to this, though to differing degrees. Internal security, health and the environment will all, to a large extent, require new approaches. In all these areas it will be necessary to define and to focus on the extra benefits that Europe can provide, not forgetting to make quite clear where everybody's responsibility lies.
The Commission is, of course, and will continue to be the driving force on all important matters. But the Commission does not work alone. It works with the other institutions, including the European Parliament. It works with the Member States, their government departments, their justice departments and their customs authorities, to name but a few. European governance involves all public players. And this shared responsibility must be more visible, so that everyone assumes their share of the work and the responsibility, so that the whole set-up works better, so that the public derive maximum benefit, and so that they can see more clearly who is doing what.
The need for a clearer assignment of responsibility also applies to the origin of Commission proposals. Here, too, the Commission does not work in an ivory tower. It is true that it has to take the political responsibility for the use it makes of its right of initiative. But it is also subject to intense legislative pressure. The figures we have published this week in the communication entitled 'Subsidiarity and proportionality' show that 35 % of the Commission's legislative proposals are the result of international commitments, and that at least 20 % are prompted by requests from other quarters: the other institutions, in particular the Council and Parliament, the Member States and business interests.
Asking the Commission to act and then going back home and denying all responsibility when the Union's action comes in for criticism is not playing the game. What we really need is more collective discipline and vigilance. We cannot pick and choose when it comes to subsidiarity and proportionality in Community action. Subsidiarity and proportionality are responsibilities to be shared, as is the provision of accurate and fair information.
I am making this particular point because there are still areas where what the Union does is, to put it bluntly, seen by people in Europe as falling short of the mark, where they want Europe to do more. These are the areas where we must focus our efforts to build new policies. Let me cite three of them: jobs, external relations and internal security.
The first area concerns the economy and society. For the last year, for the first time, we have had a genuine European strategy on employment, which is starting to prove its worth. The fact is that there is now a genuine political will in Europe to work together to design a model for economic and social growth, a model that creates jobs while liberating entrepreneurship and that capitalises on the potential offered by the economic changes we are going through. It is a model that states firmly that everyone has a part to play in the forward momentum, through training and through developing employability as the best guarantee of solidarity. This includes, of course, a safety net for those who find it hardest to get back into the labour market or to cope with the vicissitudes of life. This kind of growth with solidarity is now emerging as the hallmark of the European economic and social model. What we must do is modernise it in our own countries and promote it in international forums.
This prompts me to say a few words about the international crisis we are going through at the moment. Is it linked to the way certain economies are behaving? Or is it a crisis of the system? More than likely it is a bit of both. At any rate, let us agree that globalisation is a game that requires at least a basic level of training for the players, clear rules, a referee to enforce them and an emergency exit in case anything goes wrong. These are the ideas we must keep in mind as we review the way the Bretton Woods system is structured.
I would like to look at a subject that has been widely discussed lately: capital movements, especially short-term ones. Everyone seems to have forgotten that capital movements in Europe were only deregulated on 1 January 1990. Is it any surprise that where liberalisation has been introduced prematurely in emerging countries where there is no financial transparency, no strict prudential rules or good governance in the realm of public and financial affairs, it is unable to work perfectly in all circumstances? I would add that the European model could serve as an example of a high level of integration in economic and financial relations between states. The reason why Europe is a haven of stability at the moment is that monitoring mechanisms and better practices have produced results. There were very solid reasons why the Treaty of Amsterdam made them applicable to employment.
This brings me to the second area where Europeans have expectations of us: external relations. I will say straight away that I often feel frustrated about this. Here we have a Union that has radically transformed relations between its Member States and with its neighbours. It is a Union that is the world's largest trading power, and the world's biggest aid donor. It is a Union with a single market that is unique in the world. It is a Union of states with unrivalled experience of diplomacy. And yet, what we also have here is a Union that gropes its way forward, a Union that struggles to speak with one voice, a Union that waters down its message by engaging in obscure bureaucratic wrangling. I ask for only one thing: for the Heads of State and Government to realise what enormous potential the European Union has and to take a collective decision to make it a key player on the international stage.
For that to happen there has to be the political will, of course. There also has to be a willingness to develop a consistent external policy based on the instruments we have available to us. And we must strengthen its political dimension through a common foreign and security policy worthy of the name. We have to avoid what has unfortunately been going on since Maastricht, with national bureaucracies distorting the wishes of political leaders. Everybody wants the Union to be active and effective. But too often the Member States' own government departments, de facto, stand in the way of progress in that direction. If we want to be effective then we need to agree to genuine coordination and follow a commonly agreed line. In Vienna I hope, Mr President-in-Office, we will be appointing a high representative for the common foreign and security policy. That is the first step, but after that we will have to establish the new instruments we need in a new spirit.
This brings me to another consideration. The advent of the euro adds a new dimension to the debate on Europe's place in the world. After the major effort we have all put into making the euro a reality, I am tempted to say: one more heave, ladies and gentlemen, because now that we have the euro, we must shoulder our responsibilities internationally, coordinate our positions and make sure the euro is represented externally. We cannot possibly let the Union have no say in bodies such as the International Monetary Fund or the G7 Finance Group. This applies to not only to monetary issues, but to economic matters too. I sometimes have the impression that certain people forget that we have set up an economic and monetary Union. This question of external representation is something I often return to; I am sometimes accused of simply expressing the Commission's desire to get its hands on it. This is a misrepresentation. I have no ready-made solution, but I am saying that we have got to find one, and quickly.
Justice and home affairs is the third area in which people in Europe want to see action taken by the Union as a matter of urgency. It is an ever-present, growing worry for all our citizens. Here again it is felt that Europe should be doing more. And this feeling is shared by those involved in the field: the police, the immigration services and the courts. They are all calling on us to help develop our capacity for reacting quickly, shoulder-to-shoulder and at operational level. Speaking for myself, I have always seen this as a priority, ever since my inauguration speech before you. The new Treaty recognises how important this issue is. The Community method is being extended to cover areas that until now were matters of national sovereignty. The object is certainly not to harmonise these areas, as we had got into the habit of doing in the Community's traditional areas of operation. No-one is thinking of standardising the national police forces or setting up a single immigration department in Brussels. So here is another classic example of an area where the Community's new ways of operating need to be applied, particularly as it is vital that those involved trust each other.
The Commission and the Council will be submitting an action plan on justice and home affairs to the Vienna European Council. There must be real political will behind it. If it is a priority for ordinary citizens, then it must be a priority for the Heads of State or Government. I propose that a special meeting of the Heads of State or Government be held in 1999 to discuss this crucial issue alone. They will also have to make sure that their own government departments overcome the old national knee-jerk reactions and see beyond the futile partitions that divide the Member States from the Community.
I would now like to turn to the third area in which changes are needed for the Union's future: institutional reform. I am not going to re-state the obvious. The European Union cannot sweep the issue of how its institutions work under the carpet. The institutions of 1997 are the same as those of 1957. But there are no longer six Member States at the Council table. There are 15. And soon there will be 20 - and more. The prospect of enlargement means that we must reform the institutions as quickly as possible. The Treaty of Amsterdam still has to be ratified by a number of Member States, but a number of measures that do not require any amendment to the Treaties can already be envisaged. The Commission will therefore recommend that the Member States take action on two fronts.
The first involves improving the way the institutions work. I am convinced that a great deal can and must be done without further ado. Each institution must take a careful look at the way it works. I am happy to say that there is a growing awareness of the need for much greater coordination, in both the European Council and the General Affairs Council. As far as the Commission goes, we are keenly aware of our responsibilities. Since 1995, much has been done to improve internal management and budgetary discipline. Since 1995, as I have said, the number of proposals for new legislation has declined. Since 1995, there has been greater consultation before proposals are made at Community level. And, before the Treaty of Amsterdam enters into force, the Commission will formally amend its guidelines on legislative policy.
With the 'Commission de demain' initiative we have decided to go further, to set the task of modernisation within a perspective of comprehensive reform of the institution, adapting it to respond to new challenges. We will be developing this reform throughout 1999, through in-depth debate on the tasks and role of the Commission in tomorrow's Union, through a detailed analysis of our internal structures so that we can reorganise them around new priorities, and finally through far-reaching efforts to modernise our management. I fully intend to use the new powers that the Treaty of Amsterdam confers on the President of the Commission to see this work through.
I would suggest, too, that the other institutions should also undertake a thorough-going review of the way they work and prepare a programme for modernisation. This is about shared responsibility. Everyone must play their part, bearing in mind that many of the changes will come about through people changing their day-to-day behaviour rather than through decisions made at summit meetings.
The second point concerns the reform of the institutions themselves. The enlargement now on the horizon calls for genuine institutional reforms, and the Amsterdam Protocol spells out the need for them. The key elements have already been identified: reducing the number of Commissioners and re-weighting the votes in the Council, while also extending qualified majority voting to all areas. However, we undoubtedly need to do even more than this if we want the Union to function more efficiently. As the Commission has said in Agenda 2000, it is probably premature to discuss the details before the process of ratifying the Treaty of Amsterdam has been completed. But we do need to start thinking about the content and the timetable for these reforms and to set clear deadlines from 1999 onwards. The Commission will make its thoughts on this known in due course.
Mr President, ladies and gentlemen, here, in a few words, you have the message that I intend to convey at Pörtschach and subsequently. As always in the history of the Community, the main challenge is to translate ideas on Europe's future into action. This is what we will try to do between Pörtschach and Vienna. I would like us to have clear objectives with precise deadlines set out for the Vienna European Council.
Mr President, when I see how far we have come in recent times, it gives me confidence in our shared determination and capacity to make the Union a true model for the world of the 21st century.

Green
Mr President, it is with great pleasure that on behalf of my group I welcome to Parliament the first Chancellor of Austria to hold the presidency of the European Council. I thank him very much for being here to take part in our annual debate on the state of the Union and listen to our views about the future of Europe.
It is, in my view, a sign of the times that our heads of state and government are meeting in informal session to discuss the direction in which Europe is travelling. It is a sign of confidence - indeed of the growing confidence and maturity of our Union - that the meeting this coming weekend will focus on giving European citizens a sense of ownership of this Union, to make them feel that the partnership in which we are engaged is of value to them. And of course it is.
We have spoken many times, but over the last year in particular, about the need to give Europe back to its people, to create a people's Europe. Fine words, but just what do they mean? I believe that a people's Europe is about peace, prosperity and security. If Pörtschach can breathe new life into the vision of a united Europe by pointing the way forward on these three concepts - peace, prosperity and security - then it will be setting a new and relevant agenda for the coming years.
This weekend we can continue the very excellent start that was made in Amsterdam last year. Amsterdam gave some signals of just what a people's Europe might be about, what it might look like, because we agreed a job creation role for the Union, endorsed the social dimension, created a broad anti-discrimination competence, strengthened environmental, consumer and health opportunities and insisted on stronger cooperation between enforcement officers on terrorism and drugs. These are the issues that affect people's lives. These are the issues we pursued in Amsterdam. Now, in an increasingly unstable world, economically and politically, it is time to build on the strengths of Europe; to look at those areas where people increasingly expect us to be active and creative. For instance, the need, as has been much mentioned here already, for a dynamic common foreign and security policy, has never been so evident. The European Union's 15 economies, on the verge of the most exciting and innovative monetary venture of modern times - the launch of the euro - are calling out for greater economic coordination to manage global economic turbulence and to stimulate internal growth.
Europe is not an end in itself. Europe is a tool to deal with the problems which confront us across the continent and globally. In that sense as well the moment is right. Over recent weeks and months we have seen a desperate need for political leadership in the world. With economic turbulence continuing from the Far East to Russia, with increasing pressure on Latin American economies and currencies we have witnessed a paucity of political leadership. Japanese politics has been reeling from crisis to crisis. President Yeltsin has struggled to keep a government - any government - in the Kremlin and we have all been compelled to watch the personal and institutional trauma of the American presidency. It is Europe which is promoting innovation in the global economic and monetary structures. It is the euro which is creating a significantly new element in Europe's favour in that economic turbulence. And it is European leaders who are articulating the need for new globalised, appropriate regulation and reformed global structures to give shape, coherence and rationality in the global market.
But this is also a moment when confidence worldwide is at a low ebb and when many are confused about where and in which direction the global market is taking them. It is a moment when we have the opportunity to demonstrate that we in Europe can provide leadership in an unstable world. The questions which are crying out to be answered are the same throughout the Member States and the same issues that are demanding answers in the European discussions as well: how to create jobs in a global market; how to reform the social welfare systems of Europe without denying help and support to those who truly need it; how to save the environment for the future; how to deal with the scourges of racism, drugs and terrorism; how to train and retrain individuals to cope with the challenge of information technology; in essence, how to create a dynamic, prosperous economy with social justice.
I believe in a strong European Union. I believe that Europe's institutions need to be effective and efficient. We must continue to change, refine and democratise our institutions if we want to establish within the body politic and amongst the Union's officials a culture of openness and a willingness to conform to the challenges of modern democracy. But amongst the people in our Member States, the institutional debate is long past its sell-by date. It is and remains important to us, as it should be. We operate within the institutions. We are bound by their rules of engagement and we are often trapped by a culture of political administrative involvement which is dated and often found wanting.
So inevitably and quite rightly we will pursue changes. That is common to all parliaments, particularly to new ones, such as we are. But it is time that we made clear that Europe must not be about building institutions. It must be about securing a wider, more stable, peaceful European continent for us all; not building institutions - building a Community of shared values; not building institutions - building a future for our young.
We are often teased and criticised that we have no big idea. Europe is a big idea whose genesis and motivation is no less powerful today than it was at its inception. As John Hume said yesterday in his moving statement to this House, Europe is the greatest model of conflict resolution this world has ever seen. But today the Union has even greater vocation. Those who give more than a cursory glance at the global environment in which we are working cannot fail to see the significance of the European Union: its ability to act together for its 370 million citizens; the potential power of its economy with a single currency; its opportunity to offer a coherent chance to its young through coordinated action for employment for the future; its traditions of tolerance and openness and its sophisticated social model. If all of this can be harnessed with a greater and expanded model of cooperation in foreign and security affairs so that the Bosnias and Kosovos of this world can be prevented - not just stopped once they have begun, but prevented - then we are truly offering something new for the future.

Stenzel
Mr President, Mr President-in-Office, ladies and gentlemen, I think we can assume, Mr President-in-Office, that we all endorse your call for a European social market economy model. We also endorse your belief in a European Union that is more than merely an internal market and a common European currency. It needs a new European injection of energy. In particular, the European Union needs to achieve credibility among its citizens. On behalf of my group, I am very grateful to you for defining the Pörtschach objectives. The Members of this Parliament were not always sure what this summit would be about. They knew what it would not be about. It will not be able to take any decisions, or to anticipate any institutional reforms, but it can define guidelines for the Vienna summit and of course also set signals, signals designed to make the European Union more credible. At least that is what I hope.
There is a chance - and here of course we are dying to know what will happen - that you will receive the newly elected German chancellor in Pörtschach. You have invited him, and of course we expect him to give us full details of his economic policy targets, of the aims towards which he will steer the most important and strongest European Union economy. You have therefore invited Mr Schröder, and looking at recent events one might almost think it would have been a good idea to invite the super-minister, Oskar Lafontaine, because nobody is quite sure who will actually have the final say on Bonn's economic policy, Gerhard Schröder or Oskar Lafontaine. What interests our people here is, of course, the credibility of this economic policy, in particular the credibility of the European currency, to which you have also given priority. At the Pörtschach summit we must ask - and I expect you to do this - what the new Bonn government's views are on the independence of the European Central Bank. Is it tempted to try to influence it from within? What does it think about easing the burden on the economy by easing the burden on the small and medium-sized enterprises that pay the highest taxes and can create most jobs? After all, Mr President-in-Office, we have to accept that the short-term economic forecasts have been revised worldwide. Europe is still in a good position here. The euro has already proved to be a bulwark against financial turbulence. But we must strengthen the people's trust in the euro. Unless Pörtschach clearly supports sustainable stability, an independent European Central Bank and a careful budgetary policy, rather than confining itself to the aim of speaking with one voice on the euro at the WTO and other international bodies, then I fear our citizens might under certain circumstances have less confidence in this common currency, or even lose it entirely.
We must also give the European Union credibility with regard to security. The people need to feel secure. They need to feel secure against international crime, against uncontrolled migration. The incorporation of visa, asylum and immigration policy into Community law provided for in the Amsterdam Treaty is a step in the right direction. But more needs to be done. We must coordinate our criminal justice systems more closely, even prior to ratification of the Amsterdam Treaty. We must also regard the process of enlarging the European Union as a factor of security policy. As you said, the beginning of practical negotiations on seven chapters under the Austrian Presidency of the Council is also a positive signal. Mr President, we would be pleased if the Pörtschach summit also adopted a declaration on the objective of the enlargement process, namely to enlarge the area of freedom, security and the law in order to consolidate Europe from within. This is an extremely important project, in view of the situation in Russia. If we focus clearly on this objective of exporting security, our citizens will find it easier to identify with the process of enlargement.
The people of Europe, whom we represent here in Parliament, will also find it easier to identify with a common foreign and security policy. The evidence of the European Union's impotence in the Balkans and in the Middle East does not exactly enhance the people's confidence in this Union. But let me warn you against the illusion of believing that the problems can be resolved by appointing a CFSP representative. This representative would have to be backed by a common political will. Here I also appeal to you not just to look at this in terms of personnel, but also to look at the content. After all, the citizen must be able to see that decisions are transparent and sustainable. The original watchword of the Pörtschach summit, subsidiarity, has been short-changed to some extent, simply because European policy priorities change so quickly. But the European Parliament has put forward some ideas on the question of subsidiarity. In particular, as you said, it must not be used as an alibi for renationalisation. The Council must take better decisions, based more often on a qualified majority. They must be endorsed by the European Parliament. The European Parliament must always cooperate with the national parliaments. And, above all, we must restore the credibility of the EU as a whole and of its institutions. This is a particularly urgent concern, given the irregularities that have emerged in the Commission and also in Parliament. I would ask you to give priority to the question of the Statute for Members of the European Parliament. Let us remember something that Lenin once said, which may seem rather odd for a conservative, Christian Democrat Member, but is still true in this context: confidence is good, control is better!

Cox
Mr President, ours is a Union that has shown itself capable of extraordinary achievement when it combines vision with political will. Sadly, it is also capable of causing grave disappointment when such qualities are absent. Vision and political will have brought us to the threshold of launching the euro in 71 days' time. Internally and externally our economic relations are set to reach a new plane. As a zone dedicated to stability we can exert a major positive influence on the global stage especially at this time of crisis.
My group believes that to do this the presidency must develop proposals to ensure that the European Central Bank, together with the Euro 11 Council, assisted by the Commission and accountable to this Parliament, fully develops the external representation of the euro. Having worked so hard to create this powerful federal monetary capacity, we must not dissipate its international effect by an absence of vision and will. In seeking to enhance the international role of the Central Bank my group also expects from the bank itself greater transparency in its policy formulation. Without that we fear tensions could arise between the political and the monetary authorities, especially if the pace of economic progress slows down. The ELDR also strongly urges those Member States which meet the criteria, namely Denmark, Sweden and the United Kingdom, to join the euro.
There are few areas where our policy pretensions and our actual effort stand in starker contrast than in the area of common foreign and security policy. Once again the Kosovo crisis exposes the gap between aspiration and outcome. Kosovo, despite recent progress, remains dangerously poised on the edge of a humanitarian disaster. Its ceasefire is fragile, its political prospects uncertain. The ELDR believes that the Union and the international community must maintain pressure on Mr Milosevic and must be prepared, if necessary, to back this with the credible certainty of military intervention. The reasonable, but unfulfilled, expectations of many of our citizens that we should never again witness on European soil what we see in Kosovo undermines the credibility of the European Union. My group believes that foreign policy is an area where decidedly we need more Europe, including a Europe with a security and defence capacity.
Enlargement challenges all of us to rediscover Europe's essential task. The great prize which it offers is political and security stability across the wider continent. The ELDR welcomes the decision to open the Conference on Accession at ministerial level next month. As we face a difficult debate on the future financing of the Union and Agenda 2000, we must not lapse into an arid, sectional and narrow debate on budgetary policy, to the exclusion of the wider vision. Again, as we await the ratification of Amsterdam, the same logic applies to institutional reform. This now assumes a new urgency by going to the heart of the kind of Union we wish the applicant states to join. For the ELDR this is a Union both wider and deeper with a political and social as well as an economic mission, but also with the institutional capability to see it through.
We welcome the green light given to Cyprus but it now requires a deeper EU-led engagement to resolve that problem under the aegis of the United Nations. This will require an even-handed capacity to deal with all the regional political powers. In this regard, we deplore the continued failure of the Council to deliver the financial protocol for Turkey, and ask today how the presidency proposes to unblock this unhappy situation. The Vienna Summit will review the claims of other applicant states. My group commends in particular the progress made by the Baltic States, in the economic field in Lithuania and in human rights in Latvia. We note also with satisfaction the evolving situation in Slovakia and the renewed interest of Malta.
The prospect of deepening cooperation in the field of immigration and asylum policy is to be applauded. Concerted action can have a positive effect, provided it is not founded on the values of the lowest common denominator nor on any retreat from the 1951 Geneva Convention's fundamental approach to asylum-seeking as an individual human right. We welcome the breakthrough in a statute to establish an international criminal court as a permanent structure to bring to justice those charged with crimes against humanity and urge that the preparatory work proceed.
Finally, we remain concerned about the fight against fraud in the Union, an issue with serious potential to undermine the institutions. We believe it is important to maintain a sense of proportion, but also where there is wrongdoing to ensure full accountability which so far, regretfully, has either been unforthcoming or begrudging. We need a more independent investigation process. The state of the Union reflects that where we have the political vision and will, we succeed; where we lack those qualities, we do not. Let us learn and apply that lesson.

Pasty
Mr President, ladies and gentlemen, the informal meeting of the Heads of State or Government, due to take place in Pörtschach at the end of this week, should mark an important stage in the history of the construction of Europe.
In fact, at a time when Europe has undertaken a new process of enlargement greater than ever before, which will have unprecedented consequences, it is essential that we consider the political angle of the entire project of the construction of Europe. It is no longer a question of merely adapting the working of the institutions to accommodate a new geographical region. We must redefine the very purpose of the construction of Europe so that it can be understood by all the citizens of the Union.
The basic question that our fellow-countrymen are asking today is: why do we need the Union? It is true that the method used firstly to pool the coal and steel resources of six countries, and then to build a large internal market of 15 countries that is soon to be a monetary union, has at least left us with a substantial acquis communautaire . But this method has today reached its limits.
Today, the Union is nothing but an economic idol with feet of clay and a political dwarf, because it does not form part of a political project such as that conceived by General de Gaulle when he proposed what was known as the 'Fouchet Plan'. If we are not careful, the concept of solidarity or even of a political union is on its way to disintegrating rapidly under the pressure of national economic and financial interests. Unfortunately, this is clearly demonstrated by the renewed debate - in the context of Agenda 2000 - on net budget balances, which denies all notion of Community added value.
It is unfortunate, to say the least, that by proposing the partial renationalisation of CAP funding, the Commission - which should be the spearhead of the European spirit - is supporting what may turn out to be the unravelling of the tapestry that the European governments have had so many difficulties weaving over the last 40 years.
Reasserting that solidarity as the basis of the European Union is the only possible antidote to the prevailing fundamentalist economic thinking that undoubtedly threatens the acquis communautaire much more than the consequences of this enlargement. And it is an enlargement that some both desire and dread because they are unable to take a broad and coherent view of an expanded Europe.
With a single currency, which must undoubtedly be used to promote employment and growth, the European Union, enlarged towards the centre, the east and the south of our continent, must have the will, if it wants to survive, to play an international role that corresponds to its economic power and its historical and cultural heritage.
Throughout the world, in the Maghreb, in Africa, in the Middle East, in Asia, and in Latin America, there are high expectations of a Europe capable of defending the values of civilisation and humanism that have formed the basis of its influence over the centuries. This is much more important for the people of today than widespread free trade.The European Europe, which was the wish of General de Gaulle 40 years ago, still remains to be built. And it will only be built if Europe has the will to set up an autonomous defence and intervention force that can be deployed beyond its borders when required for the common interest and to preserve peace.
We must include the applicant countries of central and eastern Europe in this significant debate on the political emergence of a genuine Europe, for they have the most concerns about the security of the Union's external borders, as Greece also has at the moment.
The European states will not be able to go on avoiding the following question: what immediate and effective action could they take if the borders or territorial integrity of a Member State were threatened by a third country? The response at the moment is clear: they could not do anything without the blessing and participation of the United States, as the Kosovo crisis has just demonstrated once again.
Ladies and gentlemen, these are the vital questions that the Heads of State or Government should consider if they truly hope, as we must assume, to relaunch the project of a political European Union. If they were to abandon this, then it is difficult to see how, during the European elections in a few months' time, we will be able to mobilise the enthusiasm and support of our fellow-countrymen. Let us hope that our call is heard!
The guidelines that you have just set out, Mr President, are a step in the right direction, but they need to be clarified. Viel Glück, Herr Präsident !

Puerta
Mr President, Europe is entering a stage which will be crucial to its future. A new political impetus is urgently required.
Our group believes that the institutions of the European Union should focus their efforts on three main aims: to create a social model, to make progress towards institutional reform with a view to political union, and to strengthen internal solidarity, extending it to the countries included in enlargement.
The major features of the social model are full employment, the conservation of the environment and democratic control of the economy. It encompasses the proposal for a 35-hour working week in France, and the prospect of a new energy policy in Germany. Both of these could have a European dimension greater than that of monetary union, some of the conditions of which run counter to our hopes for the social sector.
As regards institutional reform, we are hoping for something more than a rhetorical message from the forthcoming summit. We strongly support transparency and participation. We hope for compromises concerning the balance - a new balance - between the Council, the Commission and the European Parliament; the strengthening of democratic accountability and the development of a genuine spirit of European citizenship, compatible of course with the existence of the Member States. A proposal on institutional and political change should be available before the next elections, so that our citizens can express their views at the ballot box.
The European Union must strengthen its role in the world with a common foreign and security policy capable of promoting its own position and of ensuring peace and respect for human rights in Europe and in every continent. The world must be freed from the military and financial power structures dominating it at present. Such a peace is already being achieved in Northern Ireland, following the end of terrorism and the political dialogue championed by our colleague and recent Nobel prize-winner John Hume.
It is also worth mentioning that the recent cessation of terrorist violence and crime has brought renewed hope to Spain, and particularly to the Basque Country. If this cessation proves permanent, it will make it possible to move towards a normal democratic situation. Elections are to be held in the Basque Country this coming weekend, in a peaceful atmosphere we totally support, and which the European Parliament must support.
Finally, we wish to stress that enlargement must not take place at the expense of internal solidarity. That would be a serious error, threatening the Union's very existence. For that reason, we could not support the document on options for the own resources system presented by the Commission recently. In our opinion, this proposal renationalises policies which are currently common ones, and would hinder social and economic cohesion in Europe.
Mr President-in-Office of the Council, our group strongly supports your view of a European employment policy. We venture to suggest however, that the main challenge for the Austrian Presidency is devising a plan for the future. The Austrian Presidency should not resign itself to going down in history as the forerunner to the German Presidency.

Aelvoet
Mr President-in-Office, Mr President of the Commission, ladies and gentlemen, nearly all the elections held during the past year clearly show that European voters want new political majorities which distance themselves from the myth that political governments must do as little as possible and that market forces will solve the problems of society through greater flexibility, liberalisation and deregulation. After the United Kingdom and France, we in Germany now have the incoming government of Socialists and Greens. The political authorities are responsible for ensuring that life in society remains tolerable for all its members, with the prospect of work, a healthy environment and emancipated rights of participation. We want to see more women on the Union family photos when a summit is held in Europe. It is impossible for isolated nation states to acquire sufficient room for political decision-making in a world economy over which there is virtually no control - and if there is one thing which recent months have made clear, it is that such control is absolutely necessary. It is in this area that the political union must exercise its authority in order to also impose global political regulations. We therefore welcome the fact that, thanks to the French Government, the Multilateral Agreement on Investment in its present form has been consigned to the waste-paper bin, and this is also stated in so many words in the new German coalition agreement. In this respect, Mrs Stenzel, a majority in this European Parliament has clearly stated that it must be possible to enter into dialogue with the European Central Bank. If that is also too much for the Conservatives, then I really do not know any more what age we are living in.
To conclude, our colleague Mr Voggenhuber will be speaking about the European summit in Pörtschach, but I would like to end on two points. The drama of foreign policy which is once again being revealed over Kosovo is that there is not in fact any common foreign policy at all. Also, we want the Commission - and I believe in this respect that Parliament has done some exemplary preparatory work - to be more transparent and better managed, ensuring that certain incidents of fraud are stopped. In this respect, it is of the utmost importance for the Commission to have the courage to support an efficient and well-structured administration, subject to democratic control. Only a well-managed administration can do this, one which does not permanently employ the services of hundreds of consultants and subcontractors of all kinds.

Lalumière
Mr President, Mr President-in-Office of the European Council, Mr President of the Commission, on the eve of the informal summit in Pörtschach, the first summit under the Austrian Presidency, what state is the Union in?
I would like to begin by welcoming the efforts of the Austrian Presidency in a certain number of areas that I would look at in more detail if I had time. These include, for example, human rights. Recently, in Vienna, a number of Members of the European Parliament attended the ceremonies commemorating the fiftieth anniversary of the Universal Declaration of Human Rights in which Austria participated, and we can vouch for its efforts in this respect. Similarly, in the fields of culture and audiovisual media, Austria is endeavouring to move several issues forward. I could go on, but I would like, in particular, to highlight the issues that invariably reappear and that are becoming more and more worrying every day.
In Pörtschach, Chancellor, as you have just said, you are going to discuss the future of the Union, its objectives and its raison d'être . That is all very well. Such basic reflection is essential, but we already know that one of the elements of this future is the forthcoming enlargement. And indeed, among the decision-makers and the public in general, we can sense uneasiness and fears. You yourself, Chancellor, said in Luxembourg last March that enlargement was certainly necessary, but that it was not exactly enthusiastically welcomed.
Without concealing the difficulties, is it not essential today to put more emphasis on the progress and positive aspects of enlargement? A statement from you in this direction would be very welcome. You have already begun, this morning, to send out this optimistic message, without ignoring the reality of the situation.
As regards the necessary reform of the institutions as a result of enlargement, I know that you are waiting for the final ratification of the Treaty of Amsterdam before you really tackle this issue. But I do not think that it is premature to put forward innovative ideas concerning the operation of the Council of Ministers, not forgetting the necessary coordination of the various Councils of Ministers. The President of the Commission has just talked about the operation of the European Parliament - and I would stress here the need for a Statute for Members of this Parliament - and the operation of the Commission. He also spoke of greater coordination of economic policies, particularly within the euro area, and the institutional resources required for this cooperation and for the euro area to be represented beyond our borders.
In a third fundamental area, that of the Union's finances, the Austrian Presidency can make a valuable contribution on resources and expenditure. As far as expenditure is concerned, I would like to stress that solidarity must continue to be one of the main guidelines for the Union's actions. Solidarity must not, of course, lead to waste, but budgetary austerity must not serve to undermine solidarity or - and this is something that you all hold dear - social justice.
It is time to consider a possible change in the way we look at our resources. Should we keep VAT or look for resources based on income? This is a good question that we are considering at the moment. How can we avoid the mistake of renationalising common policies, particularly the CAP? Should we introduce a major system of European loans to encourage investment that generates employment, since employment is our priority? Finally, can we avoid reviewing the method for calculating the contributions of our different countries? These are important questions that must be considered in the very near future.
In conclusion, Mr President, I will say a brief word on the CFSP. Once again, the Union has appeared hesitant and absent on the international scene in recent months. We hope that in December, the appointment of someone with overall responsibility for the CFSP, a male or female politician - and I stress the word politician - will mean that we can give real impetus to this policy that is so vital for the Union's future.

Berthu
Mr President, the Pörtschach summit will find it hard to untangle the knot of institutional problems the Union has got itself into.
The single currency is going to come into force in the midst of financial turmoil, while a great many additional factors which were only to be expected, but which the states do not seem to have anticipated, have not been taken into consideration. Enlargement will not be able to take place if we do not challenge the monolithic nature of Europe and the bulk of the acquis communautaire , which is, in fact, still increasing every day.
There is, in particular, one contradiction that sums up all the others: it seems as if the Union only wants to escape its problems by rushing headlong into a super-state, thereby increasing a democratic deficit that is not a 'euromyth' or a 'ready-made slogan' - as you said, Mr President of the Commission - but a reality experienced by all the peoples of Europe.
Given such a mass of institutional problems, the Treaty of Amsterdam takes the wrong route, that of the super-state that reduces the quality of democratic control in Europe. The Group of Independents for a Europe of Nations believes, on the contrary, that the most pressing matter is to restore the people's control over the Union. Unfortunately, this type of proposal always results in more Community procedures, more harmonised rules for our citizens and greater marginalisation of the nation states. This is not the right method; it only aggravates the problem.
We believe instead that we must rely more on national democracies, which are best at encouraging people's involvement, and, on the basis of these national democracies, control the Union better.
Our belief is so very different from that held today in this House that we did not think there was any point in just amending the resolution by the Committee on Institutional Affairs which will be put to the vote at the end of this debate. That is why our group has tabled a completely different resolution with detailed proposals, which is also, in fact, a programme for a Europe of nations, and for a Europe that is based on national democracies, which alone are capable of adequately representing our values in the world ahead of us.

Muscardini
Mr President, ladies and gentlemen, there are at least two ways of assessing the current state of the Union: the first is the one rejected by Mrs Spaak yesterday, the bureaucratic and formalistic way, namely to enumerate the legislative or other activities carried out during the period concerned; the second is to evaluate the processes under way in the Union with reference to the international context and the economic and social situation of the Member States, so as to reflect on the political nature of the European venture and fine-tune its aims. If we take this second approach, we must acknowledge with some disappointment that no progress whatsoever has been made. The Amsterdam Treaty is one cause of this stagnation, this political paralysis, but not the only one: the other is bad will on the part of governments, and the intergovernmental method has proved unfit to overcome the institutional difficulties.
As we have stated before, Amsterdam is one of the most insipid fruits to have been borne by the low-profile UK Presidency, at a time when the Union's aims need to be redefined and adjusted in the light of the profound changes being brought about by the single currency and enlargement. If there is merely to be a mechanical listing of what has been done, then we must denounce clearly and firmly the comatose state of the operation, which is only making progress - alas - in the declarations made by those in power.
Yet again the Union has been unable to respond in unison, as it should have done, to the challenges of the crisis in Kosovo: no joint proposals for a solution to that problem have been forthcoming at diplomatic level, and no concrete initiatives have been put forward to throw the Union's weight behind the negotiations. Almost all the governments regard the UN as a precondition and NATO as a guarantee here, as if to shirk any direct responsibility of their own. And what about Europe? And our foreign and security policy? Whatever became of the eagerly anticipated planning and evaluation unit, which was to ensure the coherence and effectiveness of our policy in a truly joint operation, making the Union's foreign policy more visible to public opinion?
Until such time as the political union is launched, we shall have cause to repeat year in, year out this tokenistic, meaningless ritual of discussing the state of the Union. The state of the Union should at long last be tackled by pursuing common European policies.

De Giovanni
Mr President, I believe that Pörtschach is a major opportunity for the resumption of an institutional political dialogue. We are all aware that no decisions will be taken at Pörtschach, which is to be an informal summit, but this, in a sense, might make it easier to take stock of the political will to carry Europe forward. In my opinion, it would be quite an achievement if, on the eve of enlargement and the adoption of the euro, Pörtschach were to contemplate the deepening of the Union and Europe's new position in the world, because both the external representation of Europe and a means of balancing stability with growth will clearly have to be addressed. If employment really is one of our aspirations, how can we establish a link between Europe and employment policies unless we create a relationship between stability and growth?
I am thinking in terms of an area of freedom, security and justice where human beings - and not just goods - can move around freely, with all the associated problems concerning jobs, legislation, judicial guarantees, security and basic rights. How can a new balance be established here between the national and the supranational dimensions, both of them necessary? That is the point.
Mrs Green referred to the need for our citizens to feel a sense of belonging to Europe: that sense of belonging can take shape most effectively in an area of freedom, security and justice. It is therefore necessary to continue building a European democracy and to determine a new balance between the institutions of the Union. We need to know who does what.
This is why, in accordance with the work programme drawn up at Cardiff, our resolution stresses the importance of subsidiarity to the shaping of democracy; without demonising it, we place it within certain limits. In the resolution to be put to the vote tomorrow, we reject subsidiarity as a pretext for the renationalisation of Community policies, we reject fears of over-centralisation in the Union, and we reject the idea of creating another institution or body to take responsibility for subsidiarity. We highlight the connection between subsidiarity and solidarity, as well as between subsidiarity and cohesion. We have sent an important political message to national parliaments by drawing up this resolution together with some of their representatives. This implies a change, since we must overcome the mutual diffidence of the past. I do believe that it is vital to minimise the grey areas and emphasise fields for cooperation.
Finally, Mr President, Mr Santer among others spoke of taking a fresh look at institutional policy. I agree with what he said: there is a need for both more and less Europe. In my view, we also need a political Europe. For example, our foreign policy has need of appropriate institutions, and in the field of employment it should be possible to take decisions at European level, but by the same token there should be more delegation of powers when it comes to implementing decisions, so as to create a fresh equilibrium between the Member States and the Union, because there really is a problem here. Administration should therefore be less partial: all the institutions must become more democratic and more efficient, and it is no accident that we have insisted on proportionality.
Last of all, I believe that certain things can be done without amending the Treaties; others cannot. Amendment implies a new method of revising the Treaties, and we shall strive to ensure that, once Amsterdam has been ratified, the Commission takes the initiative of consulting all the institutions about Treaty reform.

Medina Ortega
Madam President, as we debate the state of the Union, I think it is appropriate to refer to the comparison made between our Union and a Gothic cathedral. The President-in-Office is very familiar with Gothic cathedrals, as he comes from a city with one of the best in Europe. Gothic cathedrals were the work of many generations. They were started in one style and finished in another. I think that, at present, the European Union is just like a Gothic cathedral. It is only half finished. There are pillars which do not support anything, galleries leading nowhere and we even have areas which are not provided with any type of Community safety net.
Furthermore, it is often said at the moment that the European Union grows at times of crisis. That is to say, when everything is normal, it develops very slowly, and then, at times of crisis, development is accelerated and the Union becomes stronger. I believe that in the speeches they have made here today, the President of the Parliament, the President of the Council, and the President of the Commission have all pointed out just how a structure created for another purpose, the euro, has enabled us to withstand the international financial crisis. The euro came about for other reasons but, thanks to the euro, our stock exchanges and our currencies remain unaffected. I do therefore agree with the view that the Union matures at difficult times, for it has become stronger as a result of the financial crisis.
Of course, the main problem facing the Union is that, like a typical Gothic cathedral, it is still unfinished. Completion will take another two or three generations, and at present we need to consider how best to enlarge it. Gothic cathedrals began as little Romanesque churches which were enlarged time and again until some of them encompassed the whole of an old city, as Vienna Cathedral does, for instance. We are being called upon now to enlarge our cathedral to accommodate the countries which lie between the Baltic and the Mediterranean. Over a hundred million people are involved. They have a right to be here, and we must find ways of providing for them.
Well, there is one very simplistic solution. You could say, 'seeing that all these people will not fit into our cathedral, let us knock it down and start from scratch'. In other words, 'Let us get rid of the common agricultural policy, Community funds, Community policies, and we can all start from scratch together'. To use a German expression which can be translated into Spanish, this would amount to throwing the baby out with the bathwater. So, Mr President of the Council, Mr President of the Commission, we are genuinely concerned that if we go down this road, we will end up without a cathedral or even a storehouse.
Arguments are currently under way over tiny percentages of the Community budget. Countries which, for example, have what used to be a national port and has now become a Community port are complaining that they have to contribute too much to the Community budget. I do feel, Mr President, that this is not the time to argue over tiny percentages. What we should be doing is pressing ahead with our great project, so that we can build a real home for the whole of Europe.

Martens
Madam President, Mr President-in-Office, Mr President of the Commission, on behalf of our group, I wish you a warm welcome on this first occasion that you have addressed Parliament. I should also like to thank you for paying homage to the historic work of German Chancellor Helmut Kohl.
This debate on the state of the Union is taking place in a climate of uncertainty. Globalisation is causing concern, and financial turbulence - first in South-East Asia and then in Japan, Latin America and Russia, but also on stock markets in the United States and Europe - is creating the impression that the world economy is slipping out of control.
The market is reacting increasingly irrationally, demonstrating the mutual dependence of economic systems. Yet, despite this general sense of crisis, the pessimism is being tempered by the fact that Europe has been able to maintain great stability around its euro zone. Who, a few years ago, would have believed it possible that the weakest currencies in the European Monetary System would be able to stand up against speculation and the exchange rate fluctuations of the dollar? Together, our countries have regained the monetary sovereignty which they had each individually lost.
Although there was scepticism among some, hostility among others and indifference among a great many more, we should consider ourselves fortunate that we concentrated our efforts on this monetary union. I believe we are now in a position to enter into new undertakings. The 11 participating Member States must now ensure that the single currency, the euro, acquires a status beyond our borders, namely in regard to the G7, as a result of which it will carry real weight in world trade.
I would also like to see a political stimulus provided for the enlargement negotiations. I hope that there will be a continued awareness of mutual interests. Now that the Balkans is being revealed as a more explosive region than ever before, the Union - which is becoming economically, monetarily and socially robust, but remains a dwarf when it comes to any diplomatic or strategic decisions - must ask itself whether the provisions of the Treaty of Amsterdam allowing joint diplomatic action should be given an early application.
I believe that our citizens also continue to attach great importance to the two fundamental liberties of freedom and security - the free movement of individuals and workers without fear of crime or insecurity. This lies at the basis of our democratic system. Our group therefore wonders whether it would be possible to speed up the harmonisation of legislation on internal security.
The priorities for Pörtschach and Vienna are very clear to us. We are aware that without strong and democratic institutions, the future Union of 27 Member States has the potential to weaken that which has been built up over the past 50 years. Parliament has always stressed - and Mr De Giovanni said this - the need for a common approach in which the three political bodies and the national parliaments are all involved in reforms. We remain convinced that only majority decisions of the Council can save the Council from paralysis. The Commission remains an essential institution. Its independence and right of initiative must be safeguarded.
We expect this Parliament to acquire new legislative powers and that it will bear the new responsibility for the investiture of the Commission. We find it legitimate for the Council to accept that negotiations should begin on the Statute for Members of Parliament.
I should like to end on an optimistic note. In these three institutions, we always conduct a positive debate on the state of the Union. I believe that yesterday John Hume also provided a moving message which gave historic significance to reconciliation in Europe. Today, I should also like to pay tribute to him and say that his message must be accepted by all of us as an essential message for Europe.

Frischenschlager
Madam President, ladies and gentlemen, we have good reason today to take stock of the state of the European Union and also to consider the future and how to bring it closer to the citizens, because there is a strong sense of dissatisfaction at large. In my view, it is not enough to hold big conferences at which the participants merely swap slogans, which may make for good sound bites on television but produce no results. Mr President-in-Office, I therefore want to establish one thing quite clearly with a view to Pörtschach: the European Union's objectives, timescales and practical projects are all there; what is not there is the courage to take decisions, the courage of the national governments to take decisions. The problem with the European Union is not the much-discussed Brussels centralism; it is the weakness in decision-making, the poor capacity to resolve problems on the part of the national governments and therefore of the Council.
What I hope Pörtschach will do is give clear political signals on the main problems. A clear 'yes' to enlargement of the European Union, and under the same conditions we ourselves set in Europe, at a point when the countries concerned are able to fulfil these conditions, even at some political and financial cost. A clear endorsement of institutional reform, the improvement of our decision-making structures, so that we remain capable of taking decisions, and a clear 'yes' to a common foreign and security policy that is really worthy of the name, in the interest of peace on this continent and in the world.
The focus of power in the European Union lies in the Council, the heads of government and the national governments. They must act, they must decide, and therein lies the weakness in our present situation. Hence my appeal to you to shed light on these fundamental weaknesses during your term of the presidency. We in the European Parliament, the Members and the Commission will gladly help to promote the project of European integration in the interest of all our citizens. But without doubt it is primarily up to you, up to the national governments to do so.

Collins, Gerard
Madam President, the outcome of the debate now under way on the financing of the European Union's annual budget is of fundamental importance to the future direction of the Union over the coming years. The recent direction which this debate has taken is profoundly depressing for those of us who want to see a European Union which is capable of having a positive impact on the development not just of the present 15 Member States but also on the new democracies in Central and Eastern Europe which have applied for membership of our Union.
The re-emergence of the old Thatcher approach of looking for the money back - even if this approach is now coming from different national capitals than in Mrs Thatcher's era - still risks undermining the basic foundations of the Union, just as it did back in the 1980s.
The one outstanding common policy success of the Union has been, and continues to be, the common agricultural policy. This policy is being reviewed and reformed as part of the overall Agenda 2000 proposals. However, yet again, efforts are now being made to dismantle the common agricultural policy, and this at a time when farmers in all our countries are experiencing unprecedented difficulties.
The proposal to renationalise 25 % of the CAP budget is nothing less than a partial dismantling of the common policy in agriculture. To represent it as anything else is disingenuous and misleading. Such a fundamental change in the direction of one of the real common policies which exists in the Union should be resisted, not just by those who support the development of European agriculture but also by those who support the basic principles underlying the existence of the European Union.The Agenda 2000 proposals have launched a major review both of the structural funds and the CAP. This review should lead to a reform of both the CAP and the structural policies in order to prepare for enlargement but, equally, in order better to serve the interests of the people concerned by these policies in each of our Member States.
The continued viability of family farms in all our countries is under threat because of a number of serious factors, such as the BSE crisis and often unfair competition from third countries.
The CAP and other instruments available to the Union should now be mobilised to protect the interests of our farmers and food producers. At a time when rural development policy and the protection of the national environment are being given higher priority, it is worth asking if there will be anybody left living in our rural areas to implement these policies. Farming and food production are the essential elements in the economies of rural areas in all parts of the Union.
Finally, the CAP is essential for survival of the family farm, and efforts to dismantle or renationalise this policy must be resisted.

Herzog
Madam President, we appreciate the desire of the President-in-Office of the Council to make progress towards a genuine political union, in order to promote employment and the development of the social model. Yet we cannot help but point out the discrepancy between his intentions and the behaviour of our institutions in the face of current problems. We believe that it is particularly essential for the European institutions to assume their responsibilities in the face of the international financial crisis and the very real slowing down in growth that is bound to ensue.
The Member States have been guilty of maintaining a feeling of euphoria by saying that the euro marks the end of all the hard work and will give us permanent protection. This is a totally false assessment and we face some very painful days ahead. It is therefore the responsibility of the European Parliament to shake up the Council and the Commission. The present circumstances force us to review the effects of the budgetary stability pact and the EU's monetary policy on the different national situations. The Community is going to have to take initiatives to support economic activity and, in particular, to create plans for sustainable development. What we need is genuine coordination of economic policies, with democratic controls. We must get the instruments of solidarity working and the Union must, as a matter of urgency, define its views on how to regulate the global economy.
In order to pursue these objectives, we recommend a form of joint responsibility between the Council, the Commission and our parliamentary bodies. The resolution by the Committee on Institutional Affairs is right to recommend qualified majority voting and to balance subsidiarity with solidarity. But, in our opinion, it goes in the wrong direction by trying to confer the majority of executive power on the Commission. The Commission cannot move forward without a Council that assumes its political responsibilities. The European Parliament itself has a duty to promote public debate on the basic choices in economic, financial and social policy, in cooperation with the national parliaments and the civil society. The House has failed in this task. It must therefore reconsider its duties towards citizens, employers and trades union bodies, with a view to allowing them to become more involved in our institutional system.

Voggenhuber
Madam President, Mr President-in-Office, ladies and gentlemen, you said that the special Pörtschach summit should consider the future of Europe. But the list of subjects on the agenda tells us that it is more likely to discuss everything and anything. Many of us fear this meeting will turn out to be the most expensive boat trip in the history of the Union.
Mr President-in-Office, when politicians consider the future they should remember the promises they have made to the people and the tasks to be tackled in the present. There is indeed no lack of broken promises and unfinished tasks in the Union. We have been promised since Maastricht that the serious democratic deficits in the Union would be dealt with, that parliamentary and constitutional principles would be underpinned. The people are still waiting, while the Council is not even able to make its legislation visible.
The democratic deficit of the European Union still goes by the same name - the Council. It has promised us since Amsterdam to remove the internal barriers to EU enlargement. We know that this requires a comprehensive reform of the EU institutions. But so far the Council has not even managed to produce a binding timetable. Instead, it tends to fuel fears about enlargement towards the east.
Since the decision on monetary union, we have been promised that European integration would be given a social dimension, that instead of a market and money-based Europe, we would have a political union, a social area. But so far the political statements about fighting mass unemployment have not been followed by deeds. No sign so far of a coordinated economic policy, of an end to fiscal and social dumping throughout Europe! Council summits are increasingly turning into a bazaar of conflicting nationalist interests.
Mr President-in-Office, there are some things we do know about the future of Europe. We know that it can only succeed as a democracy, that it must overcome the division of Europe, that it can only flourish in a climate of social peace. The Pörtschach summit will be measured by whether it takes practical steps to open the door to this future a little wider.

de Gaulle
Madam President, Mr President of the Commission, from one year to the next, the report on the state of the Union sends out the same message of self-satisfaction. We are led to believe that 'euroland' would keep France safe from the chaos of the world, from the threat of an international recession, and from the fluctuations on the foreign exchange markets. In reality, all the forecasts of economic growth are currently being revised downwards, not only in France but also in Germany, and we might wonder whether the 3 % government deficit target will be met in 1999.
On the subject of international economic relations, we should remember the statements made at the Uruguay Round, that $100 billion or $200 billion of additional wealth would be created in 10 years, particularly in South-East Asia and in the emerging countries, from which Europe would undoubtedly profit. We should remember, too, the assurances given by Mr Delors, who, in 1994, in response to a question I put to him, promised that the preparatory phase of the euro would not involve any form of recession, and the ode to joy on 2 May this year, which only Mr Trichet spoiled, and which, at 3.00 p.m. precisely, should have announced the long-term prosperity ahead.
But, fortunately, we are protected by the Maastricht Treaty and the Treaty of Amsterdam, which will in future enable the people of Europe to do together whatever they no longer want to do alone. In any case, with or without a legal pretext, you know that France's leaders will give you what you dare not even ask for, without asking for anything in return, and once you have it, you will hear these so-called leaders claim the fact that they have not asked for anything in return as a success for France.
Mr President of the Commission, your message appears to me to convey a certain weariness, because we are all aware of the artificial nature of the construction of Europe. One day you will not be able to avoid the real question: what is all this for?

Raschhofer
Madam President, ladies and gentlemen, when Chancellor Kohl and Jacques Chirac wrote to Tony Blair a few months ago calling for Europe to be brought closer to the people, they were speaking from the hearts of many. The people are aware that the list of the Union's shortcomings is a long one. Let me just list the most recent headlines. A Union of fraud cases and secret Council meetings, a Union unable to speak with one voice in foreign policy and take action in a common foreign and security policy; a Union that puts forward a best practice model while unemployment stands at 18 million.
The expectations of a political declaration on the subject raised by the subsidiarity letter have accompanied us right up to the special Pörtschach summit. What signals will this special summit send out? Pörtschach is no longer concerned with closeness to the citizens. Any debate on the meaning of subsidiarity has been buried prematurely with the lethal argument of renationalisation. Pörtschach is concerned with the future of the Union, or so I have read. But it does not want any quarrels about Agenda 2000 or net contributors. Yet these questions that are to be excluded from the discussion are in fact questions of the future. We are told that the institutional reform of the Union cannot be discussed at Pörtschach because Amsterdam has not yet been ratified. The truth is, in my opinion, that the presidency of the Council is rather relieved to have this as an argument for not opening up a Pandora's box. I fear that in Pörtschach nobody will be keen to burn their fingers on difficult issues. So they are to be left out of the discussion.
Yet many areas need reform, even without amending the Treaties. This could have been a chance to show a little more courage and send out a signal for Europe. If Pörtschach is to become a summit of missed opportunities, then I would ask you to consider, Mr President-in-Office, that the loss of credibility and sense of disappointment may lead people to ask: 'what for?'.

Berès
Madam President, Mr President-in-Office, Mr President of the Commission, ladies and gentlemen, what does the future of the Union depend on? It undoubtedly depends on two major advances. The first is related to the need to define, codify and validate, through democratic consultation, the nature of the contract between the Union and its citizens, on the basis of the European social model and the values we hold dear. We need to define this contract and establish goals which will allow us to regain the support of the people of Europe, to legitimize the action we take, to establish a sound basis for the courage needed, and to verify the accession requirements for new members.
We must also provide ourselves with the tools to exercise our responsibility and to assume our dynamic role, in the midst of global chaos, in order to contribute to better regulation.
Given this long-term perspective, what do we expect in the medium term from Pörtschach? We do not want any grand declarations. It is an informal European Council. Bravo! Make sure it remains an informal European Council, Mr President; that is what we expect of you. The agenda is already very crowded. This informal European Council is welcome, and we will certainly need more of them. It is only the start: you must then also make a success of Vienna, whose timetable is very full with the national action plans on employment and the question of the external representation of the euro. Do not overload the timetable.
Beyond this informal European Council, you will also have to discuss broad guidelines with the new Commission and the next European Parliament. You must remember that.
So what are we hoping for from Pörtschach? We must start discussing these questions about our future and the institutional issue. And do not tell us that you are going to wait until everyone has ratified the Treaty of Amsterdam, because, as you well know, for certain countries - and particularly my own - it is not enough to say: ratify first, then we will negotiate. We know full well that the issues at stake are very complex, that the deadlines are short, and that the process of enlargement is already under way. In order to ratify the Treaty of Amsterdam, some countries, including my own, need guarantees in terms of the timetable and method to be used for this reform of the institutions, for what is contained in the Treaty of Amsterdam today is not enough for us.
Let us now look briefly at the broad institutional guidelines as we would like to see them, on the basis of the proposals made by the chairman of our Committee on Institutional Affairs. Yes, the General Affairs Council needs to be reformed. And you have begun deliberations on this issue. Well done! You need to follow these deliberations through, transform the General Affairs Council into a purely Foreign Affairs and Defence Council, and set up a body to coordinate with senior ministers meeting once a week. Great emphasis must be laid on this, while the importance of the Ecofin Council must be balanced out. I have nothing against the Ministers for Economic Affairs and Finance, but they are not the most important generator of social transformation.
Next, as far as the Council-Commission balance is concerned, we must insist on the balance initially provided for by the authors of the Treaty, which is a fair one. We must not over-interpret this or that provision of the Treaties to the benefit of one or other of the institutions. That is not the way the Heads of State or Government have chosen to act up until now, and that is only fair. We simply need a strong Commission and a strong Council. In this respect, we need the Commission to rediscover its sense of collective responsibility and to drop the 'non-aggression pact' which it sometimes seems only too happy to hide behind.
I will not say anything on the Euro Council, despite the fact that there is a great deal that could be said, particularly as regards the dialogue that we will have to enter into with it.
I would like to make a last comment on subsidiarity. This principle must not serve as a pretext for renationalisation. It must promote effectiveness and cohesion, but we will not achieve this by defining groups of responsibilities. There are numerous examples that demonstrate that we must act on all levels, with each of us doing what we are responsible for.

Salafranca Sánchez-Neyra
Madam President, two questions spring to mind in the context of this debate on the state of the Union and the Pörtschach informal summit. First, what is the true state of the Union, and second, what can we hope for from the Pörtschach informal summit to help us out of the state we are in?
I believe, following the recent elections in a number of Member States - and the declarations by the Prime Minister of a certain small but rich Member State which is part of the European Union, threatening to veto the whole of Agenda 2000 if he does not receive a cheque like the British one - that what we are witnessing is, at the very least, a renationalisation of the Community debate.
I feel that we are placing far too much emphasis on a particular, though nevertheless valid vision of Europe. We are concentrating on the Europe of the net balance, the taxpayer and the beneficiary, a Europe of the cash register and material goods. Europe, Madam President, is more than this. To use a phrase of Madariaga's, it is more than coal and steel. As a result of placing too much emphasis on this vision of Europe which is, I would stress, a valid one, we are becoming blinkered and forgetting the basics: the Europe of values, of peace, of understanding, of harmony and of solidarity, yes, especially the Europe of solidarity, Mr Santer. As you have heard in the House this morning, Mr Santer, many of us believe that the Commission's report on the future of own resources is in fact a break with the line of solidarity, a backward step for the Commission, and a muddled exercise in which income and expenditure are confused and in which you threaten the powers of this Parliament as you refer to Community policies.
Europe has to wake up and get back on the right track. How can this be achieved? By strengthening its internal operations through the provisions of the internal market and of economic and monetary union, and by making its presence felt in the world, because the European Union has to be more than the body which pays up and signs the cheques to sort out all the major disasters in today's world.
What can we hope for from the Pörtschach summit? There is no point in being too optimistic. There will be no operational conclusions, as it is an informal summit. What this Parliament is requesting is, in fact, the introduction of the Community method. The President of Parliament has explained what duties lie with Parliament as of right. For its part, the Commission must overcome its internal differences - it should be remembered that the ECHO case has shown up the differences between four Commissioners - and resolve to work in tandem with our Parliament, setting a course for the project of European integration. The Council has to prioritise its objectives, and bring coherence and rigour to its work. It must understand too, once and for all, that if each Member State does not seek its own advantage within the common advantage, we shall have to relinquish some degree of sovereignty to other powers which are perfectly well aware of the benefits to be derived from union and integration.
I agree entirely with the majority of the objectives put forward by the President-in-Office of the Council, but I should just like to make a small correction concerning myths. Myths are a basic ingredient of human life, but what we have to do is to replace false myths with true ones. True myths respect reality and yet are not content with it, they do not bring violence to bear on the present situation, but are not satisfied with it and aim higher, grafting our hopes and aspirations onto the present. Madam President, what we hope is that, as Mr Martens has said, Europe will not fail to live up to its aspirations to be a world leader in the twenty-first century.

Sjöstedt
Madam President, let me say a few words about this motion for a resolution from Mr De Giovanni and the Committee on Institutional Affairs. It is a very federalist resolution. Were it to be implemented, the countries of the Union would effectively be on the road towards a 'United States of Europe'. What is the problem, you might ask. The problem is that there is no demand for any such thing in the Member States. I come from northern Sweden and the calls for a stronger Commission, or for the integration of the WEU, are few and far between. Opinion polls even show that only a fraction of those Swedes who are in favour of EU membership endorse these further developments.
The real problem with the EU is its lack of proper democracy and the absence of adequate scrutiny of legislation. That is why we should now be demanding across-the-board democratisation. If we are to have a sound basis upon which to build, national parliaments must, in the foreseeable future, exercise oversight where the real legislative work is being done.

Schörling
Madam President, the motion for a resolution by Mr De Giovanni on behalf of the Committee on Institutional Affairs makes a series of assertions in the run-up to the Pörtschach meeting of heads of state and government. Paragraph 22 states, for example, that we should lay the groundwork for the integration of the WEU's areas of competence into the EU sphere. This is effectively a call for militarisation of the Union and runs totally counter to the goal pursued by a majority of Green Group members, who seek to build a peace-loving, demilitarised Europe.
The Swedish Greens will be among those voting in favour of the alternative resolution put down by the Danish 'June Movement'. The Cardiff summit sent out a plea for greater democratic legitimacy and proper application of the subsidiarity principle. This alternative resolution better reflects that view.
My colleagues and I will sadly have to vote against several amendments from our own group, in particular the one seeking to grant the European Court of Justice jurisdiction in the field of justice and home affairs. Since judicial powers are invested in the Member States, we cannot support such calls.

Vanhecke
Mr President, I should first like to remind you, and this is important in this debate on the state of affairs in the Union, that there is such a thing as the decision of the Karlsruhe Court, which specifies that the European Union is a union of states and not in any way a European superstate in the making. I believe that this fact and this decision cannot be repeated and confirmed often enough in this House.
Secondly, I should like to draw the attention of the President-in-Office of the Council to the fact that many areas of European decision-making are not only unclear and untransparent, but also fundamentally undemocratic. This applies, for example, to the excessive power of senior civil servants appointed on a party political basis, namely the European Commission, and also to a great many European directives. In my country, Flanders, there are still a great many problems connected with the transposition into Belgian law of the European directive of 19 December 1994 on voting rights for European citizens. Both the Maastricht Treaty and this binding directive itself were approved with a simple majority in Flanders, despite the fact that under Belgian law a constitutional change to voting rights should only have been possible on the basis of a two-thirds parliamentary majority. This supremacy in practice of a European directive over the Belgian Constitution means that Europe can override the constitutions of the Member States, which to my mind cannot be in line with a correct interpretation of the Union as a union of states in the sense of the binding Karlsruhe decision.
Flanders is facing the problem that granting voting rights to EU citizens in Brussels and Flemish Brabant will in practice mean an ethnic cleansing at the expense of Dutch-speaking Flemings. Nobody in this House should therefore be surprised if, at the time of next year's elections for example, Europe proves extremely unpopular in Flanders.

Swoboda
Madam President, Mr President-in-Office, Mr President of the Commission, what some Members see as a summit that will weaken the European Union can, should, indeed must turn out to be a summit that strengthens the European Union. That does not mean the European Union should take on everything and anything; no, in fact we should distinguish clearly between national and regional tasks. But in what the Union can and should take on, it must show greater commitment and efficiency.
One example is the foreign and security policy, about which there has already been some discussion today. We have seen from a number of recent examples that if the European Union pursues a common, clear and definite line it can be successful. On the question of Kosovo, as we have said often enough: when the European Union took a united stand and when it coordinated with NATO, it managed to make Milosevic bow to its will. And if we continue to take a united stand then, I believe, Milosevic and also the KLA will bow to it and begin peace talks.
On enlargement, we told the people of Slovakia and Latvia that we do indeed want to negotiate with them, but they must take a few more steps towards democracy, respect for human rights and the rights of minorities. Both countries have now done so, which shows how successful we were. It also shows, however, that we must now send out signals to the effect that we have understood, respect and support their efforts.
Mr President-in-Office, you spoke of the important decision to appoint a Mr or Mrs CFSP. I too believe that this is an important decision. But we must be clear that this has to be a strong personality, someone who can coordinate and negotiate with the members of the Commission and the individual countries. In this area, uncoordinated action would do more harm than good. Mr or Mrs CFSP must realise that too.
You made it plain that the social market economy is a model, a model that we have not just adopted in Europe. I came back from Russia yesterday, where I noticed how ultra-liberal advisers, mostly of American origin, have put the wind up and misled the Russians, but also Europe, which means that there is much that we must now put right again together. Of course Russia itself must also put matters right, since it is partly responsible for producing the entirely free market economy, especially given the conditions that have prevailed in Russia over the last few years.
My last comment, Mr President-in-Office, concerns Mr Medina's description of the European Union as rather like a Gothic cathedral. But sometimes it looks more like a post-modern building with Greek columns, Italian piazzas all around, patios from Spain and Portugal, English and French gardens, bits of German Gothic and Austrian Baroque. Even a structure like this can be attractive, but in the end it has to be based on a uniform plan. I hope it will prove possible in Pörtschach to convince all the builders we have here in Europe - sadly there are not enough women builders - to apply all their different styles and nonetheless build a uniform, common structure.
To that end, I wish you much success in Pörtschach!

Graziani
Madam President, it seemed to me - particularly in what the President-in-Office of the Council said - that I detected a new slant on the very important, high-profile issue of unemployment, which is hitting all developed societies very hard. This is something new, because it has been said until now, both within and outside this House, that unemployment is a national problem, affecting the individual Member States and not the Union, which clearly has other matters to deal with. At last we are discovering - or rather, rediscovering - that the Union too has a role to play. In other words, politics is seeking to return to the arena from which ideology - in this instance a laissez-faire attitude - had sought to expel it. Of course, we are only just taking stock of the problem - solutions are a long way off - but at least this is something, or rather it would be something if we could sweep away the ideological conviction that public institutions are nothing other than guardians of whatever the market is able to do by itself, as though economic policy were not an essential component of the introduction of the single currency.
The Council, however - and I congratulate it - has seen the need to follow up the euro with a harmonisation of economic policy, aiming not only for stability but also to fight unemployment, which degrades those affected by it but also reflects badly on those, both institutions and people, who perhaps shed a tear but do not engage their brains in respect of this problem. As the Gospel puts it, 'Not every one that saith unto me, Lord, Lord, shall enter into the kingdom of heaven; but he that doeth the will of my Father which is in heaven'.
All this re-opens the question of properly functioning institutions, one linked not so much to reforms of what already exists, but to the creation of what does not. EU foreign policy, thus far confined to mere aspirations, proves the point well: for as long as the institutions remain bogged down - and unfortunately there seems to be very little movement here - we cannot have high hopes. A foreign policy without a proper government, without a common army, is at the very most an exercise in rhetoric which smacks of irksome and inevitable impotence.

Klima
Madam President, Mr President of the Commission, Commissioners, ladies and gentlemen, I am grateful for this detailed debate, which gives us an opportunity to incorporate your views, your policy line, in the discussions of the heads of state and government on a specific subject area, prior to the Pörtschach summit. It is widely accepted that this subject must not and cannot be renationalisation but, as stated in Cardiff, that we must focus on the future of Europe.
There is also a large majority in the European Parliament that believes we must discuss the key political aspects of a more closely coordinated economic policy aimed at stability and employment in Europe, while also considering what responsible contribution Europe can make to the stability of the financial and global economic markets and the question of internal security. In this context, I am not satisfied with the rate of progress towards achieving this area of freedom, justice and security in Europe. We must also address the frequently raised question of a self-confident Europe in the framework of a stronger common foreign and security policy. I am aware that it is not enough simply to appoint a political figure, who must be a good coordinator but also a doer, as the high commissioner for common foreign and security policy. But we must take this process seriously, and it must be followed by further steps towards genuinely enhancing Europe's role in the world.
Mr Frischenschlager, I do not share your view that we have already determined the common direction precisely and laid down precise timetables. For example, I certainly believe it is important, if I may make this observation, to ask the Finance Ministers to study the prospects and possible time-frames for the progressive harmonisation of tax policy - not because I believe we should aim at some sort of levelling-down of tax rates in Europe, but because I believe we should set up a system under which in future it is not just those who cannot defend themselves, the consumers and the workers, who contribute to financing government tasks; instead, we must find a system under which something which is now very mobile, in other words capital, also makes a fair contribution to financing our common national and European tasks.
I believe that in Pörtschach we will, of course, have to address the question of improving our relations, improving coordination, but also the question of greater efficiency, together with initiating a process of greater democratic legitimacy. But, and let me make this quite clear, we must also address the question of subsidiarity, which has still not been resolved. It was never our intention that subsidiarity should imply a move towards renationalisation. Subsidiarity means strengthening common policies in areas where the citizens of Europe would derive advantages, derive European added value, from common decisions. And it also means that in cultural policy, for instance, where we do indeed have these post-modern cathedrals constructed out of a variety of cultural building blocks, a sense of European nationality, a European spirit can represent a plus but does not mean that regional or national cultural identity should or must be destroyed.
It will be our common task, in line with this Amsterdam protocol on subsidiarity, to breathe life into it, to look at each decision in terms of whether it will produce European added value for the people. This is one task the Commission has set itself. It would certainly be possible for the national parliaments to discuss an annual subsidiarity report by the Commission in order to counter the at times unjustified sense that too many decisions are taken at European level which it would be more reasonable to take at another level.
I think we must prepare ourselves carefully for the Vienna summit, and let me promise you again that the Austrian Presidency will do its utmost to achieve substantial progress on Agenda 2000. I appeal to the common resolve of the Member States to make this progress possible. I believe that it would also be very good for the Members of the European Parliament if this question were resolved jointly by the European elections; this would act as a positive sign of the capacity to solve problems, rather than a sign of weakness, a sign that we are not prepared and not able to implement the necessary internal reforms.
I also believe that if we give this sign that we are taking a positive attitude to the enlargement process at the beginning of the negotiations, we will also be able to hold a very open and honest debate on the Commission's progress report in Vienna in September. Without wanting to interfere in Slovakia's domestic policy, I must say that I very much welcome the fact that at the elections, the people of Slovakia expressed strong approval for pursuing the road to democracy, the road to a constitutional state. They thereby endorsed the European Parliament's position, namely that Slovakia must not be isolated, as a reasonable political position for the future too. I also believe that, if we have a Statute for Members by then, we will discuss and consider it in Vienna. We will get a discussion going, because it makes sense to determine rules for Members before the elections to the European Parliament.
Thank you for this debate. We have many common tasks. I wish us the success that the European idea deserves and I look forward to a second discussion with you after the conclusion of the Pörtschach and Vienna summits. Many thanks!
(Applause)
President
Thank you very much for that speech, Mr President-in-Office, and I believe the President of the Commission would also like to say a few words. I shall gladly give him the floor.

Santer
Madam President, ladies and gentlemen, I will confine myself to answering a number of points in order to clear up certain misunderstandings that emerged from what certain Members said.
Firstly, the report that the Commission presented for the purposes of the decision on own resources does not contain any Commission proposals or guidelines on future own resources. However, the Cardiff European Council instructed the Commission to examine several lines of thought, precisely in order to facilitate negotiations relating to the Agenda 2000 proposals for reform.
The Commission has not therefore put forward any own-initiative proposals for the renationalisation of the common agricultural policy. Nor did it propose taking net balances into account when establishing net contributions. The Commission has done its duty simply by indicating the possible lines of thought in order to make the negotiations in the various Member States easier.
If it should happen that agreements were reached within the Member States on the entire package and on the financial perspective, the Commission would then, and only then, take the initiative to make specific proposals. However, at this stage, the Commission has only made the negotiators aware of the possible lines of thought in one direction or another. It is now up to the Member States and the Council to give their opinions.
This was intended to clear up any misunderstandings. As for the rest, Madam President, ladies and gentlemen, I agree with all those who have told me that, in order to ensure its future, the European Union must be closer to its citizens. You know that this was, in fact, the leitmotiv of my investiture speech before the European Parliament, and I support all the efforts of the Austrian Presidency in this direction. Europe is not just a market and the euro is not an end in itself, but they are important instruments for defining and promoting a European model of society, a model of growth based on the spirit of solidarity, where economic and social cohesion must remain one of the fundamental pillars of the construction of Europe. This must be the spirit behind the debate on subsidiarity: in my opinion, subsidiarity and solidarity are two sides of the same coin, two sides that cannot be separated if we truly want to build a Europe that is closer to its people.
As for the rest, I am convinced that Europe can fulfill its responsibilities on the international stage, within the framework you mentioned, Mr President-in-Office. However, I fear that, once again, Europe might not be able to seize this opportunity and that the projects most of you support are becoming bogged down in bureaucracy. This is the great danger, the great risk, and I know what I am talking about, having heard what has been said at various Council of Ministers meetings.
That is where the European Council must intervene, and where the deliberations of the Heads of State or Government can give fresh impetus so that Europe can face up to its responsibilities to its own citizens and its partners, as well as its responsibilities on the international stage. If this is the path taken in Pörtschach, then Europe will certainly increase its credibility in the eyes of its citizens!

President
Thank you, Mr Santer.
I have received two motions for resolutions tabled pursuant to Rule 40(5).

Myller
Madam President, hopefully the speeches that come after the keynote speeches of the Commission and the Council will not be of any less value than those that preceded them.
It is very important to mention that we are not living in a ready-made Europe, but one that is continually changing. Our success will be determined according to how well we are able to meet the challenges of the future. It is thus vital that we continue the debate on whether the policy we have chosen to follow, and the one that is in place here and now, is a feasible one.
Europe has clearly coped better than other continents with the growing economic problems that exist worldwide. In a world ravaged by one crisis after another, European stability is regarded highly even by those, who, for various reasons, have opposed European cooperation. This is seen, for example, in opinion polls, which show that the single currency is growing in popularity while, at the same time, support for the European Union, which gave birth to the euro, is diminishing among our citizens.
A common economic and monetary policy requires greater coordination on economic policy between the Member States than ever before, in order to guarantee effective development in the future. In economic policy we have to pay special attention to those areas of European cooperation which our citizens judge to be important. We have to promote a European model of society, with greater compatibility in social, ecological and economic action. The central tenet of our economic policy must be to try to improve the employment situation. For this we can thank the United Kingdom, which held the previous presidency, and the current holder, Austria; we have got to grips with issues much more so than before.
The international economic crisis is unfortunately creating pressures for Europe too. We especially hope that, in our neighbouring regions, Russia will solve its present economic and political crisis as speedily as possible. The initiative still to be discussed this year on the EU's northern dimension will create much-needed sustained and systematic cooperation between Russia and the EU. In economic cooperation with Russia we have to stress the absolute necessity of making genuine structural changes, such as in the banking and administration sectors, and for this we need to redirect the TACIS cooperation programme for Russia. It is now time to develop the TACIS programme so that it reflects current requirements. The right policy is not to freeze TACIS resources but, as I said, redirect them more efficiently than before.

President
Thank you, Mrs Myller. I should like to say, for the benefit of those Members who are due to speak in this debate, that the President-in-Office and the President of the Commission were obliged to leave us. That is why they wished to speak when they did, but the Minister for Foreign Affairs is here and is listening with great attention to everything Members may have to say, as is Commissioner Fischler.

Bourlanges
Madam President, you are asking us to talk in the desert, but we are used to it here in Parliament, and this desert is actually highly populated since the Minister is here.
I would like to use the two or three minutes I have to simply send out a message. We have the feeling today that something quite strange is happening in the European Union at institutional level. We are seeing a certain increase in consensus on the idea that institutional reforms are necessary, but at the same time, this consensus tends to relate to very subtle aspects. To tell the truth, the further we progress in the institutional debate, the more we have the impression that the elements to be reformed are fading away, disappearing before our eyes, so much so that the process has now been reduced to a 'nominal reform' of the weighting of votes, a tiny extension of qualified majority voting and improvements to the Commission's organigramme.
I believe that these twin developments are worrying and that we cannot accept reforms on the cheap. Indeed, what is at issue in the European Union is not simply incidental adjustments to three institutions, but the overall concept of the Union itself. How can we operate, what must we do together, and with what resources, and, at the end of the day, what policies do we want to have in common? This lack of fundamental thinking is what is causing the drift I was just referring to, a minimal drift towards reforms that are almost non-existent.
I think that it is time to show concern about this drift and to protest against this worrying development, for enlargement requires a fundamental reform, not only of the Treaties, but also of our customs, our administration and our political will. As the former French Prime Minister, Raymond Barre, put it, in the European Union, the more we are, the greater the problems.

Fayot
Madam President, the informal summit next weekend and the one due to be held in December will be of major importance for political life in Europe. Moreover, the European elections in June 1999 and the reappointment of the Commission are approaching. The political debate in Europe is therefore gathering speed.
As far as the content is concerned, I think that recent election results in the Member States have clearly demonstrated people's desire for proactive policies, such as on employment, their refusal to allow the market to determine most political decisions and their demand that the social model that workers struggled so hard to achieve through this century should be maintained and developed. We must therefore offer the citizens genuine choices in society, both at national and European level. For that purpose, we also need to have political instruments at our disposal and I agree with President Santer when he says that European governance involves all public players, national and European. I would like to look at four aspects of this European governance.
Firstly, there are still no European political parties worthy of the name. Article 138a of the Maastricht Treaty is more or less a dead letter. We know that, in national politics, it is the parties that give structure and dynamism to political life. There is nothing of this sort at European level. Who is to blame for this? The responsibility comes down to the national parties. They should be aware of the need to build strong European parties, able to take majority decisions and with efficient mechanisms and democratic structures.
Secondly, fleshing out the concept of European citizenship, another aspect of European democracy, is proving very difficult. Not enough non-national Community citizens take part in European and local elections in every country of the European Union. This is a genuine flaw in European democracy.
Thirdly, some people believe that we can improve democracy by increasing the number of assemblies, such as by adding to the assemblies we already have an assembly made up of members of the national parliaments responsible for ensuring respect for subsidiarity. This is absurd. The only thing this would do would be to make the process less transparent.
Fourthly, how can we make European political life more interesting, with a little imagination, but without amending the Treaties? Madam President, the 'Notre Europe ' association, chaired by Jacques Delors, has proposed that, during the next European elections, the European parties should each choose a candidate for the position of the future president of the Commission. Neither Jacques Delors, nor the members of his association, myself included, are exactly frivolous people. If they have made this proposal, it is because there has been a clear drop in the number of people voting. So, in the spirit of the age, we would be well-advised to add a personal touch to European politics, and the most politically prominent European figure is and will continue to be the President of the Commission. Moreover, I believe that it creates a very bad image democratically to keep the allocation of this role out of the democratic process.

Nassauer
Madam President, I am happy to follow on from what Mr Bourlanges said and point out that the minimalist approach of the European Union runs counter to the rising expectations our citizens certainly now have of the European Union. Europe is increasingly being seen as a single area. The internal borders have disappeared, and accordingly the citizens expect a comparable degree of internal security in their national states, of protection against organised crime and also of protection against illegal immigration.
For a long time now, we have been living in a Europe that is a successful, uniform economic area, but so far we have not had a corresponding legal area to regulate and protect economic activity on the basis of social justice. That is what our citizens are looking towards. We see enlargement eastwards as an enormous historic opportunity to give Europe a new order. But at the same time, we must expect the applicant states to adopt our standards of security, justice and democracy, rather than simply seeing the eastern mafia managing to extend their field of operations.
The Amsterdam Treaty is certainly a huge step forward, but it also represents a major programme of work for the European Union. We must finally realise that it has not just brought more rights for Parliament, but is also accompanied by a perceptible loss of democratic legitimacy. This treaty transfers major domestic policy responsibilities to the Community and withdraws them from the national parliaments' direct legislative competence. Supranational competence in these areas is conferred on the Council, which only has indirect democratic legitimacy, while the European Parliament does not acquire any significant powers of codecision. This is a democratic deficit that needs to be tackled.
Under the new treaty, the Commission acquires a broader right of initiative; after five years it even has a monopoly here, and it will have to consider how to apply this monopoly in the interests of all, and not just the few. The temporary protection of refugees, for example, must not just be a generous measure to help bring families together but must also ensure a fair distribution of the burden. Consequently, in an area of freedom, security and justice, that freedom must be based on greater solidarity, greater security for the citizens; it must not founder on the persistent defence of national sovereignty!

Schäfer
Madam President, ladies and gentlemen, the future of Europe presents us with some major questions, to which we must not give trivial answers. In today's debate we are discussing real issues, and quite rightly not fighting mock battles. To make the EU fit for the twenty-first century, we must gradually continue the integration process we have begun by also embarking on institutional reforms; that does not mean adhering only to what has been achieved and certainly does not mean renationalisation. The crux of the debate on subsidiarity lies in the fact that the Maastricht and Amsterdam Treaties have shifted the EU power structure more towards common policies, and that this fact has simply not yet been recognised in national policy-making. Most European questions have now become internal policy questions that have to be resolved jointly with the EU. It is important for the governments to say quite openly to their citizens at home: yes, we will and must decide on a common European basis, because that is good for our country and because our country can no longer resolve central issues on its own.
The Euroscepticism we see among some sections of the population stems from a certain attitude: if the sun shines in the morning, it is thanks to our country; but if we wake up to snow and mud, then it is the EU's fault! Europe must assert itself! Globalisation and a growing international division of labour can only be established and influenced by a Community with strong instruments at its disposal. There are many areas in which we must reverse our policies, since we believed too much in deregulation and purely market solutions in the 1980s and 1990s. The European model still remains a state-based model. The euro was one milestone, the common employment policy must be another. I wish the Austrian Presidency great success along this road and warmly salute it: as we say at home in the Ruhr, 'Glück auf ', good luck!

Randzio-Plath
Madam President, economic union will change Europe, it will create an orderly political framework for the internal European financial market and it will also pave the way to political union. Without it, the European Union will not manage to achieve Agenda 2000 and enlargement eastwards. But we also need to develop a stronger Community spirit. The German writer Peter Schneider is constantly being disappointed in his hope for a perfect Europe because the dynamic of a strong and viable internal market created by a single currency is not being reflected in other policy areas. But every market needs a regulatory framework if society is not to be damaged, and I would remind you that the money for the people does exist. That is why monetary union offers the European Union an historic opportunity to successfully master the consequences of globalisation.
The crises in Russia and other parts of the world on the one hand and the progress in price stability on the other show how very important the euro is to European and international monetary stability. The euro-11 zone is like a lighthouse in the stormy waters of economic and financial turbulence. We in the Union must not sit back; we must organise social stability alongside monetary stability. It is not just markets, people too need to have confidence in this Europe. That is why it is now important to formulate and coordinate the economic, employment and social policy aspects of monetary union. Here I would appeal to the presidency of the Council and also to the Commission finally to give Parliament an equal say in coordinating economic and employment policy and finally to conclude the interinstitutional agreement with us, so that we can play our part in promoting this important and necessary progress in the Union. We in Parliament organised the democratic dialogue with the European Central Bank; the first monetary dialogue has taken place, but now we also need to see progress at political level, as also at international level. The European Union, and in particular the euro-11 zone, must speak with one voice both on Central Bank and political matters, and it must do so with the participation also of the Council and the Commission.
We must take measures against fiscal, social and environmental dumping, against tax havens and for a minimum company tax. The euro will prove to have its own dynamic and establish itself on the markets and among the people. We also need to organise measures for the real economy, so that as from 1 January 1999 this euro-11 zone can contribute to constantly improving the state of the Union.

Azzolini
Madam President, ladies and gentlemen, I share many of the views already expressed in this debate. I would nevertheless stress that 1998 has undoubtedly been a landmark year in the history of the European Union: it has seen the establishment of the single currency, a crucial push towards closer integration among our countries going well beyond its face value. The credit for this obviously goes to Mr Santer who, together with Mr de Silguy, has met the deadlines set out in the Maastricht Treaty. Thanks likewise go to the governments, which have ceded part of their own sovereignty for the purpose of attaining a major, historic common goal and, first and foremost among them, the government of Chancellor Kohl, who has left the leadership of his country after 16 years but has ensured himself a place in the history of the Union.
Last of all, particular thanks are due to the EU citizens, who in certain Member States have had to make yet more difficult sacrifices to enable these countries to meet the convergence criteria. However, this success should not distract our attention from the fact that the Union needs to rest on a more solid foundation if it is to play a more important, determining role. The much-discussed pillars, which cannot yet be said to carry the entire institutional load, are what will make the Union a political - not just an economic - force to be reckoned with worldwide. The serious problem of unemployment, the inadequacy of the common foreign and security policy, as well as the long-awaited reform of our institutions, in my view constitute the real challenges which still require an appropriate response.
These then are the tasks which must be placed at the very top of the Union's agenda, not least because we owe it to our own citizens and those of third countries to do so. I would stress here my view that the Union has still not devoted sufficient attention to the Mediterranean basin, and would recall that international relations should not be motivated solely by commercial interests. There are in fact well-founded reasons of a social, ethnic, cultural and strategic nature which must be translated into a more sensitive policy aiming to solve the problems which have been affecting the Mediterranean region for much too long.
Madam President, allow me just a couple of seconds to welcome, in this regard, both the establishment of the Euro-Mediterranean Forum and Malta's return to the process of European integration. I should like to see Malta in our midst as soon as possible to make up for lost time.

Cunha
Madam President, Commissioner, ladies and gentlemen, the main aspects of this debate are Agenda 2000, the stubbornly high levels of unemployment and the early warning signs of an economic recession.
On Agenda 2000, I have to say that it only makes sense if it helps to strengthen the economic and social cohesion of the European Union. The proposals on the table raise our fears that we might be heading in the opposite direction. The CAP must be balanced so as to treat all European farming systems fairly, especially peripheral or less-favoured ones or those most at threat from the World Trade Organisation. Otherwise, we run the risk of reforming for the most efficient farmers while putting the European farming model at risk.
Funding the enlargement to the east should not be at the expense of the Structural Funds or, in other words, the poorest regions and citizens of the European Union. Here too, the proposals on the table do nothing to quell our fears. The Commission's recent funding proposal will probably renationalise Community policies. There seems to be a current trend in Europe to do as little as possible to strengthen and deepen the Union, which is what is required.
As far as unemployment is concerned, I have to say that this proposal contains nothing of any significance or on a big enough scale to tackle this tragedy. We must stop vacillating between Keynesian and monetarist solutions and find a policy mix to overcome this crisis.Thirdly, the economic recession. Unlike the last recession, this one has not, so far, hit the European Union as hard as it has its main competitors. Nonetheless, with such an uncertain future the European Union should focus its attention and not be taken by surprise. The governments of the Member States, including my own country, should stop making rosy statements about the economic situation. On all of these points we have high hopes of the Austrian Presidency and the summit of Heads of State and Government due to take place next week.

President
The debate is closed.
The vote will take place tomorrow morning.

VOTES
President
Voting time will be quite short today because owing to the flood of requests from the political groups for separate votes on the resolution concerning the Extraordinary Summit Conference, we have had to postpone the vote on that issue until tomorrow. That should be of some concern to the political groups, and I think that we ought perhaps to set a shorter deadline for tabling requests for separate votes.

Falconer
Mr President, you will note of course that I am in the Chamber. My point is directed to you because I know the matter is of great concern to you. It is on communications. I recently sent an e-mail from Parliament's new computer in Brussels to my office on Thursday. After involving a number of the administration staff, the e-mail finally arrived in my office today. I do not think it is a good example of progress in the Union for an e-mail to take almost 5 days to go from Brussels to my constituency office. I understand it is the fault of the Groupwise server which Parliament employs for this task.
As Vice-President Haarder is already looking at these matters, perhaps he could look further into this and advise us if we are receiving value for money and if there have been other complaints of this nature.

Blak, Iversen, Kirsten Jensen and Sindal
This proposal forms part of the EU's overall policy in the field of air pollution. It concerns stationary installations using organic solvents. The main burden of the proposal relates to air pollution and the consequences for public health. However, aspects which may have to do with the internal environment of the workplace, the working environment, are not included. The Danish Social Democrats have therefore supported the committee's amendments on the possible effects on human health in general and occupational exposure in particular.

Lindqvist
I support the thrust of this report. We need more stringent requirements for organic solvents, particularly when they are being used intensively for industrial cleaning purposes, as straight solvents or as preserving agents.
I shall be voting in favour, on condition that the individual Member States are given the right to maintain or introduce stricter requirements - in other words, only if Amendment No 6 is carried. The precautionary and substitution principles must be followed. Chemical substances should not be used unless they are compatible with the interests of human health and the environment and pose no risk. And less dangerous substances should be used where they are available.

Rovsing
Experience from the health services in all countries has shown that volatile organic compounds per se are harmful to human health. Furthermore these compounds contribute to the formation of ozone, which also gives rise to health problems. A reduction in these substances is therefore a vital step to take in the interests of preventing a whole range of diseases, particularly bronchial conditions. Parliament contributed very positively to the improvement of this proposal on a range of points during its first reading. This applies in particular to the demand for organic solvents arising in painting also to be taken into account. It is to be welcomed that the Council's common position meets the main demands from the first reading in Parliament.
Lange report (A4-0364/98)
Fitzsimons
The proposal for a directive to reduce exhaust emissions from heavy-duty vehicles is part of an overall Community strategy and follows on from the directives reducing emissions from passenger cars and light commercial vehicles recently adopted by Parliament and the Council by conciliation procedure.
This new legislation is a success for cleaner air in Europe. The new set of agreed proposals goes far beyond the original text included in the European Commission recommendations and will certainly guarantee that new passenger cars and light commercial vehicles will in the future be less polluting than in the past. The European Parliament has also succeeded in imposing better fuel qualities in this new revised arrangement.
Low sulphur fuels are an integral element in these sets of proposals which seek to reduce the amount of emissions from diesel engines.
Sulphur content in fuel will be substantially reduced and this new fuel will easily adapt to the new emission reduction technologies for commercial vehicles as well as for exhaust purification systems.
We must remember that the Kyoto conference set down a strict global timetable for the reduction of CO2 emissions and related hazardous pollutants so as to help redress the effects on the depletion of the ozone layer and climate change.
The legalisation before us today is an intrinsic part of the programme of reform being implemented by the European Union to comply with the guidelines laid down by the participants at the Kyoto conference.
CO2 emissions from heavy-duty vehicles are a continually rising percentage of total road traffic emissions. These vehicles must therefore be covered by the Community strategy for reducing CO2 emissions as soon as possible.
Moreover, tax incentives to ensure that commercial vehicles meet the new requirements and that older vehicles are re-equipped must be brought forward so that the strict deadlines are met under this new legislation.

Lindqvist
This report on more stringent rules for diesel emissions is most welcome. It complements the earlier decisions taken by Parliament, requiring lower fuel emissions and higher fuel quality for passenger cars and light commercial vehicles, etc.
The report is basically a sound one, and I voted in favour. I supported Amendment No 26 by Mrs Hautala, in which she calls for a further reduction in emissions, with 2005 as the target year for compliance. Events surrounding the introduction of catalytic converters demonstrated that the automobile industry can meet a deadline, provided a clear policy is in place and a fixed date specified.
Spaak report (A4-0357/98)
Berthu
The report by Mrs Spaak on the progress achieved by the Union in 1997 asks that the forthcoming adjustment of the European Treaties for enlargement be used to try out a more Community-based method of decision-making led by committees of experts. It calls on the Commission, which it would thus seem to include among the experts, to draw up a preliminary reform plan before the end of the year. In the opinion of my group, this method involving committees of experts seems extremely questionable. As a general rule, it will simply be an attempt to present people with a fait accompli dressed up as some sort of God-given truth. In addition, I cannot understand why this idea is not taken up in the De Giovanni resolution on the political future of the Union. Perhaps chairman De Giovanni also has his doubts.
As regards the European Parliament, it has no legitimate codecision role to play in this review, where it would simply be supporting the most federalist pressure groups, as usual. On the contrary, this is a matter for the nations. National parliaments must put forward proposals and give their opinions, according to each country's system, before the final Council in the negotiating mandate they vote to give their governments. Finally, the Commission should only have an implementing role here, not an initiating one, but since, in this particular case, the present Commission seems to have drawn up draft reforms for the post-Amsterdam period, it should publish them. At least the French, who are soon going to have to debate the ratification of the Treaty, will be enlightened as to its genuine aims, as they are interpreted in Brussels.

Andersson, Hulthén, Lööw and Sandberg-Fries
We are not willing to depart from the principle of enhanced cooperation, as described in the Amsterdam Treaty. We cannot therefore support paragraph 11.
The coordination of defence policy should also be carried out in the way indicated in the Treaty. Nothing else is acceptable. We believe that the Union should be primarily involved in coordinating peacekeeping efforts, with the aid of the WEU. The fact that some countries are members of NATO should not prevent the EU from acting independently here, no more than the non-aligned status of other Member States should be an obstacle. We cannot therefore support what is said in paragraph 20, indent 4.

Bébéar
It has already been some months since we began the enlargement negotiations, and we are going to have to organise ourselves in future with 13 new Member States. It is therefore becoming increasingly essential to establish precise rules in order to ensure a new balance.
Of all the risks we face, the most serious, in my view, are the fact that the decision-making bodies are so widely scattered and the watering down of both the European Union's decisions and its common policies.
That is why I support the comments made in the Spaak report, particularly where it underlines the need to carry out an institutional reform of the European Union as soon as possible before the next enlargement.
A tight schedule must therefore be established in order to make up for the negative impression given to the people of Europe by the IGC. This should also make us consider who should be leading these types of negotiations: all the Member States together or, directly, a body that is democratically elected at European level?
The negotiations that have been held up until now have shown that they are incapable of achieving the desired objective. We now need real progress, or else there is no chance of stepping up the preparations.
It is vital that the accession negotiations should run alongside the institutional reforms. The slightest hint that the IGC had failed would spell disaster for the negotiations already under way and would bring all the applicants' efforts to a standstill.
I will therefore vote in favour of the Spaak report, while highlighting the importance of trying to find an institutional balance.

Blak, Iversen and Kirsten Jensen
The Danish Social Democrats today abstained from voting on Mrs Spaak's report. In certain areas, we disagree with the wishes being expressed. We think that the Amsterdam Treaty is good, and we want to see how it works in practice. Institutional reforms must not hold up the enlargement process.

Gallagher
In this report before the European Parliament today, the rapporteur, Mrs Spaak, calls for institutional reform to take place before any prospective enlargement of the European Union. We know that negotiations between the European Union and the six prospective members from Eastern and Central Europe who are set to accede to the European Union in the early part of the next century is due to commence in November next. The President of the European Commission, Jacques Santer, has already gone on the record that another intergovernmental conference will be held to reform existing European Treaties so as to ensure that the enlargement process can take place in a structured manner. What he is primarily saying is that decision-making procedures within the European Union will have to be changed if the European Union is to operate effectively when Poland, the Czech Republic, Hungary, Slovenia, Estonia and Cyprus accede to the EU.
I fully agree with the general principle that decision-making procedures within the European Union must be reformed but any reform must take place in a balanced and open manner. Certainly the Single European Act introduced the cooperation procedure and the Amsterdam Treaty has extended the power of codecision for the European Parliament in many fields of political, economic and social activities. I support the continuation of this process.
However, it has been suggested in reports from the European Parliament in prior years that the size of the European Commission should be reduced. I remember the Bourlanges report before the 1996 Intergovernmental Conference which suggested that the European Commission should be reduced in size to only ten members. As a consequence of the discussions relating to the Amsterdam Treaty, it has been agreed that the five larger Member States of the European Union will lose one of their two nominees to the European Commission when the next round of enlargement negotiations take place.
I believe that this is very important particularly from the perspective of smaller Member States like Ireland who recognise the importance of maintaining a nominee to the European Commission. Since 1973, Irish Commissioners have held such wide-ranging and important portfolios as the Directorate of Social Affairs, the Agricultural Directorate, the Competition Directorate and the Transport Directorate, and it be wholly inequitable if Ireland were to lose out from nominating its Commissioner at a future date. What I am saying here on the record of the House is that any future intergovernmental conference must maintain the right of smaller Member States to nominate a member to the European Commission at all times.
Lindqvist (ELDR), Eriksson, Seppänen and Sjöstedt (GUE/NGL), Gahrton, Holm, Lindholm and Schörling (V), Krarup and Sandbæk (I-EDN), in writing. (DA) Among the events that took place in 1997, the Amsterdam Treaty was signed and over 50 000 people protested against the EU in Amsterdam, while the negotiators - behind closed doors - thought that they were looking after the interests of the population. We think that 1997 was a year of retrograde development, not progress, in the areas covered by the report, i.e. the Amsterdam Treaty, the euro, the CFSP and EU powers in the field of legal and other matters, to mention only a few. We cannot therefore support the Spaak report in any way at all.
The Amsterdam Treaty is not a project of the peoples, as has already been stated; neither is EMU. In 1997 there was widespread opposition to the euro, opposition which still flourishes now towards the close of 1998, just a few months before the introduction of the currency. Legislative power must be transferred back to the national parliaments and not vested in an EU Court of Justice, which in many respects is more of a legislative than a judicial instance. We are opposed to the implementation of certain provisions of the Amsterdam Treaty before it has been ratified. We think that shows a lack of respect for the parliaments and hence the populations of those countries in which the Treaty has not yet been ratified. How can the European Parliament claim to represent the 'European' people if it will not respect their democratic processes?

Palm, Theorin and Wibe
We believe that EU cooperation should be intergovernmental in nature. We cannot go along with the report's express advocacy of moving towards a 'United States of Europe'.
The rapporteur calls for more decisions in the Council of Ministers to be taken on a qualified majority basis, with the European Parliament exercising greater influence. This would mean confusion in all Member States as to who is responsible for policy-making.
The report also goes further than the Amsterdam Treaty requires with regard to foreign and security policy. We agree with cooperating in pursuit of the Petersberg tasks of peacekeeping, conflict resolution and humanitarian intervention. We do not, however, support military defence or the establishment of military or civilian rapid deployment corps.

Souchet
The meagre report submitted to us for our consideration and its sparse content lead us to wonder about the usefulness of a procedure that requires Parliament to give its opinion in plenary on the 'progress' achieved by the Union, six months after the presentation by the Council of a report that is no less meagre and that itself relates to the previous year.
This assessment of the 'progress achieved by the European Union' in 1997 naturally includes a chapter on the common foreign and security policy. We find there, of course, the usual regrets at the inherent impotence of the CFSP and the formulas to cure it: its Viagra will be the future institutional reforms and the fact that 'the provisions laid down in the Treaty of Amsterdam will be implemented prior to its ratification'. Does that mean that the ratification of the Treaty of Amsterdam by our citizens would be superfluous? In fact, Mr Santer has just announced to us this morning that the Vienna European Council would be called upon to give its opinion on the appointment of someone with overall responsibility for the CFSP, before our citizens have given their opinion on the treaty that creates this role. Does the European Union thus mean to create a new legal category: to paraphrase Hayek, the legitimate anticipation of a treaty that is not ratified, a category that is exempt from any sanctions by the people.
Let us be clear about this: such shifts lead to a situation where the rule of law no longer applies. In desperation, the Spaak report states ultimately that 'the Member States will have to demonstrate firmer political resolve'. And that is all. But it is not exactly all. The finishing touches are still needed and we must therefore 'set up European civil and military intervention corps'- although the House did not want this - and establish - which the House certainly does want - ' diplomatic representation at Union level in non-member countries where fewer than four Member States have diplomatic posts'. That is the quota fixed by Mrs Spaak. What can this sort of repetitive, conventional and unreal language contribute to the debate?
Diplomacy is not a matter of arithmetics. Those who claimed, with disarmingly simplistic arguments, that through its sheer size and the accumulated influence of its constituent powers, the European Union would go beyond the diplomatic capacities of the individual Member States, were wrong. What the non-existence of the European Union on the international stage demonstrates is quite simply its lack of political existence, which is inherent in its nature.
We should not therefore expect the CFSP to give us what it cannot. We must not overestimate its potential. Both now and undoubtedly for a long time to come it will only be a modest addition to national diplomatic actions. If it tries to go beyond this role to become a restrictive mechanism, then it is going to provoke harmful self-censorship and transform itself into a system characterised by self-intimidation, mutual neutralisation, self-blocking, paralysis in terms of initiative and impetus, and idle, self-satisfied talk that encourages a lack of political will. It will dissuade those who could act effectively on its behalf from taking any action. We must therefore be careful to ensure that the CFSP does not become a sort of quicksand into which the failing determination of the Member States is dragged down. They would only wish then to be freed from the duties of sovereignty, to enjoy their common impotence and lack of responsibility, and to leave the burden of preserving their interests to others. That will not make a good common foreign policy.
Although the European Union is silent on the international stage, the Member States are more vociferous than ever. They are the living entities, the only real elements that the diplomatic game recognises as true players, because they represent what is at stake. What do recent crises show us? They show us that when Europe is not present through its major national diplomatic figures, it is not present at all. One very clear example of this was the second Iraq crisis where, contrary to what happened during the first crisis, Europe played a significant role of its own in preventing an imminent conflict. It was the two oldest nation states of Europe in diplomatic terms, France and the United Kingdom, which took action in accordance with their national traditions and interests - traditions and interests which are admittedly different, but which together are powerful enough not to need to fit in with the Community's low profile, as Christophe Réveillard rightly pointed out. These countries ensured a strong presence for Europe and played a real and important role in managing the crisis. And all things considered, it was not a bad result for the international community.
It is illogical to work relentlessly to take sovereignty away from the Member States and to condemn Europe's diplomatic weakness. One causes the other. Strong, motivated and active diplomacy is the expression of the independence that embodies the will to exist and the cohesion of people who are anxious to preserve their identity, promote their interests and contribute to the international balance. Denying the will of nations to be independent through the procedure of majority voting is even more dangerous for foreign policy than for any other field.
The countries of Europe are having a tough time with economic, financial and cultural globalisation, they see whole chunks of their sovereignty being whittled away, and they are being made to suffer a mutilating process of economic and monetary integration. The field of foreign policy is just about the only area they have left where they can still exercise their freedom. A certain number of them, at least, would not tolerate having their desire for independence denied, which we see most of all in their diplomatic initiatives. By trying to deprive them of these initiatives, Europe itself would lose all possibility of independent external action. As far as foreign policy is concerned, the only way at the moment of conceiving and implementing European actions is to rely on the national democracies. The more we try desperately to deprive them of power, the more we weaken the foundations that allow us to take joint measures.
These are the real questions that the Spaak report should have looked at in connection with the CFSP. We are a long way short of the target, so no-one will be surprised that our group has rejected this report.

Spiers
The European Parliamentary Labour Party supported the Spaak report but with serious reservations.
We did not support paragraph 8 which calls for the extension of qualified majority voting to all decisions except those of a constitutional nature.
The EPLP also has concerns about the paragraphs on the CFSP in Mrs Spaak's report. We supported Amendments Nos 1 to 3, by Gary Titley, on behalf of the Socialist Group.
Parliament's rejection of Amendment No 2 was surprising. This made the obvious point that any failures in the EU's efforts to resolve the crisis in Kosovo result far more from an absence of political will than from institutional considerations. Paragraph 20, as voted by Parliament, suggests that the European Union is a member of NATO. It is not.

Theonas
The future of the European Union is of direct concern to the citizens of its Member States and, more generally, to all European citizens, especially those who are the first victims of the EU's anti-populist, anti- labour and neo-liberal policy: the millions of people who are unemployed, poor and wretched, women, the young, and the hundreds of millions of working people who are facing a head-on attack by the EU, an attack aimed at abolishing their fundamental and basic rights.
The European Council, however, despite its much-advertised social-democrat majority, remains faithfully fixated upon monetarist, neo-liberal attitudes and persists with the same policy as its predecessor. The central reference point for this Council too will be the completion of the single internal market and Economic and Monetary Union, the faithful implementation of the stability pact, and commitment to the nominal pointers established in Maastricht.
The EU's leaders have not only failed to wake up to the popular reaction and resistance of working people, not only failed to draw appropriate conclusions from the crisis affecting the world's economy and from the increasingly acute problems in a series of countries and regions such as Russia, South-East Asia and Latin America, but they are trying to defend monopolies and large companies both against their enemy within, in other words popular movements and the workers, and against the Member States themselves, which in exercising their sovereign rights could try to prevent them from doing what they want.
That is why the central issues for the European Council are to be internal security matters, with further progress on Schengen as decided upon in the Treaty of Amsterdam, reinforcement of the forces of oppression and persecution at European level, strengthening of the CFSP and promotion of the requisite statutory changes which will establish the abolition of the veto and unanimity, and the generalisation of the majority-vote rule.
The enlargement of the EU and the Agenda 2000 choices are an attempt to kill two birds with one stone. On the one hand, the aim is to acquire new markets for European capital, while reducing the Union's 'cost', making drastic cuts in the contributions from the more developed countries and further reducing the already grossly inadequate resources earmarked by the EU for development and agriculture. Responsibility for the consequences of economic policy is being transferred to the Member States and this, together with the financial discipline imposed, will mean restricted expenditure on services such as education, health and social policy, while resources are made available for major monopolistic enterprises.
On the other hand there is an attempt to disarm popular movements and the Member States, depriving them of the means to resist at national and international level, and to promote new anti-populist international agreements such as the multipartite agreement on investments, which advocates the immunity of foreign investments from state control and safeguards the interests of 'investors' against the claims of the labour and popular movement.
The people in the countries which have applied to join the EU will also fall victim to those attempts, since a prerequisite for accession is acceptance by their governments of the acquis communautaire , in other words the institutional, legal and operational framework of the European Union.
Working people in all the Union's Member States but also in the countries about to join have only one way to resist those choices and that policy. The struggle of the workers will provide a response to the choices made by the monopolies and will open the way towards another Europe, the real Europe of the future, which will serve their interests, the interests of human beings and not those of capital.

Konrad
Mr President, ladies and gentlemen, I am speaking as rapporteur on inland waterway vessels and wish to make the following statement in this context. Evidently a change has occurred in the drafting of the press releases issued by the House. For example, there was no press mention at all of the inland waterway vessels report in the Monday afternoon German-language edition of the press release. In fact, German-speaking journalists have already protested about this in the House. I wish to join in this protest and make it known to the public, on behalf of the German-speaking Members. Clearly the Secretary-General, Mr Priestley, unilaterally decided to change the rules, which is not acceptable. We in the House decide on press releases! So I would strongly urge the Bureau to ensure that this is remedied as quickly as possible so that it can never happen again!

President
Mr Konrad, I have taken careful note of your comments and, of course, we will look into the matter and see what must be done to avoid the problems you have referred to in future.

Schwaiger
Mr President, I wish to endorse what Mr Konrad has just said. I have had the same experience. The German press releases cover the budget, rapporteurs and external economic relations. Here too there is no trace of this report. I would urge you to ensure that press releases in the German as well as the English and French-language editions are published in full and reflect what the rapporteur actually said. I consider it an intolerable procedure suddenly just to leave out this press release without a word. We will not tolerate this!

President
Mr Schwaiger, I have already told Mr Konrad that I have noted what he said. Personally speaking, since I am responsible for information in the Bureau, I have always thought that this is an area in which we unfortunately still have many problems. I have always said as much, both to the Bureau and in reports to the Members which you have all received. I am very well aware that we still have many problems in that area. It is one of the major issues for us, though we have unfortunately not yet been able to do anything about it, and we will look into that aspect very carefully. I am sorry that our German colleagues are experiencing these problems. They are not the only ones, but in any case it is very distressing that Members who devote so much time to presenting excellent reports or other work here are not accorded even rudimentary recognition.

Mann, Thomas
Mr President, thank you for your statement. I also want to thank you because you are known to be a Vice-President who tries to ensure that we create transparency, that we work closely with the public, to stop them from looking only at questions such as travel expenses, scandals and so forth. The journalists must receive prompt information from us, and you as Vice-President have done much to ensure this; the statement you have just made to us is encouraging. We will be happy to take the opportunity to pass on the personal statement you have just made to the journalists. I see that as a good and encouraging sign and hope you will continue along precisely these lines. That is why I am especially glad that you have presided over the debate on this question today, and I believe we had good reason to address you in this regard. Thank you very much!
(The sitting was suspended at 1 p.m. and resumed at 3 p.m.)

Situation in Kosovo
President
The next item is the statements by the Council and the Commission on the situation in Kosovo.
I give the floor to Mrs Ferrero-Waldner, President-in-Office of the Council.

Ferrero-Waldner
Mr President, ladies and gentlemen, since we last discussed Kosovo here in the European Parliament exactly two weeks ago, the sequence of events has given at least some grounds for hope. The resolute stand taken by the European Union and the international community as a whole, as reflected in the results of the Balkan Contact Group's discussions and in particular what are known as the 'act' decisions of 13 and 16 October, has made it clear to Belgrade that the international community has finally run out of patience with its Kosovo policy, as I had suggested during the last debate we held here.
Yugoslavia is facing serious consequences if it does not fulfil the undertakings it has entered into. We see the agreement that President Milosevic concluded with the US special envoy Richard Holbrooke on 13 October as a basis for a political solution to the Kosovo problem, no more and no less.
The NATO decision on 16 October to extend the deadline for the withdrawal of army units and the special police to 27 October shows that we will not countenance any Yugoslav departure from its undertakings.
The main provisions of the agreement that was approved by the OSCE Permanent Council on 15 October and signed by Foreign Ministers Geremek and Jovanovic on 16 October are as follows. Firstly, within the next few weeks an unarmed group of about 2 000 observers will be stationed in Kosovo, what is called the Kosovo Verification Mission, led by the OSCE in close cooperation with NATO. This mission is to monitor respect for UN Security Council Resolution 1199, adopted on 23 September.
The EU will make a substantial and clearly visible contribution to the Kosovo Verification Mission, and in particular to alleviating the humanitarian situation. The European Union is actively involved in the preparations for implementing the agreement and has immediately taken the necessary first steps to ensure its smooth operation. The Council's Political Committee is meeting at this moment to consider further European Union measures. The EU will provide the bulk of the mission, with 1 000 observers or even more. Particular importance will be given to the safety of the observers on the ground.
For the OSCE based in Vienna, the Kosovo Verification Mission represents a huge challenge. A large number of EU Member States have already agreed to provide contingents, Austria about 50 troops. The hard core of the mission will be provided by the KDOM, the Kosovo Diplomatic Observer Mission. As you know, the European Union is taking part in this, in the form of the ECMM, the European Community Monitoring Mission. This monitoring on the ground will be supplemented by NATO airspace monitoring which is already under way.
Secondly, we have a precise timetable for concluding an interim agreement between the Belgrade central government and the representatives of the Kosovo Albanians. An agreement on the basic aspects of a political solution is to be concluded by 2 November. The basis for it is the document on the status of Kosovo endorsed by the EU Balkan Contact Group and the OSCE presidency.
Thirdly, it is planned to determine by 3 November the procedure and rules for holding general elections for a provincial parliament and local self-governing bodies, including the courts, monitored by the OSCE, within the next nine months.
Fourthly, Serbia will guarantee the Kosovo Albanians and other ethnic groups in Kosovo full equal rights, covering all national and religious rights, within a Yugoslav legal system. What is most important, not least in terms of confidence-building among the Albanian population and viable self-government, is the creation of local police units, which will come under the local authorities and reflect ethnic proportions.
The humanitarian situation in Kosovo was one of the main factors that impelled the international community to take rapid and vigorous action. One of the priorities of Austria's presidency is to avert the worst. In Vienna yesterday Austria set out the ongoing and planned future EU activities on the return of the refugees. We hope these measures will also gain broad support from the next General Affairs Council.
One of the current priorities is the return of the homeless refugees, making provision for the approaching winter, providing assistance for people who have found temporary shelter with relatives and basic aid for the coming winter months. But in the end all these activities will succeed only if it proves possible to ensure the safety of those who are willing to return. We will do all we can to achieve that.
The European Union has long been calling for an early end to the bloodshed. We believe a negotiated political settlement is the only viable solution. But first, of course, the violence really must come to a halt, in other words both sides must declare and fully observe a cease-fire, even if only informally for the time being. At the same time, the humanitarian situation must be improved rapidly and radically. Only when these two conditions have been satisfied can we hope to achieve the third priority, the start of meaningful negotiations between the two sides.
On the first priority: on 23 September the UN Security Council adopted Resolution 1199 which calls on Belgrade in so many words to put a stop to the hostilities in Kosovo and to withdraw the army units and special police. In any event, NATO is now prepared for armed intervention if President Milosevic does not comply by 27 October with the concessions he has made on paper.
On the second priority, the humanitarian situation: the main task of the EU special envoy for Kosovo, presidency ambassador Wolfgang Petritsch, is to coordinate the European Union's humanitarian activities with those of the international humanitarian organisations, while also acting as a contact both for the Belgrade government and between it and the Kosovar political leadership. The presidency has set up working parties in Belgrade and Geneva to coordinate the international activities. The aim is to take concerted and locally coordinated action to identify villages and areas to which the refugees currently living in the open can return safely and with dignity. This would make it considerably easier to provide humanitarian aid. I have already told you of the presidency's 'Project Home', which is aimed at helping the refugees to return. Practical project activities have now begun.
What has been achieved in recent weeks? In view of the repeated accusations - by both sides, in fact - of serious war crimes, from mass shootings to humanitarian crimes against women and children, the presidency had been calling for months for a team of experienced international forensic experts to be sent out to Kosovo to investigate these serious accusations.
I would say that the invitation issued by the Yugoslavs to a forensic team from Helsinki University shows that the presidency has had some success here. The advance team arrived in Belgrade yesterday and is holding preliminary information talks today with the presidency's ambassador. He is to begin his work in Kosovo the day after tomorrow.
Let me turn now to another point I consider important, the gagging of the independent media in the Federal Republic of Yugoslavia. A few days ago, the government closed down several independent radio stations and daily newspapers on the pretext of an external military threat. The presidency responded at once with a declaration on 15 October and a protest by the presidency's ambassador to the Belgrade Foreign Ministry on 16 October. The representatives of independent media are now in constant contact with the presidency, various embassies, NATO, the UN and the OSCE.
We must make it clear to Belgrade that such measures are incompatible with membership of international organisations such as the Council of Europe and the OSCE and are strictly condemned by them. The new media law which the Serb parliament passed yesterday contains a range of provisions that restrict media freedom. That is a cause for concern.
The international's community's resolute and coordinated approach has finally produced results. Now, however, it is up to President Milosevic to respect the agreements and to comply with the requirements set out in Security Council Resolution 1199. If not, military attacks on Serbian targets will remain a constant threat. The responsibility for whether that happens, together with all the consequences that implies for the people of Yugoslavia, lies with Milosevic. We have made that quite plain to him.
The international community, and in particular the European Union, which backs the various decisions on sanctions, is no longer prepared to stand by and watch while refugees freeze and are threatened with starvation and the civilian population is driven out or even subjected to massacres and other atrocities. We hope we shall be able to report concrete progress at the next Kosovo debate here in the European Parliament. In order for this progress to be made, the European Union, the Council, Commission and Parliament, the OSCE, NATO and the UN, together with other international players concerned with the stability and fate of the people in this region, will have to continue to take a common approach.

van den Broek
Mr President, I shall be brief after the elaborate exposé of the presidency and confine myself to saying that the Commission also, in close cooperation with the presidency, is working hard to see what further contribution can be made to the humanitarian situation which has, of course, the highest priority. We have funds available for that, it is a matter of coordination. As the presidency has just said, we are in close contact not only with it but also with the High Commissioner for Refugees to ensure that the return of displaced persons and refugees can get under way. It is a slow and difficult process because it also requires a secure environment. Although we may be content that the worst violence and clashes have subsided since the agreement between Mr Holbrook and President Milosevic, we cannot be certain that the situation will continue - vigilance is absolutely necessary. We believe that the SACEUR, General Clark, has made quite clear to President Milosevic exactly what is required in military terms, notably as far as the withdrawals which, up till now, have not been completed, are concerned. As long as that is not the case, there is still a danger of the hostilities flaring up again, with all the human suffering that may entail.
In the meantime, the Commission continues to prepare proposals for the Council, as requested, to sharpen up the sanctions policy and package which has been in place for quite some time but which contained some loopholes that needed to be closed. We will continue our work on that.
With the presidency we abhor and condemn the law adopted by the Yugoslav parliament yesterday which bars a number of independent papers from publishing their views and radio stations from transmitting Serbian language programmes from foreign radio stations. It is clearly an expression of the entire political climate in Yugoslavia these days where fundamental rights and freedoms - and notably the freedom of the press - have been the subject of constant oppression, and that continues.
I can only hope, along with the presidency, that the situation will stabilise, that the withdrawals will actually take place. That is not only a prerequisite for the peaceful return of refugees and displaced persons, but it is also absolutely necessary to allow aid workers to do their work without personal danger. It is extremely important that the large verification mission of 2 000 people is able to work in safe conditions.
Last but not least, the absence of violence and the fulfilment of the obligations of President Milosevic will also determine the political climate in which a political solution will have in the end to be negotiated.
With the presidency, I repeat that we see no other ultimate solution to the Kosovo problem other than a political one. The only question is whether that also goes for President Milosevic. That remains to be seen.

Titley
Mr President, it goes almost without saying that we in the Socialist Group are delighted by the progress that the President-in-Office of the Council has been able to report. We congratulate the presidency on all its efforts in the last couple of weeks.
We are clearly delighted that we seem to be edging towards a solution in Kosovo and that President Milosevic appears to have accepted, at long last, the principle of self-government for Kosovo and, therefore, we have a basis for moving forward.
Clearly we are all concerned to ensure that the message that goes out of this Chamber is that the cease-fire has to apply to all sides in Kosovo. The murder of four Serbian policemen over the weekend, supposedly by the KLA, only helps those who wish to undermine this process. So we must make clear that all sides must abide by the cease-fire. We also have to be aware of what might be called the CNN factor, i.e. once we stop seeing this on our TV screens we think the problem has been resolved.
We should be clear again today that we are seeing the beginning, not the end, of a process. It is going to require a major effort to keep Milosevic on board to this agreement and, as we have seen, and as the President-in-Office and Commissioner van den Broek have mentioned, one of his first acts has been to ban the independent media in the Federal Republic of Yugoslavia, clearly a sign that he is still up to his old tricks.
We must not forget that it was only the credible threat of military force which forced Milosevic to the negotiating table, and we must maintain that threat. That is why it is important that deadlines are kept, particularly 2 November. We must bear in mind that going for the solution of over-the-horizon military force puts us at risk of Milosevic playing cat-and-mouse games. At what point do you release your military force? So we must be determined to maintain the deadlines.
It is also a beginning in the sense that what we now need - and we have seen it all before in Bosnia - is the full commitment of the international community to the stability and security and reconstruction of Kosovo. Countries cannot go away thinking the job is done: the job has not even started to be done, and we have to build upon that. I would like to see, as Commissioner van den Broek has indicated, us tightening the sanctions and looking to work on a further UN resolution that goes beyond 1199 and makes it very clear that military force could be used if Milosevic does not adhere in every aspect to this agreement. If we do not, then we will find that in six months time we are back to playing games again. I really do not want us to go back to the tragedies, particularly of the last three or four weeks, when the entire situation went beyond anything that any humane person would be prepared to listen to and be prepared to watch.

Pack
Mr President, Madam President-in-Office, I am not as quick as the previous speaker to see progress where there is none. So let me say this: I see no signs of an all-clear, and I see no change in regard to the misery of Kosovo. The western politicians have all been taken in by Milosevic again. What has come of Holbrooke's negotiations? They should have brought results no sooner or later than in spring this year. At a time when villages are still being shelled in Kosovo, when people are still being turned into refugees, we are sending 2 000 OSCE observers out there. What are they supposed to do, what can they do?
After all, they cannot really monitor the promised eventual withdrawal of Serbian forces. Who could make us believe that? How can they prove it? They cannot identify troops that remain there out of uniform. And the Serbian police units who have been carrying on their murderous business for years remain in the region. The OSCE observers are unarmed. We cannot even ensure their protection, let alone that of the Albanians they are observing. It seems to me that the recruitment of these observers is a very parlous affair. Who are they? What are their qualifications? I checked it up in Germany. There they are being signed up at a salary of DM 6 000 a month plus USD 100 a day, which comes to DM 10 000 per observer.
Many people are tempted by this kind of thing and set out into the unknown. I said to many people who questioned me: don't do it. Does anyone really think the NATO planes flying over Kosovo offer any protection whatsoever? It is another of those damned déja vu situations. Remember what happened to the UN soldiers in Bosnia and Herzegovina, who were at least armed for their own protection - while the OSCE observers are not armed, not even for their own protection. But let us assume this observer mission runs smoothly, as I described, and of course without producing results, as we all now know. Elections have been promised nine months hence, but what or who are these people supposed to vote for? Does any reasonable individual here or elsewhere believe there can be an acceptable outcome to the negotiations between Milosevic and the Albanians before the deadline expires? The negotiations are a tactical ploy by Milosevic, they are his survival strategy. He will go on and on negotiating until we eventually get fed up with the stubborn Albanians not letting him take them to the cleaners. Our threats will have less impact and the Serbian soldiers will be back in Kosovo six hours later, if Milosevic so wishes. And it will take NATO another six months to get round to doing anything at all.
How blind must the western politicians actually be to believe Milosevic's assurances that he will give way on Kosovo while at the same time, as you both noted, he has banned all the independent media in his country and forced a law through parliament that even makes it a crime to broadcast CNN and Deutsche Welle reports on radio and television? Nobody with any respect for the human rights of the Albanians would behave like that. He does not even respect the human rights of his own Serb compatriots. He treads them all underfoot.
Madam President-in-Office, your belief that anything can be guaranteed within the Yugoslav legal system, in a Yugoslavia that is further removed from democracy than anyone could ever imagine, miles away, aeons away even, really is rather naive, and is irresponsible vis-à-vis the Albanians. You may say here that you hope you can give us a better report next time. Hope may spring eternal, but it is unfounded, because as we have seen in Kosovo: Milosevic is the problem and not the solution.

Haarder
Mr President, Mrs Pack is unfortunately quite right. There was a mood of despair in this Chamber when we debated these matters, and with good reason. Posterity will remember our impotence in Bosnia and Kosovo in the same way that our parents remember Hitler's first years in power, when he exploited the weakness of the western powers. Picasso gave form to that tragedy in his depiction of Guernica. Perhaps in a few years a painter will create a similar work which he will call 'Srebrenica'. However hard it may be to imagine, Srebrenica is worse than Guernica, and it happened in our lifetime, in a time when we were elected to look after our part of the world. And it was our troops who failed, and were failed. If it is unleashed all over again because of the weakness of the West in Kosovo, we shall once again ask: how many bodies does it take before help comes?
I know that it is NATO and not the EU which holds the means of exerting military pressure. But nearly all our countries belong to NATO, and we have something we call a political union, we have a vision of speaking with one voice. What have our countries done to get NATO to act more promptly? We cannot lay the blame on NATO, and certainly not on the USA. On the contrary, we must praise and thank the USA which fortunately - unlike ourselves - is able to step in when we disintegrate because of our divisions and national special interests. I hope that the Council of Ministers will get its act together and learn from the tragic consequences of these divisions. One Member State would not even uphold the sanctions on air traffic, which had been agreed, and another Member State curiously maintained reservations and acted as a brake. Yes, Mr President, I am thinking of Britain and France, but my own country, Denmark, is no better. Because of the negative outcome of the referendum in 1992, Denmark has limped along with a dismal reservation which even prevents our government from taking decisions on mine clearance, evacuation and humanitarian actions, so we are not the slightest bit better.
What is inconceivable is that there are still some who fear that the cooperation will go too far. Anyone can see that the risk is exactly the opposite, that it will come to nothing - and that the best we shall manage is to sweep up and count the bodies after the accident has happened, and to receive huge flows of refugees, by which we shall be doing Milosevic the greatest service of all. Commissioner, can we now be sure that everything is being done to help as many as possible, in the mountains too, even if the KLA and the Serbs start shooting at one another? Can we be sure that it will not end with a new Srebrenica, in which those who should help merely leave their positions at the slightest threat and consign the people to their fate. I go to Kosovo on Saturday, Commissioner. I know that some excellent work is being done down there, but are they also getting the back-up they need? I would really like to have an answer to that.

Daskalaki
Mr President, the debates on what has happened since the break-up of Yugoslavia often adopt a rather high tone.
Kosovo is now the most acute problem. It constitutes a risk to the stability and security of the entire region, and threatens to affect the European Union itself if the disturbances spread to the south. We therefore need to be as objective as possible, because very often the loudest voices are heard from those who do not themselves face any direct danger.
There is a ten-day extension of the NATO ultimatum and a fragile agreement has been reached which may not be perfect and may be being violated by both sides, but it is a positive first step, as the Presidency too has stressed. We must give it our backing and demand respect for it. We are only too aware that fanatics will always react against such agreements and try to sabotage them, but this is all the more reason to persist. The savage Serbian attacks on civilians are beyond doubt, as are the human rights violations and Belgrade's efforts to muzzle the press. But there is also no doubt about the intransigence of the so-called Albanian liberation army which is restricting the options of the moderate Rugova.
We must also consider whether the systematic marginalisation of the entire Serbian nation promoted by the west may not simply have lent strength to the fanatics and the nationalists, and whether what the non-nationalist Serbian opposition says about Milosevic might be true, namely that he is fostering the conviction that everyone is against the Serbs and that they have to fight in order to survive.
The European Union must exert every possible diplomatic pressure to back the agreement achieved and demand respect for democratic principles and human rights, together with the reforms mentioned in connection with Kosovo. Everyone agrees, and the UK Foreign Minister said the same thing again yesterday, that there is no question of independence. However, NATO military intervention in an independent state outside its jurisdiction and without the agreement of all the permanent members of the Security Council is also no simple matter. There are other ways of intervening, which the Presidency has spelled out very carefully. If we hold our line political agreement will be achieved, the people of Kosovo will be settled under the new agreements, and the Serbian people will more easily put the ghosts of the past, which they too find oppressive, behind them.

Ephremidis
Mr President, this is an agreement which contains a number of elements and has a certain timetable. It is a very welcome development, even if it is only temporary, to stop the bloodshed and the violence, even if the agreement is sometimes violated by irresponsible and fanatical elements on both sides. However, the agreement also has a number of shortcomings and disadvantages. It was imposed by pressure from outside, by threatening the use of excessive force, even going as far as military intervention. Secondly, it shows a certain bias, because whenever there is talk of conflict, we only think - even here in the House - about imposing obligations on one side while ignoring the other. As if there were not two sides which, rightly or wrongly, each feel that they have right on their side. And finally, this agreement will have to prove itself in practice if we are to welcome it as we welcomed the agreement in Ireland a short while ago: the whole of Parliament gave that agreement a standing ovation for ten minutes. An agreement of this type needs to be sincere and to look towards peaceful, political solutions which are fair and even-handed to all sides.

Tamino
Mr President, as I stated in this House just a month ago, now that some sort of an agreement is in place, what is still plain is the lack of action on the part of the European Union. What is more, no real action has been taken for over ten years in support of peace and the non-violent protests of the Albanian population under the leadership of President Rugova. So it has to be said that, once the Albanian population had been making non-violent efforts for ten years to obtain their inalienable rights, the clashes which occurred were virtually inevitable. And here the EU's blatant lack of involvement in solving this crisis is self-evident; in fact we have delegated our role to the United States and to NATO. This of course fits into the broader context of the absence of a common foreign and security policy in the EU, but we are duty-bound to highlight the Union's lack of involvement here.
As at other times, our potential powers have not been fully exploited during the current phase: why, for example, has the European negotiator, Mr González, not stood alongside the US negotiator, Mr Holbrooke? Could it be that the Union was concerned not about the plight of the refugees, but solely about the risk that the Albanian refugees from Kosovo might enter Europe? Is this our only concern? This certainly reveals that scant attention is being paid to what is happening in the Balkans, as well as the absence of any real policy to involve the whole Balkan region in the future eastwards enlargement of the European Union.
These, to my mind, are the real problems. But having said this, we must of course welcome the fact that an initial agreement was reached on 14 October, entailing an immediate cease-fire, the withdrawal of Yugoslav troops from the region and the presence of 2 000 observers. Of course, two thousand would seem a rather small number of observers for this purpose. Regrettably, this was not the outcome of real negotiations but merely resulted from the threat of bombing by NATO, which only reveals Milosevic's true spirit and disinclination to negotiate. We believe that an immediate and full withdrawal must be guaranteed, in an attempt to avoid any confrontation; not only Milosevic but the KLA too is responsible here. We are concerned that the cessation of hostilities should not merely be an end in itself, but a real starting-point for a dialogue leading to a definitive solution of the Kosovo problem, beginning with its autonomy. We must aim to solve all the problems of the Balkan region, bearing in mind what is now happening in Serbia - the closure of certain independent newspapers - and in Macedonia, from where the signs reaching us are anything but encouraging.

Dupuis
Mr President, Madam President of the Council, Commissioner, I would first like to say to Mr Titley that you would really have to be very brave to say that in the last few days a solution for Kosovo has been found and that progress has been made.
I think that after all the attempts made by some of us during recent months, we have to give in to the evidence and perhaps make the Council and the Commission face reality. The reality is the constant denial on the part of the European Union today in the face of the serious and tragic situation in Kosovo and Serbia, which is the same denial that was shown by Europe towards what was happening in Czechoslovakia and then in Austria and everywhere else in the 1930s. I find it truly scandalous that it should be the Americans who have been putting in the hard work in Kosovo while the European Union seems to be abandoning any sort of intervention, any sort of policy and any sort of political objective.
As long as Mr Milosevic is in Belgrade, there will be no peace, either for Albanians, Serbs, Hungarians, the gypsies, or for anyone in the small republic of Yugoslavia. We need to face up to this problem now and get down to fighting this nationalist-communist regime. With all due respect to our socialist friends who are rightly celebrating the legal action that has been brought against Mr Pinochet, they need to finally have the courage to start working towards bringing Mr Milosevic before the court in The Hague as soon as possible. This will enable the Serbs and the Albanians together to rebuild a democracy and solve their problems, which involve living peacefully together, while our problem, and I repeat, involves whether or not we support a nationalist-communist regime.

Angelilli
Mr President, ladies and gentlemen, the situation in Kosovo is still problematical and confused, and Milosevic remains utterly unreliable. Despite NATO vigilance and the presence of a few OSCE observers on the ground, according to the press the bombing in Kosovo has resumed over the past few days. So the tragedy continues: more people are being forced to leave their homes and take refuge in the forests. Furthermore, because of the resumption of hostilities, the UN has even been forced to delay sending humanitarian assistance to the region.
Albanian sources report that, instead of withdrawing their troops, the Serbs are actually sending reinforcements to Kosovo, in total contravention of the conditions laid down in the UN Security Council resolution. Meanwhile, the crisis is deepening even further for the 60 000 or so people who have fled to the woods and for all the others, including large numbers of children, who are seeking safety and peace through a mass exodus to the countries of Central Europe and onwards to Italy. Indeed, in Italy alone, over 1 500 Kosovars have landed on the coast of Puglia in recent weeks, creating obvious difficulties in terms of receiving and assisting them.
Once again, by devolving its powers to other international organisations, the Union has lacked the courage and ability to thrash out even a basic strategy under the common foreign and security policy, proving itself unable to adopt a coherent and clear-cut stance on this crisis. Everything is left to the UN and NATO.
One of today's Italian newspapers carries an interview with Tony Blair in which, perhaps under slight provocation, he stressed the urgency of appointing a European Union representative to NATO, a sort of EU Foreign Minister. And yet the EU's sole practical contribution to date is the OSCE observer mission, whose establishment in Kosovo is proving painfully slow. There was talk of 2 000 observers, but as far as I can tell there are 200 or 300, so even they are not fulfilling their role.
Thus Europe is in effect absent, while the Serbian forces are delaying their withdrawal, playing on the misunderstandings and invective within NATO. Meanwhile Mladic and Karadzic are still on the run, evading international justice, and the Serbian authorities are being allowed to muzzle the press, closing down on a flimsy pretext all newspapers which disagree with the regime.
We wonder why the European Union, so attentive to human rights issues, is not drawing up a more effective and hard-hitting policy. While an entire people is enduring unspeakable injustice and suffering, we press on with our interminable, sterile discussions, memorandums of protest, verbal censure and study groups.
I would end by asserting that we must promote much tougher initiatives. I agree with Mr Dupuis in calling for an international arrest warrant to be issued at long last against Milosevic, so as to put an end to his war-mongering and, I believe, criminal actions.

Wiersma
Mr President, I find the atmosphere so far of the discussion here today rather surprising. It all seems rather downcast with regard to what Mr Holbrooke and also our intervention have achieved, as if there had been no progress over recent weeks. I reject this idea. Despite all the doubts which you may have, I think that we are now seeing a form of progress, and I would certainly not have described dropping bombs as progress. I am pleased that it has not come to that. Two weeks ago, I stood here fearing that NATO would be intervening in the Kosovo conflict. We then also expressed support for taking a hard line against the government in Belgrade, but at the same time we hoped that this would not result in a rift within the United Nations and that a political solution was perhaps still possible. I want to stress this point once again. We have always said: above all else, continue to strive for a political solution. That has been our position and it is still our position. Violence must only be used to combat violence as the very last resort.
Two weeks later, we can be cautiously optimistic. The threat of military intervention and Mr Holbrooke's negotiating skills have caused Milosevic to back down at the very last moment, despite the fact that, as usual, he himself presented it as a victory while at the same time taking a swipe at the independent media. By next week, Serbian troops must have left Kosovo. It is proving a laborious process, we are seeing that, and there remains the risk that interested groups will once again try to inflame the conflict. NATO's military threat must therefore remain in place, while pressure must also be put on the KLA not to violate the peace. Both parties are responsible for implementing the agreements. We reject provocation from either side. The Serbs must allow an autonomous Kosovo, but it must again be made clear to the Albanians that, as far as we are concerned, independence is out of the question. On this basis, and after full implementation of UN Resolution 1199, we can begin negotiations on the future of Kosovo, without preconditions.
It is now important for the OSCE to be present as quickly as possible. Observers must be in place without delay in order to reduce the risk of incidents. I agree with those who have expressed their concerns at the risks the observers themselves are facing. I believe that over the coming weeks we must take a good look at how these people can be protected as effectively as possible. We are also pleased that the Union has allocated funds for humanitarian support. We hope that the General Affairs Council can provide the necessary legal basis as soon as possible, but this aid must also be made available as quickly as possible.
The solution which has now been achieved could be described as the least worst solution, but it is nevertheless a solution which could mark the beginning of a process in which the problems concerning Kosovo can be resolved. In any event, it is a solution. I did not hear my colleagues who expressed their criticisms say what would have been a workable solution. It is a fragile solution, and vigilance is therefore required and its implementation cannot simply be left to the parties to the conflict. The continued involvement of the international community and above all of the European Union is therefore both necessary and desirable.

Habsburg-Lothringen
Mr President, Madam President-in-Office, I hope you will not take it amiss if I do not endorse your cautious optimism, because I find that rather difficult. The events of recent years and in particular Mr Milosevic's behaviour in recent years have taught us quite a lot. In fact our own behaviour in the last few months should also teach us some lessons. If when the situation in Kosovo worsened we had taken it more seriously, perhaps we would now find it much easier to join in the general optimism. But in fact we let things slide for a long time, for a long time we reacted very little, if at all. We waited till the house had actually burned down before calling the fire brigade. Thank God the fire is now gradually beginning to burn out by itself. But there is no doubt it is still there, and it really ought to be up to us to remind people again and again that the fire in this house is still burning and has not yet been extinguished.
In this connection, I am really very sorry that I have not heard a single word in this debate about the concept of the people's right to self-determination. I think we should always uphold that concept and reiterate it as a principle - for it is enshrined as such in the OSCE and not just in the EU. We failed to apply the principles of the right of the people to self-determination during the war that originally broke out following the disintegration of the former Yugoslavia, and we are failing to do so again.
Mr Wiersma, I am very sorry to have to tell you that some of the words you use are quite simply neo-colonialist, because you are setting preconditions for the people of Kosovo which they should in fact determine for themselves. You set preconditions and say that you cannot conceive of autonomy in independence. But it is not up to us to decide that, it is up to those concerned. We should be very careful about anticipating what will actually happen.
Let me make one more comment. We should now look at the factors of stability in this region and support them. At the elections in Macedonia last Sunday, the old Communist regime was voted out. There will be a second ballot in two weeks' time, when it is very probable that a new government will get in which said right at the beginning of the campaign that it definitely wanted to build up entirely different relations with the Albanian population in Macedonia. Many of the constituencies were won by Macedonian candidates - especially by the Democratic Alternative - and I hope that in future we shall see a region of stability here right next to Kosovo. We in Europe should provide the necessary support.
Allow me in conclusion briefly to touch on the ceterum censeo that we desperately need. We must not forget that the source of all evil is in fact called Milosevic and that we cannot negotiate with him, but only about him, and we must do that in The Hague!

Cars
Mr President, at last the resolute action taken by the international community has borne fruit, and we Europeans once again have the United States to thank. I would like to express the Liberal Group's appreciation of the agreement between Mr Holbrooke and Milosevic, with its provision for observers and so on. Commissioner van den Broek did however say that military withdrawal is not yet complete, and referred to Belgrade's imposition of tighter restrictions on the media and free speech. I am pleased to hear that NATO is now ready to intervene militarily if Milosevic fails to honour his undertakings by 27 October at the latest. Can the President-in-Office assure me that action really will follow, or is there a risk of still more procrastination?
The plan is for negotiations between Milosevic and the Kosovar leadership. Yet surely, Madam President-in-Office, the Kosovans will be attending these talks with their hands tied behind their backs. Will they be free to claim liberty and independence as their goal? The answer is a resounding 'no'. They will be allowed to negotiate a greater degree of self-government, but the EU and NATO are forcing them from the outset to accept Mr Milosevic as their head of state. I am right, am I not, Madam?
The European Liberals would have liked to see negotiations without preconditions, and we very much regret the fact that this is not to be the case.

Caccavale
Mr President, ladies and gentlemen, the scene has shifted slightly in these two weeks: yet again it has been decided to negotiate with Milosevic, and to regard him as part of the solution to the Balkan problem, this time Kosovo, like Bosnia before it and Croatia before that.
In my view we have yet again set out in the wrong direction, first and foremost because Europe is yet again bringing up the rear, standing on the sidelines and waiting for our American daddy to come along and solve our problems. Yet again Europe has shown itself to be a political dwarf, incapable of taking any political initiative in our own backyard. Secondly, I cannot imagine that this agreement, wrung out of Milosevic at the eleventh hour, will make him adopt a responsible attitude. Milosevic has already perpetrated ethnic cleansing in Kosovo; he has already attacked the Kosovars, chased them from their homes and razed to the ground at least 700 villages in that region. I ask myself and I ask you how the clock can possibly be turned back; I ask myself and I ask you how we can trust a man who has proved yet again, in these latest events, that he is a criminal, a murderer of women and children, confirming that he is not part of the solution but is in reality the problem, the real problem of the Balkans, of Kosovo and of Yugoslavia.
There will be no peace, either in Kosovo or elsewhere, for as long as Milosevic remains in charge of the Yugoslav regime.
Yet again I urge absolute firmness in respect of Milosevic. I call on Europe to propose that he be tried for war crimes and hauled before the International Criminal Tribunal for the Former Yugoslavia, in The Hague.

Carnero González
Mr President, I very much doubt if there is much to rejoice about in what the international community has achieved over the last few weeks. I think the sentence 'Milosevic has been forced to negotiate' ought to be turned round the other way. Is it not rather that Milosevic has forced the international community to negotiate? Implementation of Security Council resolution 1199 has not even been negotiated with Milosevic, only the points he wanted to discuss were dealt with. In fact, nothing has changed following the agreements. For example, might not the verifiers sent to Kosovo end up as hostages? Suppose Belgrade fails to honour the agreement, will the international community, will NATO risk a military intervention with 2 000 verifiers on the ground? That would be sheer madness. It is a trick, a trick which could prove fatal. Does the Council still remember the aim of democratising Yugoslavia? Will any notice ever be taken of Mr González? Or are we to remain lost forever in Mr Holbrooke's maze? For once, Mr Dupuis, I can actually agree with you: Milosevic is an international criminal and must be brought to trial at The Hague.

Antony
Mr President, ladies and gentlemen, on two occasions I have already expressed my opinion and that of my colleagues on Kosovo, recalling on the one hand the overwhelming responsibility that lies with Milosevic but also with the European and French authorities - Mr Delors, Mr Santer, Mr Mitterand - who in the past, with their federalist ideology, had encouraged him against the wishes of the Slovenian and Croatian people. On the other hand, I have highlighted the illegitimacy of NATO's intervention, which in the past steered well clear of supporting people who were fighting against communism; this intervention would undoubtedly only aggravate the situation and make the crisis in the Balkans even more inextricable.
Yesterday I listened carefully to the eulogies that were bestowed on our colleague Mr Hume, winner of the Nobel Peace Prize, for his work towards an agreement in Northern Ireland. In his moving response, which was unanimously applauded - including by us, aside from our differences on other issues -, he said that anywhere in the world, instead of sending troops or bombers, it was infinitely more preferable to adhere to his philosophy of respect for differences and in all cases to reach settlements similar to that achieved in the Irish situation. I am well aware of how difficult this is. That is all the more reason for us to get down to work.
I therefore propose that peace missions, supervised or directly led by Mr Hume himself, should be set up with a view to finding a solution to the situation in the Middle East, as we in Europe have effective links with Israel and the Palestinians and therefore cannot distance ourselves from this issue. We must naturally work to ensure the implementation of the UN resolutions on Lebanon. We also have to work for peace in Sudan, where real genocide is taking place, with the Christians and the Animists in the south doomed to famine and the civil war that is raging in the north.
However, the closest conflict to us is indeed Kosovo. A Hume mission must go there, and quickly. I have no doubt that our Parliament is determined to put pressure on the Council, as shown by its applause yesterday, in order to avoid not only destruction and death among the Serbian people, but also a real outbreak of violence in the whole region.

Imbeni
Mr President, I endorse my colleagues' assessment of the agreement and their denunciation of the crimes committed, and I hope that we shall not have to wait 25 years to bring that criminal to justice. Where I disagree with them is in analysing the situation and looking to the future. Here we are found wanting: the Council, the Commission and Parliament too. To my mind, such important institutions cannot simply issue denunciations and sign the agreement reached - above all thanks to US intervention - and then, as you quite rightly said, undertake to implement the agreements.
We are contributing money and men as usual, but in my opinion the problem is our piecemeal approach to the Balkan problem. And here we are making a mistake. If we claim that this problem is a duel between two parties, Milosevic and Kosovo, we are confusing the issue. We know full well that the problem, an intractable one, is how - or how not - to give a people the freedom to express all their human, political, civil and social rights, and not least the basic rights of culture and language. What I find unconvincing is the belief that once Milosevic has been done away with, as it were, the problem will have been solved. No! The Balkan question will still be there in the form of a clash between conflicting nationalisms, still smouldering beneath the ashes, one being the Communist nationalism of Milosevic, and the other the nationalism of a greater Albania. After all, we saw what happened in Bosnia.
So the question is what alternative strategy the European Union can adopt to tackle the issue of peace and stability in the Balkans. We must reflect on the need to address this question as a whole, while undertaking to implement these hard-won agreements and ensuring that there is a real cease-fire and a complete withdrawal of Milosevic's special forces. Why not investigate the idea of an international conference on the Balkan issue as a whole, attended by all concerned, in other words several different European countries - Serbia, Albania, Macedonia, Montenegro and Bosnia - as well as their internal minorities? This is how we can begin to make a contribution, in my opinion. We cannot call on the European Union to do more, and then persist with a narrow, blinkered approach.

Ferrero-Waldner
Thank you, Mr President. Ladies and gentlemen, it has been said here repeatedly that the agreement with Milosevic is not an ideal one. That is certainly true. But we must accept that although Milosevic has very often broken his promises in the past, he has sometimes kept them - under pressure of course. Think for example of the Dayton Accord provisions. So it is difficult to decide how to judge his present concessions in the Kosovo conflict. I believe it is up to the entire international community to be resolute and simply to take the appropriate steps if he does not respect the agreement. After all, the threat of a NATO military attack remains, and in fact that alone led to the agreement. I believe we must keep up this political pressure. And the Kosovo Verification Mission is surely very important. It has not been mentioned much during this debate. But after all, 2 000 observers in Kosovo is quite a lot of people. Let me say in response to the suggestion by various Members that the EU is not making its presence visible enough that the European Union will provide more than 1 000 members of this Verification Mission, while the Americans will only be contributing around 200. So that assertion is not true either.
Secondly, it was frequently said during the debate that the Americans were the only ones to take action. It was indeed Mr Holbrooke who negotiated this agreement, but he acted on the basis of our instructions and, as you know, within the Contact Group. The Contact Group held its last meeting at London Airport, and this last attempt was very much a joint EU and American venture. Why? So as to take the Russian Federation on board too, for of course that is also of some political significance. We now have that political agreement, but of course I think it is most important to continue exerting military pressure.
Let me also briefly respond to the criticism that this Kosovo Verification Mission is not visible enough. There are continual complaints that the EU is not being visible enough here. Let me also point out that the question of who is to head this mission has not been settled finally. The head of mission will be an American, but the Political Committee in Brussels is still considering whether there should not also be a deputy head from the EU.
I also want to address the question of the safety of these observers. That too was raised during the debate. I believe it is a most important and delicate aspect of the Kosovo Verification Mission. Of course the observers will be unarmed. That is why I consider it so very important for the OSCE and NATO to work together very closely. But we must take on board that Milosevic has after all accepted a restriction of sovereignty. That is at least a first step. Apart from monitoring on the ground, NATO will also be carrying out air surveillance; so here too there will be joint action. For the rest, as the UK Member said, the United Kingdom is putting another draft resolution before the Security Council. It was discussed last night and there is a chance that the Security Council will adopt that resolution tonight, so that it can offer us all a certain basis for further action.
In summary, Mr President, let me repeat: we all know this is not a perfect agreement, but in the circumstances it offers some kind of a solution which allows one thing in particular: the return of the refugees. Surely we all regard that as important, and the fact that it will continue to be underpinned by the military threat. We hope - although we are none of us sure - that Milosevic will recognise the seriousness of the situation and use the time to negotiate and not to break this agreement again.

Sarlis
Ladies and gentlemen, I wish to protest because the President-in-Office of the Council is leaving. I see no point in continuing with my speech, since neither the relevant Commissioner nor the Council is present. Consequently, to make things easier for other colleagues too, I am protesting because we are being deprived of the right, those among us who happen to be last in line, to have at least an answer either from the Council or from the Commission, since neither Commissioner van den Broek nor the President-in-Office are here. The latter of course spoke at great length, even though there were only two speakers from Parliament. I thank you, and in protest, I am giving up my chance to speak.

Papayannakis
Mr President, I cannot follow the debate in the way it is taking place, with platitudes and ravings and with each country expressing its views separately as if they were the views of the entire European Union. What has happened in Kosovo may be a positive step, or it may not amount to much at all. It may even be a mistake. And the same question applies to Bosnia now and will apply tomorrow to Tetovo and the day after tomorrow to other regions which speakers here who like to solve all our problems at a stroke will hear about for the first time. What I feel is missing is an overall cohesive framework policy for south-eastern Europe or, as we call it otherwise, the Balkans. Neither the Council nor the Commission have one. They should develop one as soon as possible, having done the same thing for much more remote areas, and of course it will have to be a policy with a long-term European and Community perspective. It must prove itself in the long term, otherwise we will for ever be reacting spasmodically.

Swoboda
Mr President, Commissioner, Mr Sarlis, we cannot overlook the presence of the Commissioner who is here and who represents the Commission. Ladies and gentlemen, let me begin by fully endorsing the position of the Council and its presidency. I do so not because it is an Austrian position, and certainly not for party-political reasons, but because I really do believe that it is based on the right considerations. I have been saying for some time that we will not achieve a peaceful settlement in Kosovo without the threat of military attack. However, I do not accept the view expressed by some Members here that we must take military action under all circumstances. Nobody knows what the consequences would be of an air raid. Everything we have to do now, we would also have to do after an air raid, with the many, many disadvantages which that would entail and which we would have to take on board if no other solution is found.
One disadvantage - and let me emphasise this, because I was in Moscow on Monday and talked with members of the Duma, with the chairman of the foreign policy committee and others - is that with the fall of the Iron Curtain and Communism we must do all we can to incorporate Russia into a European security system. But I also said that even if Russia vetoes it, we must be present and, if the worst comes to the worst, launch a military attack. Nonetheless, it is naive not to say dangerous, it is playing with fire to believe that we could certainly find some way to leave Russia out of it and even that we should provoke Russia.
After all, the nationalist forces in Russia are just waiting for this kind of attack to change the climate in Russia accordingly. To take the example of the bear, we all know that an injured or weak bear is often more dangerous than a strong bear. I think it would be a totally wrong approach deliberately to annoy Russia. I think the right approach would be, as the President-in-Office said, to involve Russia as far as possible in a peaceful solution, without however abandoning our objectives. That is the Council's position. That is why I think we should adhere to this position.
It must be made clear that the observers sent to Kosovo will of course be protected. If any problems arise there, these units, these monitors, must receive adequate military and police protection. We cannot gamble with the lives of these helpers. But it must be made clear that the less we seek to achieve that aim with armed forces, the more we can achieve it with civilian forces, the better for us all. After all, we must not forget what happens to a country, to a people that is being shelled. As I said, this would not just engender corresponding support for the forces of nationalism, for example in Russia, but perhaps also keep Milosevic even more firmly in the saddle. We must remember that if we follow this road. That is why we should not play with fire, Mr President, but keep to a sensible but hard line, as we have done in the past. We should continue to take this common approach!

Oostlander
Mr President, I hope that some Council staff are also present to witness what we have said in the presence of the President-in-Office of the Council himself. The Commissioner has just correctly stressed that he has no confidence at all in agreements with Milosevic. He has already seen a good many of Milosevic's signatures, and knows better.
He is also right in saying that aid workers do extremely dangerous work. I am increasingly wondering who they are in fact, this group at present described as verifiers? To my surprise, my administrative trainee, a girl of 22, told me that on a visit to NATO she was invited to join them. Just come along as a verifier, she was told. It seems to me highly irresponsible to just allow people to engage in such dangerous work for which they have received no military training whatsoever, in addition to being unarmed and also, as we have heard, with an appeal to the Serbs to help evacuate them in an emergency. You are then calling on those who are themselves playing an exceptionally dangerous role to evacuate unarmed young people, who are untrained and so forth. They are simply hostages. I saw a wonderful cartoon in a Dutch newspaper in which Saddam Hussein with his feet up on his desk was cheerfully telephoning Milosevic to warmly congratulate him on his 2 000 unarmed hostages and relishing all the fun in store. This is the situation we are facing. In the past we sent blue helmets. They were at least soldiers, but were sent under such conditions that they could easily be taken hostage. Now we are making an even more serious mistake. I wonder whether this is really a good policy, and whether Mr Holbrooke, who - as I have understood it - was acting in part on behalf of the European Union, could not have achieved a better result. Unfortunately, I believe that we must realise that Milosevic and his kind can only be convinced by a much clearer forceful stance, although I am not at all in favour of using violence if it can be avoided. But we must understand that money and fine words do not help much in the Balkans. I also find it a pity that this House remains so divided. The same was true in the past over Bosnia. The Social Democrats, supported by the far left, have always pursued a policy which more or less failed to take account of Milosevic. I simply cannot understand this. There is an anti-militaristic tendency behind it, but I would say that defending the rule of law demands rather more. I hope that the time will come when this House overcomes its divisions on this question.
The President-in-Office of the Council certainly has an unpleasant task. Please note what she had to say here: patience has run out, just like two weeks ago. She has given dates, 27 October and 3 November, by which time things must have changed. She is not going to come back with 4 November, I hope? Our patience has run out, just like two weeks, four weeks and six weeks ago. This really is losing all credibility. I must say I find it a great pity to hear Mr Wiersma say that the Kosovars cannot have independence. I find that too patronising. You should not have to live under a criminal dictator, even if we do want Kosovo to remain part of Yugoslavia. This really cannot be ignored.

Alavanos
Mr President, I have a number of comments.
First, it has been proved that diplomacy has potential, provided that it is accompanied by patience and persistence. It has potential in Yugoslavia, Palestine and Ireland, and there is no need to rush to resort to arms.
Secondly, it was unfortunately again the United States and not the European Union, even though Yugoslavia is our neighbour, which led the persistent and difficult negotiations and pressure that produced this peaceful resolution.
The third point I want to stress is that there are certainly forces which want to undermine the package agreed upon, on both sides, as we saw with the murder of a number of Serbs a few days ago. That is why the international community, everyone involved in this process, must look in both directions and not just at one side.
Fourthly, it is important that we should stress the framework within which developments in Kosovo - full autonomy while at the same time respecting the existing frontiers in the Balkans - are to take place.
My last point is addressed to Mr Bangemann. I would like to ask why it is that the European Union, the Commission and, indeed, all of us are so keen to take up the cause of Kosovo, of the Kosovo Albanians, and even resort to military threats, but when it comes to occupied Cyprus or the Kurds, the Commission is happy not only to turn its back on threats and political pressure, but even to manipulate policy so that finance for Turkey can go ahead. That is a very sad state of affairs, and it reflects badly on the European Union, Mr Santer and all the Commissioners.

Cushnahan
Mr President, it is good to have hope but it must not misplaced and it must not blind us to reality. I want to be optimistic but I am fearful that Milosevic is still playing a cat-and-mouse game. I believe he has been encouraged to do this particularly because of the inaction of the United Nations. While I recognise that there were problems with China and Russia, I cannot help but feel cynical when I compare and contrast the UN response in Kosovo with its response during the Gulf War. Obviously, if Kosovo, like Kuwait, were rich in oil the UN would have acted differently.
The lesson of Bosnia-Herzegovina has not been learnt. Because of procrastination then hundreds of thousands of people needlessly died in ethnic cleansing. But once the US and its European allies took action, the situation changed dramatically. This point should not be forgotten, especially if Milosevic fails to honour the US-brokered agreement and comply with UN security resolutions in letter and in spirit. His failure to do so should be met with only one response and that is the military option. I regret to say that I believe that is the only language that will be understood and that will lead to a resolution of this particular crisis.

President
Thank you, Mr Cushnahan.
The debate is closed.

Economic crisis in Latin America
President
The next item is the statement by the Commission on the economic crisis in Latin America.
I give the floor to Mr Bangemann, on behalf of the Commission.

Bangemann
Mr President, the current economic and in particular financial situation in the world is having a number of adverse effects which, of course, also affect Latin America. There is a difference between the real economic situation and the situation of the financial markets. This difference is particularly marked in countries like the Latin American countries, which basically have a fairly stable economic situation that offers some good prospects, while at the same time being threatened by financial uncertainty. Because of this situation, because of this difference, we must not overreact to these uncertainties.
The sober fact, which nobody can overlook, is of course that the uncertainty on the global financial markets has led to situations of crisis in some regions of the world, including Latin America. But at the same time, we must point out that the current economic situation and the prospects in the Latin American countries still look promising. That is to say that the situation can be assessed in two different ways, depending on the factors we take into account. But perhaps these two different points of view can be coordinated if we realise that we must not try to make a self-fulfilling prophecy, in other words that the financial uncertainty should not lead us to regard Latin America's economic prospects unfavourably, which would only help worsen the real economic situation, since the statistics paint an entirely different picture.
In 1997, Latin America's economic performance was the highest in decades. Average growth in the region was over 5 %. Per capita GDP rose by more than 3 % and inflation tended to fall throughout the region - certainly not to the level we consider acceptable here at home, but what is important here is the trend. All this reflected the rise in investment, the massive influx of capital. Let me remind you that during the time when people were speaking of a lost decade, the flight of capital was quite substantial. Today we have the reverse situation, which is why, looking at the statistics, the picture is certainly quite different from that suggested by the financial situation alone.
All the Latin American governments have also set themselves the aim of achieving general economic stability through reforms, and the majority of these governments have carried out some radical reforms, based on sound financial management and economic openness. The Commission therefore believes we can regard this as a solid foundation for tackling the current financial problems. Of course the economic downswing in Asia - less so in Russia - has an impact on the region. That impact varies depending on the countries' economic links with the Asian region. Brazil conducts 12 % of its foreign trade with Asia, 25 % of Chilean exports go to Asia, and 13 % of Peruvian exports.
This means that the economic decline in Asia will certainly affect some countries more than others, and that despite greater diversification and the increasing importance of the processing industry and the services sector, raw material exports will continue to play an important role and therefore also make some countries economically vulnerable. The Asian economic downswing will, therefore, necessarily be reflected in these countries' current account balances. But that is not the real danger. We are convinced this decline can be absorbed. The immediate danger is that the Latin American currencies may weaken.
The loss of confidence in the international capital markets and the growing awareness of risks following the Asian and, more recently, the Russian financial crisis have made the Latin American currencies more vulnerable to potentially destabilising capital movements. That is why Brazil has now taken stringent measures to combat speculation and Chile, Mexico and Colombia will no doubt follow suit. These rapid and resolute reactions show that the region is better equipped than in the past to meet the challenges of the globalisation of financial markets. Argentina is one outstanding example of how joint international efforts can support a country in this respect.
Although growth has also slowed in Argentina in recent months, we believe the country has solid economic foundations and that the reforms introduced earlier this decade are now having an effect, and a very positive one too. Yet at the beginning of this month there were great fears that the worldwide financial instability would overtax its economy. On 5 October, the World Bank therefore approved loans of USD 5.7 billion to reassure investors and because foreign banks were hesitating to provide Argentina with the necessary resources. This guarantees that Argentina will be able to meet its financial obligations by the end of March next year.
It is also a clear sign that the international community will also help other countries - if it proves necessary - which means we have good reason to evaluate Latin America's future realistically and also positively. However, the radical political and, more importantly, economic reforms on which so many Latin American countries embarked at the end of the 1980s must be pursued to their end. It would be suicidal to conclude that because of these difficulties, the reforms must be brought to an end and a different policy pursued. The Commission will therefore support every measure that encourages the continuation of these reforms. That is the only chance for the continent. You know that we are taking very practical steps in many areas: both political but also, where necessary, financial measures in the area of industrial cooperation, and of course in the area of traditional cooperation.
With this statement we want to help prevent a collapse, which could not be justified in any rational, realistic economic terms, but could only be the result of an overreaction. The key point of this debate, in our view, is to help prevent this overreaction.

Miranda de Lage
Mr President, I should like to thank the Commissioner for the information he has just given. This debate certainly provides a good opportunity for us to review relations between the European Union and Latin America. The fact that contact has been made with a view to preparing the final phase of trade liberalisation agreements with Mercosur, Chile and Mexico proves that the Union is genuinely committed to strengthening and moving forward with the agreements, and is not just expressing a vague desire to come closer together. Likewise, the Latin American economies have made a genuine effort to modernise, fight inflation and meet their international obligations such as debt repayment. As the turn of the century approached, growth was becoming quite marked, and expectations of a strong economic recovery were high. It was hoped that a fairer distribution of wealth would begin to do away with the polarisation of Latin American societies into the haves and the have-nots. Increased international investment, improved growth, the encouraging progress made towards integration, along with marked political stability and strengthened democracy had all played their part. However, as the Commissioner just mentioned, most of the progress made has evaporated in just a few weeks, following a crisis which was probably partly exaggerated, causing a panic reaction. Certain economies still have structural problems and some had not yet felt the benefit of the spectacular growth in other countries. For them, the consequences have been devastating. After a decade when our relationship has grown so much closer, there is a degree of mutual trust between us, and Latin America is therefore hoping we will do more than make a fine statement of intent.
My group is concerned for the citizens, for social stability and democracy. We therefore wish a firm political stand to be taken. Let me explain what I mean by this. We must make a determined effort to tackle the debate on the workings of the international financial system in what is now, to all intents and purposes, a globalised economy. The joint resolution takes this approach and is a positive step which will have a calming effect and spread confidence in those markets most affected by the crisis. However, the practical effects of this resolution must make themselves felt soon. My group urges the Commission to take the initiative, because due to the extent of our social development and the size of our economy, of our financial system, of our share of the world market and of our profits - which must be mentioned here - we are called upon to take a lead in today's world. We should not shy away from this role, particularly in situations such as the one we are currently discussing, when the international monetary institutions fail to play their part in resolving the crisis and persist in applying conventional solutions, thus generating worldwide unrest and loss of confidence.

Galeote Quecedo
Mr President, the economic crisis we are confronted with is certainly real. It began in the Asian countries, moved on to Russia with serious consequences, and is now threatening to spread to Latin America. Yet, as Commissioner Bangemann explained so clearly, there are no objective reasons for it. What the Commissioner neglected to mention was that in the meantime the European Union, its institutions, and almost all the Member States have failed to become involved in the debate and consequently in providing solutions, maintaining a silence which has baffled everyone, our Latin American partners most of all. It is bad enough that the European Parliament has not made time to debate the situation until today, but it is even worse that the European Commission has shown itself totally lacking in initiative and that the Council has been unable to adopt any decisions on the matter.
For us to claim a place on the world stage, as the major economic power we are, and to hope to take on the responsibilities and the leading role which the arrival of the euro on the world economic scene could create for us, when we lack the breadth of vision called for in today's globalised world - overlooking even the view, that fortunately for us, Latin America is the only emerging area not so far shaken by the crisis - would be a contradiction in terms. We ought to bear in mind too that, only this morning, the Commission reduced our forecast growth for next year by six tenths.
Thanks to the determined effort made by those countries to carry out structural reforms during the last ten years, they have been able to withstand speculation from a strong economic base, created by developing sound economic policies. Fiscal and monetary discipline, liberalisation and regional integration have been the key elements of Latin American economic policy in recent years. Without these, Latin America would have suffered grievously already. Now is the time to reiterate and emphasise the need to resist the temptation to block the free movement of capital, and adopt protectionist policies which are irrelevant at the end of the twentieth century.
Of course, for us, this new vision of a globalised world economy must be subject to certain restrictions imposed by the values of democracy, solidarity and social cohesion. At this juncture, therefore, we feel we should draw attention to the social consequences of financial instability.
My group therefore supports the call made at the recent summit of Latin American nations for discussions to be held with a view to establishing minimum rules of conduct where major flows within the financial and economic worlds are concerned.
In this context, we should certainly welcome the unblocking of the United States' contributions to the International Monetary Fund and the reduction of interest rates, but more is needed.
For its part, Spain has contributed USD 3 000 million to the International Monetary Fund to provide for a reserve or contingency fund for Latin America to be established. So you will understand, ladies and gentlemen, how pleased I am that, in the hope of extending it to the Union as a whole and to the Member States, this initiative has been included in the joint motion for a resolution with which this debate will close.
Responsibility for developing the initiatives and putting forward further measures now rests with the European Commission. In this connection, I think it is worth mentioning, Commissioner, how very low the utilisation of the budget allocation for Latin America has been - barely 2 % in the first six months of this year.
We would urge the Council to make every effort to further the processes now in place for progressive and reciprocal trade liberalisation.

Gasòliba i Böhm
Mr President, Commissioner, ladies and gentlemen, I must say how much I welcome Commissioner Bangemann's statement and the concern both he and the Commission have expressed regarding a situation which is affecting international financial and economic stability. I have reflected on the reason behind the progressive impact of this international financial and economic crisis which has hit the economies of Latin America so hard. It is worth mentioning, in the first place, how fragile they are. These economies are still emerging from a long period of internal conflict, and excessive debt. They have, in fact, as has already been mentioned, made a great effort - on the one hand, to achieve stability, setting up democratic regimes and, on the other, to restructure their economies. They have also tried hard to open themselves to the outside world.
To date, the attempt to open up to the outside world had proved successful when coupled with good access to foreign markets. Furthermore, as Commissioner Bangemann remarked, the flow of investment had been most beneficial.
Unfortunately, according to a range of statistics, the price of raw materials has plummeted. For instance, the price of rubber fell by 32.9 %, that of wool by 31.8 %, that of maize by 9.3 %, and that of cotton by 14.6 %. Expectations for economic growth have been dramatically revised: growth has halved from last year to this. Furthermore, participation in trade and production has been drastically reduced, for example by a third of exports from Chile or 23 % of exports from Peru.
Clearly, the situation must be retrieved, and this should be done through financial arrangements which restore international confidence in these economies. As we see it, two essential elements are involved. Firstly, the process of internationalisation and opening up the markets on a world scale must not be jeopardised and, secondly, genuine economic, social and political stability must be guaranteed. Progress has already been made in these areas, and the importance of transparency and support for the economies must be emphasised.
In conclusion, therefore, I should like to join with the previous speakers in calling on the Community institutions and the European Commission to play a more effective role in this area. Unfortunately, although the launch of the euro is now almost upon us, they are not yet making their presence felt in the international financial institutions.

Puerta
Commissioner Bangemann, you will have realised that all the Members who have so far spoken have done so in Spanish. Naturally, we are particularly sensitive to the situation in Latin America, and we know many of our colleagues in the House share our concern. However, when we speak, we do so as Europeans. We are not alarmist. When we speak as Europeans - in my case, as spokesperson for a group on the left - we do not wish to be prophets of doom, but we do wish to register our concern.
Following the so-called lost decade of the 1980s, the International Monetary Fund's structural adjustment applied a coercive mechanism which produced a mirage of recovery and growth. We can now appreciate that the reality is quite different, and that Latin America is very vulnerable to the effects of the Russian and Asian crises. And not only is it psychologically vulnerable, its structures are vulnerable too. This does not bode well for countries which have suffered under a succession of authoritarian regimes. We feel that the responsibilities we have acquired through our role as Europeans require us to respond to the serious challenges posed by the loss of production, loss of employment and drop in salaries. That is not all: we are also witnessing an exodus of capital, a drop in internal and foreign investment for fear of insolvency in the private sector, and a progressive deterioration in the fabric of society. The outlook is far from bright for this region, which should be very dear to us in Europe for historical and cultural reasons.
My group believes that, due to globalisation, the crisis may have a negative impact on societies in regions which have just emerged from what were often bloody conflicts. Most of these societies are embarking on major processes of internal restructuring. We therefore appeal to the Commission and accept as Members of this House that we have a duty to act as well as to consider. We have to work responsibly and not be motivated purely by our self-interest as Europeans. It is true, however, that the Latin American crisis may destabilise the European economy if we fail to express our solidarity and to take prompt and decisive action to safeguard the future.
An enhanced role for the European Community could counter the influence of Japan and the United States, and result in a better framework for the globalisation of the world's economy. Our group does not defend the simplistic notion that economic policy should be surrendered to politics and solidarity. We are in favour of social adjustment which takes the human factor into account, but we know that if the economy is disregarded, costs will spiral and benefits vanish. We therefore support the resolution which will be put to the vote in the House today. We urge the Commission to play an active role in these processes of regional integration, demonstrating strong support for and solidarity with Latin America, and facilitating the emergence of stable, democratic and highly developed societies.

Kreissl-Dörfler
Mr President, ladies and gentlemen, the crisis that is currently gripping more and more regions in the world and therefore also Latin America is not a disease, but the logical consequence of a world economy that has gone awry. So there is no risk of contagion, no point trying to vaccinate with new financial injections, as various groups are proposing in their compromise resolution. On the contrary, injections of finance would only be grist to the mill of those people who have been unscrupulously amassing fortunes in Latin America for years.
All the fiddling and cheating that has been going in Brazilian banks in the last ten years alone can only be described as criminal. Let me just remind you of the famous 'pink file' affair two years ago. It contained a list of politicians from António Carlos Magalhães to the former President Sarney who had been receiving illegal transfers for years; the only reason it did not come to court was because these same politicians voted against setting up a committee of inquiry. Large private banks collapsed by the dozen, the State took over the debts, balance sheets were forged unscrupulously and the ordinary people lost all their savings.
Anyone who in such a situation calls for more liberalisation, fewer controls and nothing but measures to, and I quote, 'ensure that confidence is regained among investors' is asking for trouble. Just offering funds to service the external debt simply makes the vicious circle rotate even faster. In the face of the growing poverty in Latin America, it would be cynical of us once again to miss the opportunity to incorporate brakes in the financial roundabout. Fresh money, new investment must remain in Latin America; at least they must remain there for a minimum period, and they must be used to support local production and promote local consumption.
At the Latin American summit in Lisbon last week, even President Cardoso was prepared to remember his own left-wing past, in view of the crisis. It was he personally who called for a tax on short-term capital movements and for the resulting revenue to go to poverty programmes. That is exactly what the so-called Tobin tax is meant to achieve. It may not be a way of gaining the confidence of irresponsible speculators, but will certainly attract investors who look to the long term.
Ladies and gentlemen, if you endorse our amendments in this regard, we would also be prepared to support your resolution.

Escolá Hernando
Mr President, I should like to thank the Commissioner for his statement. Ladies and gentlemen, try to imagine a scenario where a country experiences a steep rise in the interest rate, a dramatic fall in the stock market, an increase in the national debt, panic amongst financial investors, the threat of currency devaluation - in short, a major crisis of confidence and the collapse of economic reforms in progress. Well, this is exactly what befell many Asian countries last year, then Russia during the summer, and is now happening in Brazil. There is a danger that other countries in Latin America may soon be affected.
Fear, particularly financial fear, comes free of charge. If we do not put a stop to this domino effect, there can be no guarantee that the United States or the European Union itself might not soon be affected, even though their economies are solvent. We should, of course, hope that this possible domino effect will be arrested thanks to the solid democratic basis established across South America, following the many agreements signed with the European Union.
In our view, long-term measures should be taken to deal with the situation, namely the reform of the institutional framework which developed from Bretton Woods. Medium-term measures are also called for, to promote greater transparency and the regulation of financial institutions. In the short term, we should find ways of offering immediate financial support. Spain, for instance, has set up a fund to assist Brazil, and the United States has followed suit, offering lines of credit to countries threatened by similar financial problems. It is to be hoped that the European Union too will act swiftly and decisively in the near future. I stress the need for swift and decisive action, because we need to move quickly to prevent the crisis spreading across Latin America and resulting in the withdrawal of foreign capital and a regional recession. It has been estimated that the Brazilian stock market is currently losing a million pesetas a second. Ladies and gentlemen, this cannot be allowed to continue.

Souchet
Mr President, the scale of the financial crisis that is affecting the countries of Latin America, as it is affecting nearly all countries with emerging economies, and the extent of the impact it is bound to have on the European economies and particularly on the countries in the euro area, have been largely underestimated in Europe up until now. Here, in fact, we have incessantly heard the political cant about the euro shield and the European exception, as if Europe could remain an island of stability, due to a mistaken understanding of the importance of intra-Community trade, and as if we were trying to ward off the crisis and its impact on us through a show of optimism that is infantile and irresponsible. Our primary task as responsible elected representatives should be, on the contrary, to consider the true reality of the crisis as it stands, even if this in fact threatens to make the introduction of the euro more tricky than we thought and might even lead us to question the possibility of introducing a new currency in the middle of an international financial upheaval.
The declaration that has just been made by Commissioner Bangemann on Latin America is at least a sign, in part, of this essential return to realism, and we are beginning to see such signs in various quarters. The Prime Minister of Luxembourg, Mr Junker, is saying that the euro is not an eternal shield. The winner of the 1998 Nobel Prize in Economics, Amartya Sen, is expressing his fears of seeing a single monetary policy guided solely by anti-inflationary concerns having devastating effects on Europe when faced with a sustainable drop in American rates.
The Asian and Latin-American financial crises and their effects on the value of the dollar could indeed be the first asymmetrical shock to affect the various countries of the euro area. Their economies, I remind you, are still far from being in line. The Iberian economies will therefore be affected earlier and to a greater extent than the others by a major Latin-American crisis. It is in this context that we will be able to judge whether the euro really acts as a shield or whether the countries of the euro area can together withstand the wide gap between the very heavy constraints of the single currency and the shocks that each of the countries is going to suffer as a result of the crisis, to different degrees, in different sectors and at different times.
Nor can we fail to ask whether it is really the right time for the various countries committed to forming the euro area to deprive themselves of flexible monetary resources that are tried and tested means of adjusting to an economic crisis, at a time when we appear to be verging on a major world financial crisis!

Antony
Mr President, the overall economic situation in the countries of Latin America is not good. It is not good in the banana republics exploited by North American trusts. It is not good in the countries where the communist guerillas are pillaging, raping and killing. In Peru, the so-called 'Shining' Path is massacring entire villages. Nor is it good in Colombia, especially in Caguán, where the extreme left-wing Columbian revolutionary armed forces receive payments from drug traffickers whose cultivation and trade they are protecting.
Only one country, which was put back on course for a sound economy several years ago, is showing a clean bill of health all round. That country is Chile. The Chilean model is therefore an example for the other countries of Latin America, but also for the African countries and for Russia.
The bulletin of the French Embassy, which I consulted yesterday on the Internet, says that growth is continual and that stability is guaranteed for prices, the currency and public finances. Chile is the country where investment is being made and where financial reserves are increasing. In 1973, the situation was different. The Marxist dictator Allende had ruined the country, which, following the lorry-drivers strikes, was experiencing a revolt among housewives. Everywhere, extreme left-wing armed groups were ruling with violence and murdering more and more people. It was like Spain in 1936, where the right-wing majority, Gil Robles' CEDA, had its activities curbed and its leaders and militants assassinated, not to speak of the anti-Catholic atrocities.
Then a republican officer took a stand: General Pinochet. He took a stand, like General Franco in the past, to avoid the grip of communism that, there as elsewhere, was preparing to set up its gulags and fill the mass graves. The army and the police dealt with terrorism and the violence of subversion with warlike methods and every type of regrettable abuse. And, on the pretext that torture is institutionalised and widely practised in Israel, are preparations being made in London or Madrid to imprison Benyamin Netanyahu, whose army has killed more Palestinian resistant fighters than Chile has killed revolutionaries? Is General Sharon going to be arrested in Washington or Paris for all the savage repression that has taken place under his authority?
We are forever appealing here for the rule of law, but the ambush on General Pinochet, organized in a joint Spanish and British plot, cynically violates all the rules of international law. However, no committee of inquiry and no people's tribunal has been set up to judge 80 years of red terror in the world and those responsible for 200 million deaths, if we add the victims of the wars to the 100 million who have died in the organised famines and mass executions of communism, an impassable scenario of modern slavery.

Linkohr
Mr President, allow me to add a few words to Mr Kreissl-Dörfler's comments. He is naturally quite right to cite corruption as one of the causes of the economic instability. The fact is, of course, that there are some thoroughly corrupt states - one could call them military dictatorships. Mr Antony just referred to a country that used to be a military dictatorship. These countries are certainly stable economically. But there are also some properly governed states that are economically vulnerable. There are many reasons why this can be so. We are seeing this situation in Latin America at the moment. There is a certain psychology that applies to financial markets when they obviously no longer have confidence in the fixed exchange rates of Brazil, for instance. It leads to a flight of capital, as in Asia and Russia. That happens for psychological reasons. It has no economic basis, as Mr Bangemann rightly pointed out.
But there is also one factor over which the states often have no influence at all, namely the fall in raw material prices. The advantage Europe is currently deriving from cheaper oil is quite simply a disaster for Mexico, Venezuela and other countries. That has nothing to do with corruption, it is because of the fall in raw material prices, which really should give us food for thought. How can we also stabilise raw material prices in the long term?
It is also due to the disappearance of Latin America's Asian markets, through no fault of its own. Furthermore, with the disappearance of the Asian markets and the devalued Asian currencies, Latin American goods are now faced with cheap competition from that region. That is why I think we must take a very practical approach to this problem. Looked at in practical terms, that means Brazil must be stabilised at this time. Brazil is the key economy in Latin America. Let me refer you to paragraph 9 of our motion for a resolution, in which we call for a special fund - something which has been discussed in the past - supported by the international financial institutions, to help Brazil cope with the present difficult situation. If Brazil collapses, if Brazil has to devalue, the entire region would be affected. We would be exactly where we were in the early 1980s, namely confronted with a disastrous situation in which the ordinary people, the people of Latin America, have to pay the price for the inability of the financiers to maintain order in the world.
So I ask you to approve our motion for a resolution and thereby to support all the efforts made by the Commission and the Council and also by others to prop up the Brazilian economy at this time. That does not excuse them from the homework that needs to be done in these countries, with which we would be happy to assist them.

Salafranca Sánchez-Neyra
Mr President, I should like to thank Commissioner Bangemann for his ever-positive and involved presence amongst us.
Following the debt crisis, Latin American countries have in recent years made a considerable political and economic effort towards structural adjustment. This has involved enormous social costs.
It so happens, Mr President, that although those countries agreed to the clause on democracy in their cooperation agreements with the European Union, they receive the worst treatment, in real terms, under the Community budget. Not only do they not enjoy any budgetary advantages, but they do not benefit either from the preferential trading treatment granted, for example, to the countries of the Lomé Convention.
With the advent of this crisis, the Latin American countries have been punished twice over: they have been the victims of the adjustment, and they have also been the victims of the system we advised them to adjust to. Clearly, the solution to this crisis lies beyond the competence and sphere of influence of the European Union. Nevertheless, Commissioner, much can be done at Community level. Mr Marín, the Commissioner responsible, is aware that I have always supported him in the past, and that he can continue to rely on my humble self to support any initiatives he may put forward with a view to strengthening relations between the European Union and Latin America.
I do have to say, however, Commissioner, that on this occasion a clear, effective and diligent response from the Commission was sorely lacking. In such difficult times, the European Union cannot and must not shirk its responsibilities, nor may it resort to silence.
Mr Bangemann, it is regrettable that year after year the Commission should propose the same amounts for the main budget lines for Latin America. No account is taken of the new agreements with Chile, Mexico and Mercosur, of the challenges next year's Rio summit will present, or of the current crisis affecting the economies of Latin America. No provision is made either to compensate for the rate of inflation.
I therefore share the concern expressed by Mrs Miranda in this regard. I trust all the political groups which have participated in this debate - Mr Puerta's or even Mrs Miranda's, since the general rapporteur for the budget is in her political group - will be able to support the amendments to the draft budget for the coming year put forward by both Mrs Miranda and myself. As it has consistently done, my group also supports the amendments I have proposed.
I do hope, Mr President, that following this debate the Commission will tackle the situation with enthusiasm and imagination and will consider a suitable response at Community level. What is needed is not just a declaration, but a package of budgetary measures, investment, more credit from the European Investment Bank, Community guarantees and trading agreements. The Old World has to find a way of expressing its solidarity with its long-standing and long-suffering friends in Latin America.

Orlando
Mr President, although the financial and economic crisis in Latin America is undoubtedly linked to those in the Far East and Russia, being a consequence of them, it has certain specific features of its own. There is a clear disparity between, on the one hand, all the admirable proposals and efforts being brought to bear by the parties concerned - the international community, the Monetary Fund, the European Investment Bank and the World Bank - and, on the other, the utterly inadequate results achieved. This is a sign that the treatment is perhaps not the right one: we should stop showering Latin America with aspirins, which have disastrous effects, but should perhaps prescribe for it a course of antibiotics, or in other words - as Mrs Kreissl-Dörfler put it - adopt an alternative policy approach.
Tough decisions must be taken to break the vicious circle of debt which only produces more; debts should be written off once and for all. Measures should be taken with all due respect for human rights; equitable growth should be pursued in both Europe and Latin America, without applying different standards. Finally, excessive liberalisation should be avoided, since that serves only to make matters worse, and we should put an end to unconditional guarantee funds, which have contributed to the disaster in Russia.

Lukas
Mr President, not so long ago, Latin America was regarded as one of the most promising regions for the world economy. Today the economic and financial crisis in this region has had very serious consequences, and not only for the people there. The Latin American countries rely heavily on the trend in raw material prices, and it is an established fact that this crisis is seriously disrupting the international financial markets. We keep rightly declaring that so far the euro zone has reacted in a relatively stable way to the international network of crises. But we must realise that all the worldwide economic problems are bound to have an impact on the European Union too, unless internationally coordinated measures are taken.
We shall have to tackle the problems at their roots if we wish to resolve them and revive the world economy. One problem is that the level of real interest rates is at times too high. We must improve the quality of management systems, supervisory systems and, in particular, financial systems, on an international basis.

Katiforis
Mr President, dear colleagues, Commissioner Bangemann, it matters little that the fundamentals of the real economy are sound, as you said at the beginning of your speech, because in a monetary economy, a market economy, the disease always comes from the money side. It is the money side that we have to somehow cure if we are going to stop the financial crisis from spilling over and overwhelming the real economy.
The question is what are we doing to achieve this? The answer is that we, the developed world, are doing very little indeed, yet we are asking Latin American to bear the burden of the adjustment. What is Latin America doing? Latin America is actually doing quite a lot. Brazil has raised its interest rates to 50 %. You can appreciate what effect that is likely to have on its real economy. Next year Brazil will have negative rates of growth: -2 or -3 %. You can understand how that will exacerbate the poverty and misery in that country, which are already considerable. Now we are asking them to do more. We are asking them to reduce a deficit of 7 % in Brazil to 2 or 3 %, as if they were going to join the euro. You can understand what that will do to their public services: it means taking the food out of the mouths of starving children. This is what this pressure implies.
We threaten them with a repeat of the speculative attack on their currency. The speculators, we tell them, are waiting to see what we will do on 25 October after the election when the new measures will be announced. What can they do? They are starving already, what more can they do to save the Western financial system, Mr Commissioner?
What can we do to save our own system? President Cardoso spoke in favour of introducing a Tobin tax. For four years we have been talking about a Tobin tax and we have not made any progress. We need to have a fund to rescue them. What size should this fund be? Between $40 and 100 million say the specialists - that money does not exist in the financial institutions, Mr Commissioner.
It is a mistake to think that we are talking about their interests alone. If Brazil falls, any person in a responsible position will tell you that Wall Street will fall and if Wall Street falls the consequences for Europe will be terrible. Mr Commissioner, it is our interests that we have to defend and we should defend them at our cost and not at their cost. When one hears the ominous sounds coming from Latin America do not ask 'for whom the bell tolls?' - it tolls for you.

Lenz
Mr President, after all these economic and political considerations, let me point to another aspect. We all breathed a sigh of relief when we heard in the early 1990s that the economic upswing in Latin America heralded the end of the lost decade of the 1980s. In addition to this economic upswing, which in fact differed widely from one country to another, we also saw more stable democratic governments emerge in all the countries - and I believe this is most important for us - with the exception of Cuba.
True, this was sometimes accompanied by severe political difficulties and social crises, and there were still many human rights violations. But what was important was that democracy and economic recovery gained ground and gradually also filtered through to the people, as reflected at least in some degree of political stability. Now the Asian economic and financial crisis has also reached Latin America, where structures that are still weak are being further weakened and threatened. We must not allow the new financial crises to make the people begin to doubt in democratic structures that are, in any case, still very inadequate in some respects.
By now we in Europe should be familiar with the disappointment people feel if the chain of democracy, the rule of law and prosperity does not match up to their expectations. Europe, the EC and the democratic parties provided much support in their time. Despite all the problems engendered by the changes in Eastern Europe, which have brought similar problems in their wake, we should not forget these partners, and especially not the risks which this kind of disappointment can entail. The current debate about Pinochet shows how thin the protective cover actually is, although here we are dealing with an established democracy, namely Chile.
Nor must Mercosur, with its high ambitions, become a victim. It too is in a sense our godchild, and we must attack the human rights violations that accompany every economic and social crisis, even if the two aspects may seem quite unrelated. Certainly, the Latin American markets are future markets for us. We would ask the Commission to take these factors into consideration in any initiatives now taken, given also that the word has now spread in what are called the worldwide and international financial institutions that the two aspects are indeed interrelated.

Musumeci
Mr President, despite the Commissioner's upbeat tone, the financial crisis affecting Latin America is bound to cause alarm and concern in the European Union, not only because of the need for the EU to play a role in international monetary cooperation, but also because Europe has for many centuries been linked to that vast area of central and southern America through ties of culture, language, religion and civilisation, and - perhaps - because everything possible has not yet been done to establish a special relationship with that market.
Naturally we welcome the idea of a financial package for Latin America, geared to creating new jobs and boosting domestic consumption. We are equally pleased to note the increased growth of recent years, but there can be no doubt that reforms aimed at achieving economic stability and financial transparency have now become absolutely essential, and that we must ensure that a loss of confidence by financial markets does not weaken the currencies of Latin America.
How should the challenges of the future be tackled? The World Bank has already assisted Argentina; it could obviously do likewise for other countries. But the European Union cannot refrain from playing its own part, by reinforcing political cooperation, intervening more effectively and ensuring that capital does not stop moving freely around Latin America. Rather, strict controls should be put in place to prevent speculation, and new investors encouraged with incentives targeted in particular at small and medium-sized enterprises. At the same time, human rights must be complied with in full, and democratic conditions respected.
Unless the European Union can assume a leading role in the shaping of a new international monetary system, the much-vaunted launch of the euro could result in partial failure, like a Ferrari without an engine: good enough to display in the shop window, but not to set out on the long road towards international solidarity.

Newens
Mr President, the economic crisis in the world today clearly demonstrates the fact that few countries are immune from the consequences of economic shocks in other parts of the world. Asia is important, but Latin America only sends 1 % of its exports to Russia. It was, however, badly affected by the flight of capital triggered by the situation in Russia. If Latin America is plunged into deep crisis, this will inevitably have a very serious effect on the American economy and pose the threat of a world crisis more serious than any since the pre-war era, which could devastate Europe.
It was hoped that the low inflation rates and improving levels of growth in Latin America would provide the basis for real progress and, as Mr Bangemann said, in 1997 the average rate of growth was over 5 %. This was attributed by many observers to liberalisation, privatisation, deregulation, etc. encouraging an inflow of capital. However, the present crisis has shown that such policies leave their practitioners vulnerable to events totally beyond their control. As the Managing Director of the IMF, Michel Camdessus, put it: 'At times one has the impression that markets do not differentiate properly the good players.' While it would be totally mistaken to consider returning to closed economies or narrow protectionism, there is a need for agreed international regulation to deter huge and sudden capital flows, particularly of short-term funds, and to work towards globally coordinated interest rates. Consideration must also be given to a rescheduling or writing-off of huge foreign debts which rose for Latin America as a whole from $83bn in 1975 to $627bn in 1996.
Structural adjustment programmes, liberalisation and fiscal reforms have also frequently involved cuts in health, education and social and poverty alleviation expenditures, and these should have been avoided in the past and must be resisted in the future if poverty is not to be rapidly increased and demand further reduced.
It is incumbent on us in Europe to adopt policies, such as the easing of interest rates, to encourage growth, and the provision of appropriate financial support - not, however, just to help the rich and the speculators.
The crisis in Latin America and in the world as a whole should alert us to the necessity of questioning the neo-liberal policies which became the conventional wisdom and seeking to construct a new model of development involving regulation at the global level, a new international financial agreement, reform of international financial institutions and a new deal to reverse the trend to ever greater income inequality and vast poverty.

Secchi
Mr President, I very much appreciated Mr Bangemann's introduction, and I believe there is no need to stress that - as virtually all the previous speakers have said - the violent financial turbulence which has hit all markets in recent months, sparked by the crises first in Asia and then in Russia, could have particularly serious adverse effects on the economy of Latin America. This possible development is all the more worrying, given the efforts made in recent years by most of these countries to stabilise their economies and equip themselves for a satisfactory move into world markets. These processes of adaptation have demanded considerable sacrifices on the part of the populations of Latin America, not least in terms of reduced real incomes and living standards. The first green shoots are nevertheless emerging, as proved by the growing interest in that area on the part of economic operators, in terms of both financial flows, trade and investment in production.
Unfortunately, our assessment is less upbeat in the case of countries claiming to be friends of Latin America, in particular the European Union. By way of example, we could mention the deadlock reached over the draft cooperation agreement with Mercosur and Chile, not to mention the one with Mexico. Indeed, despite the Commission's efforts and the support from this House, the selfishness and short-sightedness of certain Member States - more concerned to protect narrow farming interests than to develop a broad-based vision of international economic and hence political relations - are preventing the launch of initiatives which could have extremely important repercussions, primarily for Latin America but also for Europe.
Whilst this unacceptable stalemate should be criticised in no uncertain terms, it is equally necessary to encourage the Commission and Council to do whatever they can, not least through financial measures, to consolidate the results achieved to date and prevent the efforts made by Latin America from degenerating into a new and untenable 'lost decade'. For example, referring to the figures quoted by Mr Katiforis, whereas it might be entirely inconsistent with the principles of sound economic policy management to think of using for domestic purposes any excess reserves of the European central banks which might be generated once the euro is introduced, it would seem quite reasonable to devote part of these sums to extraordinary financial support for Latin America, by agreement with the other international institutions, with a view to avoiding a situation where - as has already been underlined - those countries' problems could soon become ours as well.

Herman
Mr President, I would like to draw three lessons from this. The first is that in a very interdependent world, the possibility of infection means that we have to make it our priority to stop the spread of disease, if I might say so. We have scarce resources: the intervention methods of the Monetary Fund. We have wasted them. Going to Mr Yeltsin's rescue, in the circumstances in which it was done, was a waste. And we no longer have these resources to give to countries that show that they have a State and a market structure, which is not perfect - nothing anywhere is perfect - but which, when compared to the void with which we are faced in Russia, is totally different. This is, therefore, the first lesson to draw: we must initially block the spread of the disease.
The second lesson to learn is that the problems of balance of payments or of collapse of credits are not simply problems of credit or of advancing the necessary liquid assets. There needs to be a framework, a culture, a set of institutions that work. A market is not a jungle. The market is the result of a civilised legal and political structure. That is what a market is.
Those people who today - and this is the third lesson - want to do away with the entire condemned system and replace it, because the failures we have seen are the result of uncontrolled collective behaviour, are not saying what they want to replace it with, but we know that they are thinking of systems that have brought no results. Protectionism, which for 20 years has been called support for the Third World, has yielded no results. Billions have been spent on helping regimes that have done nothing to ensure the development of the population, and this was done in order to have a clear conscience.
I therefore think that, all things considered, integration into a globalized economy according to very precise rules is the best solution, in the long run, to guarantee development. The example of Chile has shown this. There have been others, and the fact that at a given time things may get out of control, for very specific reasons, must not make us give up. We know very well why things got out of control in Japan, Thailand and elsewhere. What we are dealing with is not so much poor management in those countries, but rather the arrival of a short term influx of capital, which was withdrawn at the first sign of a setback, and then the collective chain of events led to a difficult situation. That is what we need to solve, that is the lesson to learn. We must not throw out the baby with the bathwater.

President
I have received five motions for resolutions tabled pursuant to Rule 37(2).
The debate is closed.
The vote will take place tomorrow at 10 a.m.

Telecommunications, media and information technology
President
The next item is the report (A4-0328/98) by Mr Paasilinna, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the communication from the Commission: Green Paper on the convergence of the telecommunications, media and information technology sectors and the implications for regulation (COM(97)0623 - C4-0664/97). Draftsmen (Hughes procedure): Mrs Plooij-van Gorsel for the Committee on Research, Technological Development and Energy, Mr Hory for the Committee on Legal Affairs and Citizens' Rights and Mr Kuhne for the Committee on Culture, Youth, Education and the Media.

Paasilinna
Mr President, Commissioner, ladies and gentlemen, last spring I had the honour of being appointed rapporteur of a Parliamentary report on a Green Paper dealing with the convergence of telecommunications, the media and information technology. The Commission's document was very technical and perhaps even meandered somewhat. I, for my part, tried to keep the report brief. Too lengthy a report might not have led to any action being taken, since it might have been difficult to see the wood for the trees. Convergence is such a complicated and unpredictable matter that reports should at least not end up making it even more obscure.
My position is based on advocating an open European information society for everyone, in which there is no division between the information-rich and the information-poor. Information is not an ordinary commodity. Regardless of its mode of dissemination, it has great social and cultural value. Bytes are not neutral. I maintain that participation in the world networks should be the modern right of every European citizen, which also means having as extensive a market as possible. Likewise, the SME sector, which employs so many, must have a basic right to flexible access to the new, integrated environment. Convergence does not necessarily mean the merger of different sectors of industry - trends indicate that it is actually more a way of transcending borders. It is then that new and partially overlapping activities and services will co-exist.
To safeguard the availability, interchangeability and multi-functionality of the networks, the transmission of information has to be regulated within the terms of a standard regulatory framework. Regulation has to meet the challenges of employment as well as the rights of citizens, while at the same time satisfying the needs of new economic strategies and the synergy interests of companies. As sectors are developing fast so must our legislators also work fast and keep up-to-date. I have in mind a model for flexible regulation. It will not hamper competitiveness in European industry, but will actually aid it. Nevertheless, regulation will be available if any sector runs off the rails. I did not approve of the delay in drafting this report: on the contrary, when it comes to competitiveness, we have to press on. I await prompt action on the part of the Commission to get legislative initiatives into place so that we can bring the matter to a conclusion when Finland holds the Presidency.
The current framework for regulation is still feasible, then, but convergence is happening right now and the transition period we have is short. Competition already exists, for example, among the telephone and the cable television networks and between the fixed telephone network and mobile phones. You can get music and television programmes off the Internet. For this level of technical transmission a new, separate legislative code must be created, one that will cover all the many systems that exist today. We most definitely do not need a European supervisory authority to take responsibility for content or services. They will naturally remain a matter for the Member States, in accordance with the principle of subsidiarity.
The part mobile phones play in our society was perhaps not done justice to in the Green Paper. For example, recently in my own country, Finland, there has been an explosion in the number of mobile phones, which is showing no signs of abating. They are used for paying bills, for surfing the net and playing computer games, and soon you will be watching TV programmes on them. The mobile has seen convergence, if anything has. The mobile is a way of life: you are always close by, yet you have your freedom.
When we consider equivalence among the networks, equal and fair terms of allocation have also to be ensured for service providers. In this connection, we must strongly oppose the auctioning of mobile communication frequencies. Auctioning would lead to monopolies, and then the American and European giants would start dividing up the frequencies among themselves. That would be going against everyone's interests, especially the consumers, as prices would rise. The amount of money a company has is no indication of how good a service it can provide. Under the Treaty of Amsterdam, the preferential treatment that public service broadcasters are getting is bound by special conditions governing the content and quality of programmes. In addition to effective regulation, we need an enormous injection of investment into education and training, the European information industry, and employment. Above all, we have to promote the notion of an information society which is open to everyone.

Plooij-van Gorsel
Mr President, Commissioner, ladies and gentlemen, on behalf of all the committees involved in the Green Paper on convergence, I should first like to thank the rapporteur for the excellent cooperation which has produced a coherent report.
Convergence of the telecommunications, media and information technology sectors is a major challenge for policy-makers and legislators. The keen competition between the various technologies makes it extremely difficult to predict what the situation will be in the future. But what is certain is that the arrival of new services will lead to an expansion of the information market as a whole. This will bring new opportunities for economic growth and employment.
A new environment for communication services also provides opportunities to improve the quality of life of European citizens by offering the consumer more choice and lower prices. Applications and services are becoming independent of the supporting infrastructure, which is why technology is clearly a motor for change.
Support for research and development activities in the field of ICT under the fifth framework programme can make a major contribution to the convergence process. The Committee on Research, Technological Development and Energy therefore much regretted that the budgetary resources proposed by the Council for the Technologies of the Information Society programme are lower than under the fourth framework programme. This is not in keeping with the economic and social importance which the Green Paper on convergence rightly awards to information technology.
Technological developments influence the regulatory framework and vice versa. Regulations must not be an obstacle to the interoperability of different technologies and must therefore, if nothing else, be technologically neutral and non-discriminatory. Rules should also preferably be applied worldwide.
The convergence of telecommunications, media and information technology is essential to a flourishing electronic trade. The relatively high cost of data and telecommunications in Europe and the lack of security on the Internet means that electronic commerce has so far remained principally limited to the transfer of data between large companies and their suppliers and customers. Lower telecommunications costs due to liberalisation and the possibilities offered by the Internet will facilitate access to electronic commerce for small and medium-sized businesses and the consumer.
There is a real shortage of factual material - by which I mean good statistics - with which to assess the rate and direction of the development of ICT services currently used in trade and industry in other areas of society. Measuring computer use or Internet use, for example, is just one of the elements. Good benchmark studies, preferably at international or European level, are necessary in order to judge whether or not it is desirable to regulate. We must learn to live with the fact that government cannot keep up with all these developments at the legal level.
Finally, Mr President, convergence is not an aim in itself. It is a matter of eliminating barriers to the supply and use of ICT products. National legislation for telecommunications or for information technology or for printed media alone must therefore be adapted. In this context, the capacity for innovation and the opportunities for risk-taking must be sustained, and not hindered by an excess of rules and regulations designed to channel convergence.

Kuhne
Mr President, ladies and gentlemen, I would love to see a more detailed debate on how an uncontroversial and positive technical process can fall victim to an interest-led ideology of deregulation, regardless of its market capacity or the behaviour of users and viewers, regardless even of everything that is recognised and known as necessary to the economic strengthening of the production and use of European content.
In the view of the Committee on Culture, Youth, Education and the Media, the report before us must also contain the following points, in addition to the emphasis on public broadcasting and the Amsterdam protocol on the subject, i.e. not having programme requirements laid down by an EU Commissioner. They include what are called 'must carry' obligations for network operators in respect of the programmes of public service providers; a form of regulation which reflects a balance in the law on the media, telecommunications and competition, to ensure security for investors and legal certainty; the continued enforcement of regulatory principles such as pluralism, cultural diversity, protection of young people and the production and marketing of quality programmes, even in a world with no shortage of frequencies; and the submission of a draft directive on media ownership and the protection of pluralism. Precisely in view of the growing convergence of transmission channels for all forms of electronic communication, access is quite rightly an important factor with regard to acquiring market power and must therefore be subject to democratic control. I believe we still have quite a lot to do here, which includes supplementing and correcting the motion for a resolution by the Committee on Economic and Monetary Affairs and Industrial Policy along these lines.

Wolf
Mr President, Commissioner, ladies and gentlemen, I wonder why this curious combination of vulgar Marxism and speculation keeps cropping up whenever we discuss the information society. According to Mrs Plooij-van Gorsel, technology is the motor of development, which is simply not true. The question of productive forces and production conditions is not that simple, not even according to Marx, although that is another matter. Even good statistics are no use in themselves. We need to look at quality. We need to understand what is happening. Until we understand that, there is no point in producing statistics.
Vague ideas about where market opportunities might exist do not help open up markets; what helps open up markets is careful regulation, investment security, definite rules. Careful regulation cannot be used as a blanket excuse for continuing to apply the deregulation ideology in the way it has been applied in the past. In that respect, I welcome Mr Paasilinna's report. By taking a specific approach and by clearly defining his terms in his report on convergence, he is shedding some light on the obscurity which the Commission report unfortunately creates, and is establishing at least some basis for a discussion that really can answer the question: what does careful regulation mean here? Two words, information and communication, can in effect serve as a gold mine, a weapon or a lever for democratic participation. But that depends on how they are applied in the various areas, what the people need and expect, and what needs and expectations must be supported, created or indeed scaled down by the appropriate rules; because of course only a vulgar Liberal would believe that we can simply let things take their course and surely something good will come of it. That is not the real world either.

Palacio Vallelersundi
Mr President, I take the floor to deputise for Mr Hory of the ARE Group, draftsman of the opinion of the Committee on Legal Affairs. I fully support his views, and shall now continue in French, since we discussed this speech in that language.
Mr President, in drafting this opinion, the Committee on Legal Affairs and Citizens' Rights set itself the prime objective of studying the legal problems presented by the phenomenon of convergence. This phenomenon is mainly a result of the technical developments of digitalization and compression, which permit various types of infrastructure functioning independently of each other to transport various types of content. This infrastructure despecialization erodes the traditional distinction between telecommunications and broadcasting, and is bringing about a debate on the desirable regulatory changes in this sector.
The Committee on Legal Affairs therefore felt it was important to adopt a functional approach that is not limited to the three options proposed by the Commission's Green Paper. This is why our committee has proposed a model for the future that, while maintaining the traditional distinction between infrastructure and content, aims to simplify the regulatory framework.
The new framework that is proposed is subdivided into five different sectors. The first involves infrastructure provision: resource access and interconnection arrangements. The second relates to network operation: routing and transporting of communications content. The third concerns access system management: allocation of Internet numbers and addresses and browser systems, including electronic programme guides. The fourth relates to general content, that is, the content of television and Internet programmes, including intellectual property rights. And the fifth relates to specific content, that is, the provision of services such as voice telephony and Internet access.
The Committee on Legal Affairs also emphasises that due to the speed of technological change, simply applying Community legislation on competition, which is there to stop, a posteriori, the formation of cartels and the abuse of dominant positions, is no longer enough to respond effectively to the large-scale process of alliance-making and vertical integrations within the industry.
Our committee therefore considers it necessary to broaden the ONP-type open provision rules whenever bottlenecks threaten to limit competition between businesses and to compromise consumer protection.
It therefore calls on the Commission to do its utmost to ensure that digital TV decoders in Europe are compatible in future and to draw up a draft directive to close the remaining loopholes, notably in the protection accorded by consumer law to consumers of goods or services offered via new technologies.

Hendrick
Mr President, I should like to start by thanking Mr Paasilinna for an excellent report. The Green Paper and the report defined convergence as growing together and interchangeability of networks and channels for communication, and, in addition, the integration of distinct technologies in the new forms of applications and services. They also talk about convergence of content which I will discuss a little later.
The divisions of the past into the technical areas of voice telephony, broadcasting and new services have led to a complex legislative and regulatory framework which has arisen due to a variety of different technologies being applied. These technologies made the distinction between a telephone call, a television broadcast and an Internet page access quite pronounced in terms of delivery and content. In network and technological terms those services will still be delivered in a similar fashion as they are today but the technologies applied will be predominantly digital rather than analogue and predominantly fibre-optical and satellite-based rather than electrical, cable and terrestrial broadcast based.
Therefore, the delivery mechanisms will not greatly affect the way in which these services are delivered or consumed. They will, however, provide and offer new services of a form and nature which will break down the traditional boundaries that exist between current forms of communication. This will mean that traditional forms of content can be stored, transmitted and received by the same media and means. The content will, by the technology at least, be treated indiscriminately.
For that matter, why should we, as regulators, discriminate between different forms of content other than to cost added value, protect copywrite and provide security when the boundaries between the traditional forms of content break down? We are, in effect, experiencing convergence of content. Is a video-conferencing session between four people a telephone call with vision? Is it a live television broadcast to multipoint destinations? Is it a new service which should not be covered by European telephony or broadcast regulation but treated like a new service such as Internet shopping? I believe it is none of these.
The review of communication into a single regulatory framework to be carried out by the Commission next year is to be welcomed. On the basis of its Green Paper on convergence and Parliament's response in the form of the Paasilinna report, it will provide a framework that will contain light and simple regulation to promote economic and industrial objectives such as competition and interoperability. It will also enhance the concept and implementation of universal service so that everyone is information-rich and cultural diversity is maintained.
The Commission's Green Paper and Parliament's response make those arguments. I commend Mr Paasilinna's report to this House.

Hoppenstedt
Mr President, Commissioner, ladies and gentlemen, globalisation and convergence are the prevailing slogans of our time. That is why the Green Paper described the review of the traditional regulatory system in terms of its relevance to the future as the most important challenge. The Commission launched this discussion in December last year. It is clear from the huge participation of media representatives, consumer associations and industry in the consultation meeting that was then organised, with 270 contributions and more than 80 000 visitors to the Internet site by July 1998, that there is enormous interest and an enormous need for action in this area. How should we respond? Depending on the various interests of the parties concerned, the proposed solutions range from trust in the self-regulatory powers of the free market, through a partial regulation of specific areas, to excluding certain areas of public service.
My position in this discussion is that we are standing at the beginning of a development whose effects we cannot clearly predict, with the best will in the world. There is certainly no consensus in the forecasts on the future use of digital services. It is too soon to say anything for sure, because there are still too many unknown variables. So we must take care not to place too much importance on any one aspect, which could distort the discussion and spoil our future chances on this potential European market.
I wish to congratulate the rapporteur warmly on his first report in this Parliament, in which he has endeavoured to strike a balance between the various demands. He says to the Commission, and I quote: 'a cautious attitude towards regulating new services should only be introduced where and when it proves necessary for the safeguard of the interests of consumers', adding, 'and if self-regulation by the industry based on these principles appears not to be efficient enough'. Here I can only agree with the rapporteur. However, there are some points, though only a few, on which I differ with him. I think that, at this stage of the discussion, to over-regulate by focusing the debate on the impact of convergence on content could have some adverse effects.
Mr Kuhne, of course I believe in recognising today's evaluation of the importance of public broadcasting, but all the various areas must be included in this discussion, and on an equal footing. We must create a favourable climate, so that everyone can find their own place in future developments, by which I also mean the future role of public and private broadcasting in this changed environment. We are still in the first year of the discussion, which will extend over another two or three years with the further measures planned by the Commission. So at this initial stage, I would urge that we do not block the way to further discussions by laying down rules that are too specific. We are only at the beginning of our search for the best solutions for all the areas concerned.

Thors
Mr President, perhaps I might cite two topical examples of convergence. Today we experienced a world - or at least a European - first. The Finnish Parliament's 'debate on the future' was broadcast live over the Internet. Using my notebook computer, I was able to follow in real time here in Strasbourg.
Moreover, the promoters of Sami Radio in Finnish Lapland have designed a website. Now the Sami people in Sweden, Finland and Norway have a cheap and easy way of keeping in touch across the borders and exchanging news about what they are doing. Samis account for four to five thousand of Finland's five million inhabitants.
I am quoting these examples to illustrate the need for us media folk to stop thinking that, as long as we copy the Americans, everything will be fine. Instead we should have the confidence to go our own way, offering variety and opening the door to all groups in society. Danish film producers have recently pointed us in the right direction. It is our duty to ensure that minority groups have their own channels and that small producers are given the scope they need. Journalistic quality should be a priority. More channel space will become available over time, and greater specialisation will increasingly be an option.
We need to prepare ourselves for less regulation, as several speakers have said. We need common EU rules more than ever before. This means more transparency in the telecommunications sector, especially with regard to tariffs.
This is certainly an exciting area and no one has all the answers. Dizzying developments are underway. This partly explains why we in the ELDR Group cannot support the rapporteur's Amendment No 13, stating that TV will increasingly become the prime means of locating and processing information. It is a pity we are not discussing Mrs Ryynänen's report on the role of libraries in the modern world until Friday.
Lastly, I should like to inform the President and the rapporteur that Amendments Nos 1 to 4 in the Swedish version of the text make no sense at all.

President
Thank you, Mrs Thors. We have taken note of your comments on the Swedish versions of the amendments. That will be looked into.

Gallagher
Mr President, first and foremost, I wish to pay tribute to the rapporteur for the preparation and presentation of the report. We cannot deny that developments in the telecommunications industry and in the information technology sector are verging on the astounding. Examples of new products being delivered include home banking and home shopping over the Internet, Voice over the Internet, e-mail data and Worldwide Web access over mobile phone networks and the use of wireless links to homes and businesses to connect them to the fixed telecommunications network, web casting of news, sport, concerts and other audiovisual services. Such developments represent concrete examples of an information society that has the potential to touch the lives of every citizen in the Union. They also highlight the significant change and the range and diversity of traditional telecommunications and media services.
The changes described in the Green Paper have the potential to substantially improve the quality of life for all the citizens of Europe. They will also have the effect of assisting the process of integrating the regions of Europe in the heart of the European economy. Legislation by means of regulation must be introduced to oversee the working of the new evolving sector of e-commerce, because the general good might not always be protected if unfettered market rules were to apply.
On the separate but related matter of media pluralism, I support the recent initiative by the Irish Government to maintain free access to major sporting events for all viewers. This is a commitment of the Irish Government and it is a programme for government, and legislation will be enacted, thereby giving pride of place to this important social objective.
Sport must remain an outlet for all people, regardless of class or background. Legislation must be enacted which ensures the principle of equality of access for all prospective viewers to our important national sporting events, such as hurling and football, all-Ireland finals and, of course, the Irish Grand National.
We must recognise that the new multimedia conglomerates are continually endeavouring to buy up the rights of many sporting events worldwide. The Member States of the Union must not lose sight of the fact that cultural and regional diversity can only be protected if national sporting events are accessible to all viewers who wish to see them.

Ribeiro
Mr President, there is one aspect of this debate on the Paasilina report that I find especially important and should like to highlight.
This report was approved in committee by 49 votes for, 1 abstention and 2 votes against (those of our group). The reasons why we voted against it are very clear. We believe that convergence in the sectors of telecommunications, the media and information technologies, in the framework of the information society, should not mean treating everything as if were merchandise, ignoring cultural specificities and identities, or calling into question the notions of creation and copyright, intellectual property or the fundamental concept of public service in this area.
We are quite convinced that our stand is the right one, which is why we have tabled eight amendments in keeping with the reasons why we voted against this report - apparently in a minority.
It is both curious and significant that the rapporteur has had the courage to table 16 proposals for amendments to his own report. We congratulate him on this as some of those amendments suggest that we are on the same wavelength, although we would not have chosen to word them as he has. But these amendments refer both to the role of the authorities as an essential component of public service and the preservation of cultural diversity and we welcome that.
We shall therefore wait and see what fate the plenary has in store for these amendments before we decide which way to vote. They reflect an approach that goes beyond merely looking upon these phenomena in terms of the economy or trade. That might restore to the text the stances taken by the Committee on Culture, Youth, Education and the Media and the Committee on Social Affairs and Employment rejected by the Commission.

Leperre-Verrier
Mr President, tomorrow we will have to answer the main question posed by the Commission's Green Paper: what will be the impact of the use of common technologies, particularly revolutionary ones, by the audiovisual and telecommunications sectors? One does not need to be a genius to imagine what consequences such a technological breakthrough will have on our daily lives, consequences that will not only be economic and legal, but also cultural and social.
Despite this, we must not be discouraged by the scale of the task. On the contrary, I welcome the fact that the Committee on Economic and Monetary Affairs has recognised the need for European regulations. In this respect, I would like to offer my congratulations for the contributions from Mr Kuhn, the draftsman of the opinion of the Committee on Culture, whose work is an example of clarity and precision, and from Mr Hory who, in the Committee on Legal Affairs, led with intelligence and talent a thorough discussion on the legal implications of the issue.
We therefore need a clear separation between the regulations to be applied to electronic communication infrastructures and those relating to content. Maintaining current Community regulations and setting up more flexible regulations for the mixed interactive services offered by the Internet fulfill the requirements of public interest and also the need to take cultural concerns into consideration.
This means that priority would be given to a combination of options 1 and 2 proposed in the Green Paper, as advocated at the Birmingham Conference. However, we need to remain vigilant because technology moves faster than political decision-making and there is a great temptation, when faced with changing concepts, to strengthen competition law or make sacrifices to the religion of ultra-liberalism.
Moreover, the European Union, which has already lost the battle of Hollywood, is in danger of losing the battle of Silicon Valley if our various Member States do not realise the urgency of regaining technological control by putting in place a common multimedia policy. We will thus belie the statement by Mrs Irina Magaziner, an adviser to President Clinton, declaring that the Internet is not an international resource, but the fruit of American investment.

Read
Mr President, I want to start by offering my congratulations to my colleague, Mr Paasilinna. I know how much careful preparation and extensive consultation has gone into his report. I commend him on it.
Colleagues, it is normal when considering issues like this to look to the future. But I want to illustrate my own comments on Mr Paasilinna's work and the Commission proposals by looking to the past, to a book written by Mark Twain called 'A Connecticut Yankee at the Court of King Arthur'. The Connecticut Yankee was a telephone engineer in America who sustained a blow to his head and was transported back to the time of King Arthur. He used his skills and knowledge to intervene in the wars of that time, mainly to save his own skin - it has to be said - rather than from any philanthropic designs. He understood from his own practical experience the importance of access to networks and services. He knew, as does Mr Paasilinna, that these proposals are not just about technology, they are about how technology can address the needs of citizens and consumers. But what the Connecticut Yankee did understand - I quote from the motion for a resolution - ' takes the view that the convergence of telecommunications media and information technology sectors must be reflected in European rule-making in such a way that inter-operability of various technologies is not hampered'. It is that point that I think was so crucial at the time of King Arthur and is going to be crucial not just in the future but now.
The Green Paper and the rapporteur can but guess at the speed of change. Other speakers here have commented on how this whole world of telecommunications and broadcasting and transfer of data has changed in a relatively short time. What seems very clear is that the market can deliver on some of this but there is a need for clear rules at European level about much of it to make sure that the European industry remains in the forefront of these changes.
The Connecticut Yankee was not particularly concerned about competition rules. He had all the information and for understandable reasons he kept it to himself. But the rapporteur - as well as this House and the Commission - is concerned that the rules are clear, that there is a price to pay for anti-competitive measures, but that the needs of citizens and consumers are not lost sight of.
I commend Mr Paasilinna's report to you. I also commend to both the Commissioner and the rapporteur - and anybody else who is interested - that you read Mark Twain's work. It was remarkably prescient and really repays reading.

Malerba
Mr President, the Green Paper on convergence is devoted to an issue of great importance and, I believe, the main question it raises is that of three options for future regulatory work: the first is to extend existing regulations and keep the different sectors distinct; the second is to create a new incremental framework for services as and when they become available; and the third, more ambitious one is to create a new global framework.
I agree with Mr Paasilinna's reasoning, and would refer in particular to the fourth paragraph of his conclusions, which inclines towards the third option, that of a global framework. I believe in fact that within a reasonable time-span, perhaps not immediately, we shall have to move on from a legislative approach based on the means of transmission, the hardware, to one based on the type of transaction, and hence the user and the added value of the transaction. In the meantime, however, work must continue both on updating the existing regulatory framework and on defining the new statutory framework requirements occasioned by the new media. I am thinking here of the Internet initiative launched by Mr Bangemann, which we shall be discussing at the next part-session.
Time is pressing, but very briefly, what two points must be taken into account in this move towards a global regulatory framework? The first is interoperability, in other words the promotion of open systems and standard platforms. Even though Europe is not the leader in this sector, it must hold its head high, and I believe that the fifth framework programme will help it to do so. The second rule is competition. Whereas, on the one hand, the huge transmission capacity generated by digital technology will reduce the pressure on a shortage of transmission channels and on the public utilities, on the other hand new forms of public or private monopoly could arise - I refer in particular to the Microsoft case, which we are all currently following with interest - and the rules of competition might need to be reviewed in the light of new technological opportunities, so as to reorientate alliances along these lines.

Pailler
Mr President, the Commission's Green Paper presents some open options, but underlying them is a basic approach: that the convergence of modes of transmission would lead to the convergence of content. This amounts to treating cultural works in the same way as any type of goods. This liberal approach is of particular concern because it would have an adverse effect on creation, information and public service, and would end up calling into question cultural policies and legislation on authors' rights and intellectual property.
The Paasilinna report recognises some of the risks and dangers of this approach, but it is based overall on the respect for competition law. Moreover, it is significant that the positive amendments by the Committee on Employment and Social Affairs and the Committee on Culture have been rejected. My group has therefore tabled amendments that are all based on the principle that cultural works, especially films and television programmes, cannot be treated like other products. It is essential to maintain specific regulations for the audiovisual sector that are justified with regard to the issues of freedom of expression, pluralism, cultural diversity, minority cultures and preserving the public interest.
The current regulations, which need to be improved and not abolished, should be complemented with a directive on pluralism and the concentration of media that takes all forms of communication into account. I would like to refer to what was said by one of Mr Bangemann's own compatriots - to repay the Francophile approach he often shows towards me -, namely Walter Benjamin, if you will excuse my pronunciation: letting things take their course is a recipe for disaster. They are his words and I agree with him.
By adopting these amendments, our Parliament will express its will to oppose the Commission's ultra-liberal approach that contributed to the failure of the MAI, one of the objectives of which was, I recall, to liberalise the audiovisual sector.

Dell'Alba
Mr President, Commissioner, ladies and gentlemen, I am especially addressing the two of you, as you have a lot of experience of parliament and government, in order to draw your attention to the ridiculous situation that we are in.
We are debating the Paasilinna report, to which there are about 20 amendments from a certain Mr Paasilinna, on behalf of the Socialist Group. I am wondering which is the real Paasilinna, Paasilinna I or Paasilinna II? It is like the films: Rambo I, Rambo II. It must be a Nordic saga I do not understand. But perhaps tomorrow the real Paasilinna will tell us what position the rapporteur Paasilinna intends to take on the Paasilinna amendments tabled to the Paasilinna report. You must admit that, in the world of information technology, it is a little difficult to work it out! Personally, I am in favour of Paasilinna I and against Paasilinna II. I am saying this so it will be clear in everybody's mind.
Aside from this exercise - which was not at all rhetorical, because it seems to me to be somewhat contradictory, Mr Paasilinna, as you must realise -, I would like to say that even Paasilinna I, which I personally support, seems to fall a little short of what we might have expected. We are faced with a global challenge. In Europe we have 20 million computers. There are 70 million in the United States. Silicon Valley is in the process of taking over all our minds, as my colleague Mrs Leperre-Verrier rightly said, and here we are, saying that maybe we could...
We should have given Mr Bangemann a lot more scope to include this as a main point in the Agenda, in the interest of our countries, in the interest of research, etcetera. I think this little report lacks ambition. Mr Bangemann, I would like the White Paper to be a little more equal to the task, and to set out the huge challenge that we are facing. Either we face it, or we will be dominated by the Americans in this field, too, as we already are in others.

Wibe
Mr President, let me first of all commend this sterling report by Mr Paasilinna - although I should point out that some parts are not easy to comprehend in the Swedish translation. How we move forward towards an information society is a very important matter, and I wish to make three points in this respect.
Developments are not moving at the same pace in the USA and in Europe; the Americans are clearly ahead. US companies are much more successful than their European counterparts. Some people may wonder whether we should seek to offset Europe's competitive disadvantage with some kind of development programme to help us catch up. I think not. The theory of comparative advantage teaches us that it is quite natural for a country to be ahead in certain sectors. In return, other countries will be on top in other sectors. Take the Nordic area, where we currently have two of the world leaders in mobile telephony. I see no reason for concern that America is ahead on computers and the Internet.
My second point has to do with market regulation, which - as the rapporteur says - is not all bad. Nor does it necessarily stand in the way of technological development. In fact, evidence shows that regulation in a particular branch can actually boost innovation. It is above all the Internet that needs attention, in my opinion. I am no advocate of regulation for regulation's sake, but the Internet is an essential tool for certain new varieties of crime. Standard use cannot sensibly be regulated, however. It would be like trying to stop people in a crowd chatting to one another. One watchdog per individual would be required. Comprehensive Internet surveillance is just not possible; every single computer would need monitoring.
The role of public service companies is the third area I wish to cover. I am fully behind the rapporteur when he says that we must have a strong public service sector so as to prevent the commercial companies - whose taste is not always of the best - from taking over. Throughout Europe and the USA, we have terrifying examples of how privately-owned media concerns, particularly in the television sector, are pursuing flagrantly political goals. One does not have to be paranoid to realise that the concentration of ownership we now have poses a potential threat to democracy.

van Velzen, W.G.
Mr President, both the Commissioner and Mr Paasilinna are tackling a difficult subject, and I pay tribute to their commitment and efforts in this field. Technological developments proceed at such a pace that PCS, TVS and so on are able to do things which until recently we never thought possible. But naturally there is also communication between the fixed and the mobile network, and we are seeing that it is possible to telephone via the cable system and so forth. In short, traditional legislation is changing. The answer is often technology-independent regulation, but I should like to ask the Commissioner if he could name any cases where technology-dependent regulation exists.
Mr President, the market players are involved in all kinds of integration processes, such as mergers, alliances, and the rest. It is of course necessary to avoid the creation of huge monopolies or parties with a dominant market position. The consumer's choice must not be limited, and that is particularly important when access to the customers is via systems of conditional access or even decoders. I would therefore ask the Commissioner if on that point he envisages strictly enforcing the rules of competition.
The UMTS, the successor to the GSM telephony which has been so successful in Europe, is an example of a convergence system. Does the Commissioner know at the present time the situation regarding the allocation of frequencies in the Member States? I believe this to be of essential importance. But convergence also involves international compatibility. It is very important that the business community is now busy with this in the context of the Internet manual. But what are we doing in the public field? What is the role of politics? Can the Commissioner explain the current role of politics in this field?
Finally, it is a question of consumer confidence in the field of privacy. I therefore believe that it is very important for the electronic signature directive to come before Parliament as quickly as possible, and I hope that vigorous efforts are being made to ensure that this is the case.

Theonas
Mr President, I agree with our rapporteur that convergence is not a technical, legal or economic issue. It is first and foremost political, and concerns individual rights, employment, cultural polymorphism and consumer protection, all of them issues which cannot be left to market forces. However, with the public sector being unseated in the converging areas, the ever-shrinking world and the creation of huge, global monopolistic conglomerates through the many takeovers and mergers taking place, disquiet about what is happening to citizens' rights is growing.
In light of these developments the Green Paper should first consider and highlight the connection between convergence and the way the market is being controlled more and more by monopoly interests, the prospect of vertical integration in the sector, the imposition of restrictive policies and the control of critical resources and services, and the consequences for employment and labour relations. It should indicate measures for the protection of the service as a whole, for people's right to have access to a broad range of services, for the avoidance of artificial cost increases, etc.
Technological progress is necessary and one way or another advances will be made. However, it is not right that citizens' rights should be denied in its name and that the interests of the market and the monopolies should be put first.

Bangemann
Mr President, Mr Dell'Alba has summarised my feelings about this debate very well. He was, of course, far better able to do so than I could, because if I had put it the way he did, the rapporteur, who has done a remarkable job, and perhaps some others too, might feel offended. This debate has brought to mind the first discussion we held on what we have called the information society. At that time, exactly the same arguments were put forward: the information owners and non-owners, the social role of the public monopolies, the question of how to apply competition law, a whole catalogue of fears which have now proved groundless, when we look back at the information society, and in particular at telecommunications. Mark Twain offers a good example. The success of market mechanisms takes me back to Huckleberry Finn, who was made to paint his fence. He does so with such fervour and enthusiasm that all his friends who are watching think it must be so much fun to paint the fence that they offer him a few cents to allow them to paint too.
What this means is that we are not dealing here with the question of regulating, but with a development that has arisen from the needs of people and from technology. Nobody, and I say this to Mr Kuhne, can define convergence. You say in your opinion that we have not even defined it. That is typical of the lawyer's attitude, who wants a definition before he can do anything, instead of looking at life, at what really happens. Convergence is not something that was defined by the Commission, or by myself as an ultra-liberal; it is something that happens on a day-to-day basis. To say that convergence, if it exists at all, relates only to technology and cannot relate to its content is fundamentally wrong! Even now you can of course find content in what used to be called telecommunications that used to be found only on television. One of the problems, Mr Kuhne, if I may say so, is that in discussions of this kind, the public television networks keep letting themselves be represented by people who once had dealings with them of one kind or another. The rapporteur for the Federal Constitutional Court was the head of Norddeutsche Rundfunk , a public television corporation. That is a hindrance to discussion. Why? For example, you say that quality should be the deciding factor. I can only reply that if you want to make quality the yardstick - and I am quite prepared to take the time to watch the television content produced by public corporations for nights on end with Mrs Pailler, indeed especially with Mrs Pailler - then you will have to ban half the programmes, at least half of them! I am certainly optimistic in this respect. Walter Benjamin for instance, if I am pronouncing his name correctly, was a total individualist. He was, if you like, a left-winger in the broad sense of the term. But he would never have been given a job in public television. Never! Because he was far more of an individualist than those people. Then there is Mr Wibe, who has now left - it really is a bit much to put forward some kind of argument in a debate with the Commission and then to go away. I find that appalling! Anyway he said, well, we need the public broadcasters so that they can evaluate things in a politically neutral manner. Of course there are private broadcasters who are political animals. As we saw in Italy. But there are also public broadcasters who push their political views, Mr Kuhne! If I turn on the television instead of the radio in the morning and know after about three seconds that this can only be Westdeutscher Rundfunk , that is because of the political slant of that corporation! So please do not try to argue that we need public broadcasting because of its political impartiality. That is a total myth, nothing else, and it is misleading for the public!
What we have here today is something quite different. I tried to point out during the first debate with Parliament that we should not let ourselves be drawn into this discussion. In the first place, the public television companies have a right to exist. Of course they have, if they are doing a job. If you read the Amsterdam protocol properly you will see exactly what it says, namely that no treaty provision may be annulled; of course it cannot. The competition rules remain in force. If the Member States want to apply the right to operate public companies, then they would be well advised to begin by defining what that public purpose is in the first place. But I do not want to pursue this further, otherwise I will be making the same mistake you made, namely concentrating on this question.
The key question is a quite different one. We are seeing closer convergence not only of the technology of various media and communications areas, but also, therefore, of content. I do not know who said this, I think it was Mrs Thors, and Mr Hendrick also pointed it out, but of course today we can obtain all forms of content via the Internet. We can telephone through the Internet. The question that interests us right now is not how to guarantee the continued existence of public television companies. That would be like having a discussion on agricultural policy in the context of economic policy in which every farmer asks whether his son can still be a farmer in the future. Likewise, you go to a television company today and every journalist asks whether journalism has a future. Can my son still become an editor or head of department in a public television company?
Mr Wolf, a little while ago I accused you of vulgar Marxism. You obviously took that very much to heart. I do not know what this is about, perhaps vulgar corporatism or something like that. But that is not the point. The point is whether we can apply the rules we currently have in telephony to the provision and use of Internet telephone services. The question is, according to what rules can purchasing agreements, for instance, be concluded on the Internet? As Mr van Velzen rightly pointed out, these are the real problems! And does the report mention any of this? Not in the least. You are chasing shadows, talking about things that will never happen! Just as I said at the time about the deregulation of telecommunications, there will no disadvantages for the consumer. On the contrary, when you look at telephone charges today - in fact they are no longer charges, they are prices - when you look at the various offers, you discover that everyone benefits greatly from this. Meanwhile, the job losses that initially occurred with the earlier monopoly companies, because these were unproductive jobs, have actually been offset. We still have a positive balance here today.
Mrs Pailler, as a member of a Communist party, you are quite right to consider this question. We are counting on the creation of a substantial number of jobs in a few areas, including precisely the area of telecommunications, over the next few years. We already have about 500 000 new jobs in the Union, and we reckon on another 1.5 million jobs by the year 2005. If we do not create the appropriate market conditions, we will simply find others trying to take over that market. Today, if you want to accept an offer on the Internet, you will find it virtually impossible to identify the source of that offer, and if we want to make all this impossible by trying to apply the restrictive rules of traditional telephony, we might as well say goodbye to the whole business! Then it will not happen here. That is the real problem. We asked questions about this in the Green Paper. I admit that those to whom we sent the Green Paper were rather conservative in their replies. They are - well, I do not want to insult anyone again, but it is nothing personal when I insult you. I am quite prepared to work together with you, but your response to the Green Paper is inadequate, with a few exceptions, as a means of supporting us in our efforts.
Mr Gallagher? He is gone too. The sporting events he described to us again with such aplomb are matters that have all been settled already. There has been a European Union rule for more than a year now which leaves it up to the Member State to decide whether access to certain outstanding sporting events is free. So that no longer needs saying here. He puts it forward with great aplomb as a contribution to the debate, and a few people clap because it is such fun. You could say that if Newcastle United played against - I can't think of an Irish club at this moment - let us say some Dublin team, the game must be accessible to everyone. Of course it must, we have already decided that. That is not the problem. The problem is that if this game is to be freely accessible, can it only be made accessible by a public company or could a private TV company do so too? These are the kind of questions that arise.
I was also told that first we must see how things develop, and then we would have to react as fast as possible. True enough. But we have two trends that we cannot control. The first is the rapid development of technology, the other, as Carsten Hoppenstedt said, is that we are living in a global system. That means we can no longer lay down rules for ourselves alone. You have not yet realised, if I may say so, that the general, traditional regulatory framework we have is inadequate here, for two reasons. Firstly, because we can never keep pace with the speed of technical progress. We need at least two years to get a directive through, by which time, of course, everything may have changed entirely.
Secondly, if we did manage to keep pace with developments, we would never achieve global rules. That is precisely why we are now trying to produce global rules for the Internet with the participation of private companies. It would have been nice to have answers or contributions to the debate that could have helped us on our way. I hope that will be the case in future discussions.

Paasilinna
Mr President, many thanks to the Commissioner for what was a very colourful and arresting speech. I would, however, say that there can be no information society without rights, either in Europe or the world at large. That is something we want to assert strongly. It is why we have traffic regulations and other rules. There are no phantoms in the report, as you suggested, since we now have enormous international global companies that operate in these regions and spend larger sums of money than many EU Member States. The big question is how we can work together so that both culture and business and firms both large and small can operate successfully. For this reason we need some sort of framework. I do not think we disagree on this issue. It is an important one.

Bangemann
Mr Paasilinna, I did not dispute the fact that we need a regulatory system. I said so myself at the end of my statement. We need a regulatory framework which is appropriate to technical progress, to its speed and to globalisation. That is what we need. It is a regulatory system. But that is something different from the traditional rules, directives and regulations we normally produce here. That is the problem.

President
Thank you, Mr Bangemann.
The debate is closed.
The vote will take place tomorrow at 10 a.m.

Third stage of EMU
President
The next item is the report (A4-0341/98) by Mr Giansily, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on foreign currency reserves in the third stage of EMU.
I give the floor to the rapporteur, Mr Giansily, for five minutes.

Giansily
Ladies and gentlemen, what are the currency reserves of the central banks used for? This question was at the root of the debate we had in the Subcommittee on Monetary Affairs and in the Committee on Economic and Monetary Affairs on this own-initiative report that I have the honour to present to you.
The first use of these reserves is to enable intervention in the exchange market when there are major disruptions and especially when there are attacks against the currency concerned, which are mainly massive sales of currency that cause the price to fall. The second use is to cover balance of payments external deficits. Having pointed this out, let us now look at what is stated in the Treaty establishing the European Central Bank. In Article 30(1) it states 'that the European Central Bank shall be provided by the national central banks with foreign reserve assets, other than Member States' currencies, ECUs, IMF reserve positions and special drawing rights, up to an amount equivalent to 50 billion euros.'
Naturally, the removal of the need to have exchange reserves among the 11 currencies that, through the application of the principle of fungibility, will become subdivisions of the euro on 1 January, could lead us to believe that a substantial proportion of the reserves in question will become useless and that this supposed excess of reserves could be used elsewhere. In other words, once the reserve of 50 billion euros has been set up - in fact, as 50 billion euros was planned for 15 countries, this sum is reduced to 40 billion euros for 11 countries, 39.46 billion euros to be precise -, we can estimate that the excess that will remain in the coffers of the banks that are members of the ESCB will represent around 400 billion dollars.
This is why one could, through a somewhat summary analysis, imagine that those funds might be redistributed on the economic circuit by massive injections into the markets of the reserves that have thus become useless. I held the opposite opinion in the debates in the Subcommittee on Monetary Affairs and the Committee on Economic and Monetary Affairs and I would like to thank my fellow committee members for supporting me on this point, and particularly Fernand Herman, who improved my draft without actually altering it.
We must not, in fact, believe that the euro will be the sum of the 11 currencies that are going to be absorbed: it will be something else entirely. It will be, above all, another great world currency, as President Jacques Chirac called it, and its role as an exchange stabiliser will be the first truly positive act in the world monetary system since President Nixon's unilateral denunciation of the Bretton Woods agreements on 15 August 1971. The euro is a new currency, it has been well received by global operators since it has become clear that it is really going to come into circulation, and on the global monetary market it will find itself mainly in competition with the dollar, while the ESCB will have a reserve of 400 billion dollars. Injecting massive amounts of the American currency into the market, with the risk of causing it to fall and thereby increasing the competitiveness of the products of our principal competitor on the world industrial and agricultural markets, would be completely counter-productive in economic terms.
We therefore need to be extremely cautious and, as a consequence, not lose sight of the fact that the quality of the euro will be assessed according to three main criteria. The first of these will be the ability of the governments of the 11 countries involved to respect the stability pact and, consequently, to keep, dare I say it, the spirit of Maastricht alive. The second will be the ability of the directors of the European Central Bank and the ESCB to give credibility to the management of this currency, notably through the amount of outstanding credit that will be granted. The third will be the response in terms of reserves in the event of 'disfiducia ' concerning our new currency. In this particular case, it is better to be envied than pitied and to preserve and keep what we have.
I will conclude with two points. Our committee thus approves the decision dated 8 July to make an initial transfer in gold of 15 % of the exchange reserve assets from the national central banks to the European Central Bank. The second point is that we also want a gold euro coin to be minted, the value of which is still to be decided, but which in the future would be an important marker in the general disorder that has been reigning for too long on the world capital market.

Metten
Mr President, one of the major changes which the euro will bring is that 11 countries which are strongly or very strongly exposed to exchange rate risks will immediately become a single zone which is only very slightly exposed to such a risk. The average exposure to exchange rate fluctuations will be reduced by a factor of three, while foreign currency reserves will remain unchanged. That is a luxury. The other principal reason for keeping foreign currency reserves, namely a balance of payments deficit, will also not apply to the euro-11 zone. Unlike the United States with its huge deficit, the EU in fact has a modest surplus. Yet despite this large balance of payments deficit, the United States has relatively modest foreign currency reserves, opting to print new dollars instead. This is all very well as long as there is no alternative to the dollar as a world currency. The euro provides just such an alternative, and as a result the US will have to take a more critical look at its balance of payments deficit. At the present time, with the global economy on the brink of crisis, this balance of payments deficit, which is just a symptom of an even greater US trade deficit, is the principal motor for the global economy. Without the US deficits, the rest of the world would be unable to build up surpluses. The privilege of being a global currency therefore also brings responsibilities in respect of the global economy. In practice, the US helps provide liquidity in the world trade system, even if largely at the expense of the rest of the world, the so-called seignorage which comes with issuing the global currency.
The question now is whether or not Europe is prepared to take on, even if only in part, this role currently played by the United States. The euro will certainly mean the end of an all-powerful dollar. The euro will become a trading, monetary and reserve currency. There will be seignorage and the euro will be stashed away in safes and socks. The euro zone will grow rich at the expense of the rest of the world, but are we going to give the rest of the world anything in return, apart from a stable currency to hoard and to pay with? The answer could be yes, if the euro further appreciates in value. Although this would not be good for the internal economy, as it would worsen our competitive position, it could prove necessary as a result of our global responsibility. It would be the quickest route to a situation in which Europe would also contribute to economic recovery in Asia, the former Soviet Union and Latin America. With a more expensive euro, our trading partners in the second and third world can more easily export themselves out of misery, just as Europe recently did by virtue of the high dollar.
But what has such a philosophy to do with the Giansily report? A great deal. Because the vast quantities of foreign currency reserves held by the European System of Central Banks, USD 400 000 million, would most certainly make the euro more expensive if they were released onto the market in large quantities. The Giansily report argues against doing this at present, partly in the belief that a more expensive euro is undesirable at the present time. I should like to see the surplus reserves released more quickly onto the market, because a more expensive euro can act as a much-needed additional motor for the international economy. Also, because the euro zone is a much more closed economy than that of the 11 individual countries which comprise it, the euro zone will be better able to cope with a more expensive euro. One thing is clear, however. The euro will not automatically become a global currency. We must also earn it, and have the courage to assume our global responsibilities.

Christodoulou
Mr President, let me thank Mr Giansily for his excellent analysis and for his efforts to deal with a difficult subject.
The entry into operation of Economic and Monetary Union, and consequently too the European Central Bank's assumption of responsibility for monetary policy, coincide with a period of exchange-rate fluctuations and pressures which, I would like to hope, are temporary but, as it seems, are not an isolated phenomenon but one that is fairly generalised and needs careful and prudent handling.
For that reason, the management of foreign reserve assets is extremely important from the very beginning. In fact dealing with the crisis will entail coordinated action and international cooperation, which unfortunately does not seem to be happening at the moment, especially between countries whose currencies occupy an important position in the world economy. So determination of the optimum level of foreign reserve assets will depend to a large extent on the efforts to stabilise the euro, particularly against the dollar. It is also vitally important to lay down clear rules for the exercise of the powers granted by the Treaty to the national central banks, so that decentralised foreign exchange interventions can be effective and will not go against the objectives we hope to achieve. Of course, the sums involved are not very large, and with the enormous volume of money that is circulating internationally, foreign exchange reserves sometimes appear too small to be able to withstand difficulties.
However, it should be noted that in the early stages of a profiteering raid, well organised and coordinated intervention by the central banks can have the effect of preventing profiteering from getting out of hand. And this is precisely where foreign exchange reserves play a major part. That is why we should not hurry to reduce them. Reductions will be made by the national banks according to circumstances: if they see that the conditions require or allow a reduction of foreign reserve assets, they will reduce them. If the conditions are otherwise, then they will naturally hold on to those assets. Consequently, I think we should deal with the issue more calmly, in other words we should not propose reductions of foreign reserve assets until the situation becomes clearer and we are in a position to decide that there is no need for interventions of the type I mentioned earlier, which anticipate more general crises.
On the subject of utilising foreign reserve assets for other purposes, I must say that foreign reserve assets are not something we keep hidden in a drawer and which we can take out when we like and use for anything we want. They are already resources in circulation, they are in use, countries have invested them, and consequently they are not just there like something that grows on trees, to be used as we wish. I therefore think that we should have been rather more conservative in the amendments we tabled, and for that reason my group, having consulted those who introduced those amendments, would prefer not to adopt this rather superficial and premature approach to the problem.

Wolf
Mr President, ladies and gentlemen, Commissioner, today we are discussing something quite sensational, namely that there is money in the bank and everyone seems to admit that it is in a sense money surplus to requirements. We know from everyday experience that it is not that easy to get it out of the bank. And what Mr Christodoulou said is quite true: we must look at the circumstances and not be too hasty. But we really should accept the arguments Mr Metten put forward here, namely that an economic area which does away with the old concepts of external and internal trade and then, to be realistic, still has a foreign trade dependence of less than 10 %, does not need the same currency reserves as the pre-euro economic area, with its foreign trade share of somewhere around 60 %.
Secondly, the balance of payments is in fact positive, structurally positive, and that is no mere chance. Consequently, it is important to realise that these two factors together produce a potential quantity of surplus money in the hands of the European system of central banks. Of course we will not manage to get hold of it by breaking in with a crowbar - that would indeed be silly - but we shall have to liberate it and use it for purposes compatible with the aim of stabilisation in the euro zone, perhaps in the framework of the European Investment Bank. I believe that is the point we are discussing today.

Castagnède
Mr President, Commissioner, ladies and gentlemen, we share Mr Giansily's point of view in that we are against reducing the reserve assets of the ESCB during the changeover phase to the introduction of the euro. However, we share this point of view on the basis of an analysis that is not exactly in keeping with that of our rapporteur.
Mr Giansily expresses, in fact he endorses, an opinion that states that a level of exchange reserve assets of around 400 billion dollars would be excessive in terms of international standards. However, one could question the nature or the relevance of the standards to which he is referring. Obviously, the introduction of the euro, in a geographical area where trade will take place mainly between the participants, will reduce the need to cover possible external deficits.
We feel, however, that the need to have the ability to intervene in order to prevent disruptions on the currency markets has been underestimated. It has been underestimated firstly in respect of the economic risk presented by monetary disruptions associated with the fluctuation of considerable flows of private capital; we should recall that the loss of wealth through the devaluation of shares that followed the crisis that began in Asia a little over a year ago is estimated at between $1 600 billion and $3 500 billion. It has also been underestimated in respect of the role we believe the euro should play in stabilising monetary relations in the world and even in reorganising the international monetary system.
A significant stock of reserve assets is likely to act as an effective deterrent against monetary turbulence. That is one of the main reasons, along with that set out by Mr Giansily, for ensuring that we do not give in to the temptation to reduce the reserve assets of the ESCB.
So monetary union will have the effect of transforming a fraction of the exchange reserves of the national central banks into internal assets. We think that this fraction could be usefully employed in some cases to reduce public deficits or for investment spending that supports growth and employment. This would in some way be a bonus for joining the euro that could make it even more acceptable to the citizens of the countries taking part and encourage those countries that are still reluctant to participate.

Berthu
Mr President, Commissioner, the Giansily report explains extremely well how part of the reserves of the national central banks will be pooled in the future single currency system and how the relations between those banks and the European Central Bank will be organised in order to manage them.
Nevertheless, we would like to ask here for clarification on two points. Firstly, what will be the exact relationship between the ECB and the national central banks with regard to the management of the free reserves, that is, the reserves that fall outside the 39.46 billion euros that will be placed at the disposal of the Central Bank, in accordance with the Statute? Article 31 of the Statute of the ESCB mentions the possibility of authorisation from the European Central Bank for the most significant operations carried out by the national central banks. This authorisation is therefore provided for in the Treaty, but it is quite an outrageous procedure concerning reserves that, in principle, remain entirely the property of the Member States. We would very much like to know at least what the limits are.
Secondly, will exchange reserves in gold be physically transferred to Frankfurt or not? The Giansily report is not entirely clear on this point. It leaves the issue open to several interpretations. You know, Commissioner, that the French Minister for Economic Affairs, Dominique Strauss-Kahn, took a very clear position on this before the French National Assembly. When he was questioned on 31 March by members of our Assembly's committee on finance, he stated very reassuringly that the ECU 50 billion that is the sum of the contributions to the European System of Central Banks will remain the property of the various Member States. He then added that only the management of the reserves was transferred and that for the currencies and bonds concerned, it is only a matter of simply signing them over, while the gold will stay in the cellars of the Banque de France, without even being physically transferred.
I would therefore like us to be equally reassured of this at a European level and to be given confirmation that there will be no physical transfer, as this does not seem to me to be essential, from a technical point of view, for the smooth running of the system.
Finally, I would like to take this opportunity to recall that, two months away from the introduction of the euro, some very important issues have still not been clarified, such as the exact degree to which the Council is involved in defining the exchange-rate policy, the democratic control of monetary union or the resolution of liquidity crises. These ambiguities obviously reflect, in my opinion, structural defects. The International Monetary Fund has recently expressed its concern about this, stating that there will be an increase in systematic risks to the banking system at the time when the single currency is introduced, due to the fact that a large number of important decisions have not been taken.
To conclude, we do not know where we are going, but we are going anyway. This seems to be the motto of our politicians, who are caught up in the spiral of their so-called irreversible commitments to the single currency.

Lukas
Mr President, I congratulate Mr Giansily on his balanced report and agree with him that the extremely high currency reserves may act as a necessary safety net during the transitional period. A successful speculative attack on the single currency during this phase could in effect have serious implications for the European economy and do considerable damage. It is clear, however, that surplus currency reserves of up to USD 200 billion must not remain unused in the long term. In my view, it is therefore quite legitimate to begin considering even at this stage how this money could be used in future to combat the high unemployment rate in Europe. In any event, it would be unjustifiable to leave it lying around unused any longer than is absolutely necessary.
Everybody knows that neither the Community nor most of the Member States have enough funds for research. Here the situation is markedly better in the United States and Japan. With more support for research and innovation, we could manage to make our firms more competitive and thereby give impetus to employment policies. In particular, this would enable us to strengthen the SMEs - which form the backbone of the EU - in terms of technology and also make them more competitive. So let me conclude by calling for the surplus currency reserves to be targeted at practical research programmes, when the time comes, so that we can successfully tackle our main problem, namely massive unemployment.

Herman
Mr President, Mr Castagn&#x010D;de is right, the reserves are not only necessary for settling international payments. They are necessary, too, in order to intervene in the markets and they also serve to offset the issuing of the currency. So people are wrong when they think that the reserves can be put back into the budget to be used for something else. That money does not belong to the State, or to the budget, but to the banks. Even when the banks are completely nationalised, in order to reduce reserves, there has to be a reduction in the currency circulation that offsets it. So for goodness' sake, let us think a little about the basic workings of the currency in Europe. Before using money that is not there, for political objectives, we must take account of how the current banking system actually works.
Having said that, I completely support Mr Giansily, especially as at the start, when we still do not know how things are going to develop, it is essential to have a minimum amount of reserves in order to be able to play the markets.
I know that it will be rather through changes in interest rates that we will be able to influence prices, but we also know that it is better to have several strings to our bow than just one. If it broke, we would be left with nothing. But when we have considerable reserves here, we can intervene if the manipulation of or changes in interest rates are not enough to deter some speculative attacks on the future euro.
This, Mr President, is why I completely support the Giansily report and we will vote in favour of most of the other amendments that have been tabled, apart from taking account of the fact that some of them could be modified in order to take the international economic climate into consideration.

Blokland
Mr President, the creation of the euro zone means that the Member States with a relatively very open economy will immediately be part of a relatively closed economy. As a result, a large part of the present official external reserves will in time prove to be superfluous. In due course, they can therefore be disposed of. But it must be done in a way which does not cause market turbulence. Care is required. The European System of Central Banks must be on its guard. There is no reason to suppose that it will not be. In this respect, the resolution we have before us supports the proposed policy.
Part of the problem will solve itself. Around one quarter of the present official external reserves are in currencies which will be converted into the euro. From 1 January 1999 these will no longer be part of the reserves, but internal resources. There is no question of them being used to pay off the national debt. Monetary financing is in any event prohibited by the Treaty.
In this debate, we must be careful not to be solely concerned with a euro which is valued too high against the US dollar. In fact, a relatively strong euro stimulates US imports and hinders European exports, while a weak euro is very attractive for US companies contemplating merging with or even taking over European companies, which is not the intention either.
We believe there is one conclusion to be drawn from this: the internal price stability of the euro must always be the priority. The euro's external value is the result of monetary policy. Depending on the possibilities offered on international currency markets, the official external reserves can be reduced to a lower level. Payments to international organisations, such as the United Nations and the International Monetary Fund, are an excellent means of doing this. But we must always remain very attentive to the impact of this on exchange rates. The necessary changes having been made, this also applies to reducing the gold reserve. I do not much like the idea of a gold euro coin - it would be a strange symbol of European unity.

Peijs
Mr President, I congratulate Mr Giansily on his judicious report. The report concludes that the 330 billion in foreign reserves can ultimately be reduced. I agree. The American Federal Reserve Bank keeps relatively smaller reserves, and in the future the US situation will be comparable to that of Europe. The Federal Reserve adopts a policy of benign neglect with regard to the dollar's external value, comparable to what is expected to be the approach of the European Central Bank. In terms of openness and exports, the US economy as a bloc is also comparable to the future euro zone. The central banks themselves also have cause to keep an efficient quantity of foreign reserves, since in future part of the income from foreign reserves will be added to the reserves of the national banks. In the Netherlands, the ratio is 95 % to 5 %, with 95 % going to the state. A less than optimal mix will result in reduced transfers to the reserves.
But foreign reserves are necessary. At the end of December 1998, it may be possible to intervene on a large scale on foreign currency markets against the agreed rates. Until that time German marks, French francs and so on can be used. After that, the European Central Bank will start to apply its monetary policy. Assets in German marks and French francs will then automatically be domestic assets. But a considerable proportion will remain in dollars and gold. For the durability and credibility of the bank, it may be important to keep significant reserves. I should like to ask the Commissioner to what extent he has received signals that the financial markets believe in the rates which have been established.
One more very urgent matter, Mr Commissioner. There is already some discussion in the Netherlands of how the euro coins and notes are going to be introduced. The scenario of the legal big bang, which is supported by the Dutch Parliament, makes it necessary to distribute euro coins and notes before 1 January 2002 when they are not yet legal tender, in the same way as a tourist buys pesetas before going to Spain. He is not yet able to use them. This so-called 'frontloading' requires permission from the Central Bank. Will the Commission and the European Central Bank try to reach a speedy and positive decision on this point? For the rest, I am indeed in favour of gold coins, and precisely for that reason, Mr Blokland.

García-Margallo y Marfil
I should like to thank the rapporteur for this fine report. Commissioner, it has been said, with slight Gallic exaggeration, that the introduction of the euro is the most important event which has taken place in Europe since 1917. It is certainly true, however, that we Europeans have been absorbed by the internal repercussions of the euro and have been slow to consider its external impact.
Conditions inside and outside the Union have changed since the Washington Conference two years ago, at which these matters were first raised, and even since the spring, when the decision on the countries to be included in the first group was taken. Forecasts for growth have been revised downwards, as a result of the Asian crisis, the Russian crisis, the Latin American crisis and the fall in the value of the dollar, as the Commissioner has mentioned this very afternoon. In these circumstances, we should be glad that the report recommends prudent handling of the reserves. The key question, Commissioner, is this: in these circumstances, what action has to be taken to ensure that the euro does not become too expensive and does not make our exports dearer, threatening jobs? In the present situation, prudent handling of the reserves alone will not suffice to save us from such consequences. Development has already been slowed down enough. As the report states, what is required now is greater coordination between the governments concerned, and between European governments and the governments of countries outside the Union regarding the management of the international monetary system. It will be difficult to achieve such coordination until the euro makes its presence felt on the wider political scene. It will be difficult too to review the system or set up a system like Bretton Woods until the euro is managed by a political authority, until we install a pilot at the helm of the vessel we are about to launch.

Porto
I shall begin by congratulating Mr Giansily on his magnificent report with which I agree. Apart from some more technical problems, the main concern when the reserves of the European Central Bank are created must be the dollar reserve assets at its disposal.
They come to an enormous amount, some US$ 400 billion, the 'legacy' of the reserves of the various national central banks. No useful or immediate use can be found for them, if we bear in mind that trade between euro-countries will no longer be external trade. Realistically, we might foresee the need, even in the future, for between US$ 50 billion and 200 bn, i.e. only one eighth or, at most, one half of what is at the Bank's disposal.
We must not be tempted by any objective, however noble, for using these reserves at once, flooding the world markets with dollars and drastically reducing that currency's value against the euro.
A strong euro might be attractive for prestige's sake but we must also maintain the competitiveness of the European economy. Realistically that would be jeopardised if the euro were to be over-valued. The European business community would react against such a move and that would lead to less investment and, in turn, to fewer jobs.
The credibility of a currency, after all, does not depend only on very high parities. If it is to be genuinely and durably credible its parity must be the right one externally, which in turn will depend on its internal stability. We must therefore do all we can to ensure that the stability and growth pact is achieved, as the rapporteur rightly stressed.

Mendes Bota
... but his plans to use some of the reserves of the euro zone Member States' central banks - an idea shared, as it happens, by Lionel Jospin - for taking a major political initiative to boost economic recovery in Europe, with job creation as the main target, fail to provide the necessary safeguards.
That is mainly because the proposal still applies very little rigour to the so-called surplus currency reserves of the European System of Central Banks. It is true that, with the advent of the euro and stage three of Economic and Monetary Union, the exchange risk inherent in transactions using national currencies will be considerably reduced. It is also true that most external trade will be transformed into internal trade, because it will take place within the euro zone itself, drastically reducing the need for currency reserves as a means of international payment.
But the exact size of that surplus is still a mystery. Figures quoted range from US$ 50 billion to as much as US$ 300 bn. Nor can it be ascertained for sure that reserves are the same as surpluses, especially since sizeable reserves set up in DEM will automatically be converted into euros as of 1 January next, and will no longer be regarded as currency reserves. They will become internal assets.
On the other hand, it will not be easy to violate the broad autonomy granted to the national central banks for managing their own reserves, and make them use those reserves in specific ways to suit the political decisions taken by the Member States' governments. This all suggests that the right strategy will prevail, namely a hands-off approach to the management of assets held by the ESCB. That would reduce the risk of a sharp depreciation of the dollar against the euro, something that would be disastrous for exporters in the European Union.
Maintaining a significant volume of currency reserves in dollars and yen will undoubtedly be the best safeguard for preventing the speculative turmoil that might hit international financial markets in this stage of transition towards the euro. That will enable stability measures to be taken so that the euro can earn prestige, based on soundness and credibility, as a major international reference currency.

de Silguy
Mr President, I promise to give as global and as brief a speech as possible, and I thank you for agreeing to prolong this debate slightly.
Ladies and gentlemen, at a time when the European Central Bank is establishing how it is going to function, it is right that Mr Giansily is calling on you to discuss the problem of currency reserves in the third stage of EMU.
First of all, I must point out that I am speaking here today without prejudice, of course, to the position of the European Central Bank, which, under Article 105, is responsible for managing the reserves. I do not wish to interfere with the independence of this institution.
In general, the Commission agrees with most of the analysis made by the rapporteur. However, there is one point on which I would like to speak, as it could cause problems for us. It is the question of the optimum level of exchange reserve assets. Of course, there will no longer be a need to intervene in the exchange markets in order to stabilise exchange rates between the currencies of the participating countries, and this obviously removes the need to keep reserves for this purpose. However, moving from that position to deducing that the total amount of reserves held by the ESCB will be higher than the optimum level of exchange reserve assets requires a step to be taken, and I hesitate to take that step, because we are not sure how we should estimate an optimum level of exchange reserves. Mr Wolf, exchange assets are not superfluous money lying dormant in the coffers of the national central banks, and as I think Mr Herman rightly pointed out, the amount should not be exaggerated and its usefulness should not be underestimated.
I think that, in the context of the euro area, to answer this question we need to consider a series of factors. Firstly, even after the introduction of the euro, on 1 January 1999, the exchange reserves of the euro area will still be considerably less than those held by the main Asian countries. I am thinking here, for example, of China, whose ratio of exchange reserves to external trade will be twice that of the euro area. However, China does not have a convertible currency.
Secondly, for industrialised countries at least, the traditional link between the volume of international trade and the level of exchange reserves needed is in any case extremely difficult to establish for reasons associated with free movement and the liberalisation of capital movements. I have consulted a whole series of studies in order to try to estimate, to quantify, the surplus level of reserves within the ESCB. I have seen results that vary from zero to 200 billion euros - 200 billion dollars -, and that is the how vague the results are.
The third important factor is that the national central banks will adjust their balance to the introduction of the euro. The changeover to the euro will therefore automatically diminish the reserves in European central banks for purely technical reasons, notably the removal of reserves in currencies that are going to become part of the euro, for example, the reserves of German marks in the Banque de France.
Fourthly, high exchange reserves are an effective means of maintaining the banking system with its structural need for liquid assets. By definition, this is essential for the sound running of monetary policy and for defining interest rates.
The fifth factor is that a high level of reserves in the ESCB will contribute to its credibility, which is absolutely essential at the launch. It would be inappropriate for us to now reduce that credibility, especially considering the turbulence that we are experiencing on the financial markets. I would like to remind you, and particularly Mr Metten, that if the credibility of the ESCB were affected, the credibility of the euro would also be affected, and this could, in fact, lead to a rise in interest rates, which is completely the opposite result to what we are seeking by introducing the euro. You can be assured that the reserves are not there to turn Europe into an international powerhouse, but if there is a need to inject liquid assets into the system, there are other means of doing it apart from liquidating the reserves, which would affect the credibility of the currency. I think, however, that this point was strongly and rightly highlighted by your rapporteur.
To conclude, while congratulating Mr Giansily on his serious analysis and cautious conclusions, I would like to point out that in this field - and I think this was highlighted by Mr Christodoulou, who is more skilled than I am in this respect having been the governor of a central bank -, only experience will allow us to decide on the appropriate level for exchange reserves, and this is principally the work and the responsibility of the ESCB.
The Commission therefore has every confidence that this task will be adequately carried out by the members of the Governing Council of the Central Bank.

President
Thank you, Mr de Silguy.
The debate is closed.
The vote will take place tomorrow at 10 a.m.
(The sitting was suspended at 7.25 p.m. and resumed at 9 p.m.)

Protection of workers
President
The next item is the report (A4-0353/98) by Mr Correia, on behalf of the Committee on Employment and Social Affairs, on the proposal for a Council Directive amending for the second time Directive 90/394/EEC on the protection of workers from the risks related to exposure to carcinogens at work (COM(98)0170 - C4-0310/98-98/0093(SYN)).

Correia
Mr President, Commissioner, ladies and gentlemen, this report deals with the Commission proposal amending for the second time Directive 90/394/EEC on the protection of workers from the risks related to carcinogens at work.
The main purpose of this proposal is to extend the scope of the existing Directive to include hardwood dusts (oak and beech), category I and II mutogens and vinyl chloride monomer.
Pursuant to Article 118A of the Treaty on European Union, the Council must adopt, by means of directives, the minimum provisions to promote the improvement of working conditions and guarantee workers the highest level of health and safety protection. We welcome any initiative taken to achieve that and this is one such initiative. It is, however, a shame that the Commission did not take this opportunity to broaden the scope of the directive even further to consolidate the provisions of Directive 83/477/EEC on wood dust. The failure to amend the established general framework means that significant difficulties would arise should the Member States or the Court of Justice opt for a restrictive interpretation of the provisions of that directive. Furthermore, under the terms of Article 118A, we are supposed not to impose any 'administrative, financial and legal constraints which might inhibit the development of SMEs'.
During discussions on this report, we were told by the Commission representative that an impact study had been carried out into these constraints but, as far as we know, it has not been published. We do not therefore know what the consequences of the publication of this directive might have on SMEs.
It was against this background that we tried, with welcome help from other Members of Parliament, to reconcile workers' inalienable right to health with the desirability of financially healthy businesses, with special emphasis on SMEs, the main job creators, but also not forgetting the major industries in this sector. Nor could we overlook the fact that in the European Union there are more than 42 000 industries, the overwhelming majority SMEs, employing around 1.9 billion workers. At a time when the main priority is fighting unemployment we must create tax and financial incentives or derogations to make sure that costs of applying this directive are kept as low as possible and do not fall solely on the shoulders of the entrepreneurs, as that would have a knock-on effect on their workers. Any bankruptcies caused would naturally lead to job losses.
As to protecting workers' health, which is the main focus of our approach, we understand that the Commission will have to take into account - as it rightly proposes - levels which are about average for the limit values encountered at the workplace. We should mention in passing that there are no accurate scientifically proven figures - opinions vary from 2 to 20 mg per m3 . The choice of 5 mg/m3 is not based on any scientific evidence but it seems to me to be pitched about right. We cannot say the same of the types of wood covered by this proposal for a directive. Although it has been scientifically proven that oak and beech dust may be carcinogenic and, when inhaled, cause nasal adenocarcinomas, we think that, given the biochemical similarities of various other hardwoods, and based on estimates, this directive should as a preventive measure include all hardwood types - which does not mean that research into the potential carcinogenicity of wood dust when inhaled should not be continued, as long as it is extended to cover all types of wood.
We have tabled some amendments to the Commission text on the basis of these arguments. Bearing in mind that the vote in the Committee on Social Affairs on these amendments was unanimous, we hope that the Commission will accept them and amend its initial proposal. Finally, I should like to thank everyone who contributed to my report.

Skinner
I welcome this report from Mr Correia because I know that considerable hard work has gone into it. Health and safety is not the most popular pastime in the European Parliament, but within the Committee on Employment and Social Affairs Mr Correia has spent some time developing what I hope will be a future career in this area. The committee has achieved certain compromises which, I believe, will effectively win a proper vote in plenary this week.
The carcinogenic effects of hard wood, as we have just heard, have been of the greatest concern to the European Union's Member States. The fact that we now embrace all hard woods in this particular directive is a sensible start. The limit values which have been set, as Mr Correia indicates, are for a common European standard. Of course each Member State will be able to set standards much higher than that - that is up to them, but one thing is quite clear: this is something which will be revised in years to come and which, I am sure, we will all wish to revisit in order to be able to accord the highest standards to workers in the industry across the European Union. This is nevertheless a start.
I will say that in terms of those compromises financial assistance for such changes is something which will perhaps cause some concern, and maybe the Commission may respond to that particular issue. We have clearly indicated that we can no longer tolerate the carcinogenic effects in these particular industries where the mass production of wood dust which people breathe in clearly leads to the mutagens which cause unidentified mass illness and sickness within our Community every year for many of our unprotected workers.
I would like to end here with a quick remark to say that Mr Correia has spent a difficult and courageous time discussing this in committee at times and I commend his report to all here today.

Pronk
Mr President, health and safety is a subject of great importance to us all. The European man in the street regards it as one of his most prized assets. And the European Union has done a very great deal for health and safety as part of its social policy. Numerous directives have been issued and this is one of them. Each directive seeks to address an area which is not as yet regulated and which is harmful to health.
But the hapless reader finds it rather difficult to pick his way through the maze of directives. So before I deal with the rest of the report, I have a question for the Commission. Might it not be possible for the Commission to have a study carried out, by the University in Florence, for example - I see that Mr Monti is with us and so the University in Florence immediately comes to mind - to see if the whole body of directives might not be made rather easier to navigate through, arranged according to a different ranking system. I know that Florence tried to do that with the European Treaty, and quite successfully, though unfortunately it has not been emulated by the policy-makers. I would like to propose something of the kind here and ask you if a study on the matter might be commissioned.
Regarding the directive, I must compliment Mr Correia on all his hard work. I think it is very important that he sought to broaden the issue a little. The point he mentioned just now, whether or not effects were scientifically proven, is a rather difficult one. I think he has managed to secure some good compromises here. I think that too is something on which we should congratulate him.
We did not in fact support all the amendments. We voted against two of them, Amendments Nos 1 and 2. Amendment No 1 because it is not clear what is meant by a transitional period. Is that the normal transitional period, or is it one which starts when this directive comes into force? That is not clear at all. It creates confusion. Amendment No 2 is wrong in principle, because Member States are asked to give financial aid to companies in difficulties. Those kinds of problems have to be solved under our system by the directives themselves. And I want to hear the Commission's view on that, which will doubtless be forthcoming.
I have no problems at all with the rest of the opinion, indeed I am very pleased with it. I would like to see the first two amendments scrapped, though. I trust the majority of the House will agree with me on that.

Ojala
Mr President, the Commission's proposal for the carcinogens directive to include exposure to wood dust from oak and beech wood is an excellent one. There is good reason to adopt this approach. Directives have to be supplemented as we acquire more scientific evidence, such as the evidence we have now obtained on oak and beech wood. As for other hardwoods, we can state, on the basis of research, that they are likely to have carcinogenic effects on human beings, but that has yet to be conclusively proven. The Committee on Employment and Social Affairs has decided to apply the precautionary principle in this matter and propose that the directive cover all hardwood trees.
There is, however, no such proof in respect of softwood trees. These produce a softer wood than the harder deciduous trees, which makes their dust less harmful. For example, there is still no scientific evidence to suggest that there is any danger of cancer with Finland's main industrial timber types: pine, spruce, and birch. Naturally the directive will have to be amended again if we acquire new data on these. However, it is hardly worth broadening the directive to include all species of tree at this stage, as there is no evidence to justify doing so.
We nonetheless have to remember that possible carcinogenicity is not the only problem with wood dust. All wood dust causes health problems, such as allergies, but this is an area outside the scope of the directive.
The Commission finally proposed a limit value for hardwood dust of five milligrams per cubic metre, which is very high. In many countries that will not mean any change at all to the situation that already exists. Our committee, however, agreed to the high limit value once it had received an assurance from the Commission that the value would be amended downwards. We did hear that such a proposal might appear even within the next two years.
If the health of workers is to be protected at the workplace, there must be an assurance that people at work are in no way exposed to carcinogens. Whatever limit value is set, with the obvious exception of zero, means we are giving our approval to a situation where workers' health is at risk. In setting limit values there are always compromises between workers' health, on the one hand, and the economic and technical consequences of worker protection, on the other. Now that wood dust is covered in the directive on carcinogens we can only hope that the Commission will produce new proposals as speedily as possible to supplement this directive and lower the limit values set.

Schörling
Mr President, my group, the Greens, is delighted that this directive is being extended to cover wood dust and hard woods. The text we have before us is now very good indeed, thanks to the combined efforts of the rapporteur and the Committee on Employment and Social Affairs. I particularly appreciate the call for fixed limit values. Numerous studies have revealed that workers are constantly at risk as things stand. And not only from the types of wood cited in the Commission's proposal; all hardwoods cause problems. We cannot be sure either that softwoods are not carcinogenic, as Mrs Ojala said. We need to establish the facts and then take action where necessary.
The tenor of Amendment No 1 is somewhat disturbing. The implication is that jobs and employees' health are at odds with one another. Transition periods and derogations should never be used as an excuse for not doing what needs to be done. Nor should they be a means for companies to wriggle out of investing in resolving the problems. Society only ends up footing the bill - not to mention the cost in terms of human misery. I really do not like the wording of Amendment No 1.
Mr Pronk argued that companies should be given no assistance with redesigning premises and making the necessary adaptations. That is quite the wrong approach, in my view. It is Union policy, after all, to apply the precautionary principle. That could well mean offering help to companies to remove carcinogenic substances from the workplace. The Greens will be voting in favour of this report.

Blak
Mr President, there is still a need for minimum directives in the field of the working environment, so I am glad that the Commission has taken this initiative. But the Commission proposal to amend the cancer directive is far from satisfactory. The Commission proposes that the directive should be extended to include work involving wood dust from beech and oak. That is quite unacceptable. The Scientific Committee has concluded that dust from other tree species is in all probability also carcinogenic. I therefore urge you to vote for dust from all woods to be covered by the directive. A person exposed to wood dust runs a serious risk of developing cancer of the nose, chronic bronchitis and allergies. We should help to ensure that European employees get real protection from this risk. If there are doubts as to the carcinogenic effect of a substance, we should apply the precautionary principle. Besides, it is difficult in practical work at a plant to have different safety arrangements for different types of wood dust.
The Commission proposal for a maximum value for wood dust of 5 mg per cubic metre is also unjustifiable from a health point of view. The Commission does not explain why it has opted precisely for 5 mg. The Scientific Committee has not given an opinion on the matter. It is thus not possible to set a maximum value on the basis of any assessment from the Committee. It is therefore appropriate to refer to the maximum values applied in the Member States. In many Member States, the limit is much lower than the 5 mg proposed by the Commission. Experience from these countries shows that it is a relatively simple matter in purely technical terms to adhere to these limits. It can also make sense economically. Danish studies have shown that, by halving the maximum value from 2 to 1 mg, it is possible to save considerable amounts on the cost of hospitals, absenteeism and early retirement. It is of course a minimum directive, so Member States with lower limits will not be forced to raise their maximum values, but we must still work to ensure that workers throughout Europe get the best possible protection, especially when such serious diseases as cancer are involved. We must therefore, at the very least, oblige the Commission to examine the question of lowering the maximum values as early as two years after the directive has been implemented.
We have also achieved a reasonably good compromise in committee, so I urge you to vote for the report since, in many ways, it represents an improvement on the Commission proposal. I would also like to praise the rapporteur for a job well done.

Schiedermeier
Mr President, I would like to extend my warmest thanks to the rapporteur for the good job he has done. The European Parliament places a high value on the protection of health, as does the second amendment of this directive. While the other issues are relatively easy to resolve, the problems of hardwood dust are more difficult. A strict interpretation of the term by Member States, in so far as one is technically possible, could not only signify an end to furniture production, but could also pose a threat to the production of hand-crafted work.
Within a context of globalisation, the EU cannot cut jobs by laying down excessive requirements, which would lead for instance to the creation of yet more jobs involving higher health risks for workers in third countries. That would not make sense. The technical expenditure that is being called for should therefore be commensurate with the resulting protection of workers' health. It would also of course be logical to do further research into possibly improving the way in which limit values are fixed. A solution is not possible without transitional periods.
According to one of the rapporteur's amendments, Member States may need to provide financial assistance. The SMEs affected do not by any means receive assistance, however, because if one Member State helps out its companies a great deal, and another cannot or does not want to do this, then a huge distortion in competition could arise. That is why I would ask the Commission to make sure that the technical requirements and the limit values remain within a range that can be respected, and that the Union provides appropriate support so that conditions end up being more or less equal everywhere. Ultimately we do not want a situation where workers enjoy excellent protection against carcinogens and hardwood dust as a result of the new version of Directive 90/394, but at the same time have no work because their company has had to shut down due to the excessive requirements. That is not what the amendment of this directive is trying to achieve. However, I will, of course, be voting in favour of this report.

Matikainen-Kallström
Mr President, the report says that wood dust is a substance that causes cancer, but completely fails to mention an even more important substance in this connection, asbestos. Its use is allowed in Belgium, for example. It would have been easier for the Berlaymont to hoover up wood dust rather than having to take years and years to dispose of sheets of asbestos. What is the situation with the new Parliament building with regard to asbestos?
Asbestos is a notoriously dangerous material. During the first years of the new millennium more than ten thousand people will die from diseases caused by it, mainly lung cancer, every year. Asbestos can be effectively replaced by other materials that have the same properties but which are considerably safer. Why has this not been done? The use of asbestos in new applications is already banned in the Nordic countries, in Germany, the Netherlands and France. The Commission, however, for one reason or another, has dragged its feet in deciding to ban the use of asbestos. If the Commission allows its continued use in new applications, national bans will no longer be able to prevent the importation of machinery and equipment that pose a risk in terms of asbestos.
I have asked the Commission what progress has been made in drafting a directive to ban the use of asbestos in new applications. Urgent decisions have to be taken precisely because asbestos is so dangerous. In addition, certain manufacturers use asbestos as a competitive tool against safe but more expensive substitutes. People's health should take priority and it is about time these urgent decisions were taken. The directive is being drafted but the investigation stage is taking up too much time. The experience of many countries over many years should vouch for the use of substitute materials.

Cushnahan
Mr President, if we support the social dimension of the European Union, we must give it practical expression by giving priority to the protection of the health and safety of workers. I support the extension of the existing directive on carcinogens to include dust from oak and beech wood, category 1 and category 2 mutagens and vinyl chloride monomer. I also support the rapporteur's view that the directive should cover wood dust from all types of hardwood.
Some may argue that sufficient scientific evidence has not been produced to justify this. I dispute that approach. Often action is taken too late in relation to health and safety matters. In this context it is much better to be ultra cautious. To put it quite simply, I would suggest that it is better to be safe in the short term than sorry in the long term.

Monti
Mr President, I should like to thank Mr Correia for his excellent report, as well as the Committee on Employment and Social Affairs for the constructive way in which it has examined the proposed amendment to the directive on the protection of workers from the risks related to carcinogens. The aims of the proposal are relatively straightforward. First of all, we wish to extend the scope of the directive so as to include dust from certain types of wood, and category 1 and 2 mutagens. This is an important initiative within the Community's efforts to guarantee better protection of workers from the risks related to carcinogens at work. Secondly, with a view to simplification, we are taking this opportunity to incorporate the provisions of the Council directive on vinyl chloride monomer into the directive on carcinogens.
I am pleased to say that the Commission can accept most of Parliament's amendments since they help to make the proposal more effective. I am referring to Amendment No 3, the first part of No 5, and Amendments Nos 6, 7, 8, 10 and 11. I shall explain briefly why, in contrast, the other amendments are not acceptable.
Amendment No 1 stipulates that the provisions relating to wood dusts will only apply to existing places of work after a transition period. Mr Pronk touched on this point among others. In the Commission's opinion, the time granted in the draft directive for undertakings to make technical adaptations to their workplaces is adequate.
Amendment No 2, referred to by Mr Skinner and Mrs Schörling among others, proposes that the Member States should provide undertakings with financial assistance to help them meet their obligations. If a Community instrument were to impose such a duty on Member States, it would conflict with the principle of subsidiarity. What is more, it would set a precedent and, in our opinion, it would be a mistake to suggest subsidising employers to fulfil their responsibilities in terms of the health and safety of their workers.
Amendment No 4 sets out to fix limit values for wood dust at a level which rules out any risk to workers. We have every understanding for the underlying idea here, but, given the characteristics of carcinogens, we should not fix unrealistic limits. The Commission's proposal puts forward a workable limit in this regard.
The second part of Amendment No 5 is deemed superfluous, given that the Commission accepts the first part of this amendment.
My final comment relates to Amendment No 9: it is unacceptable to the Commission because the date of entry into force of the directive must coincide with the repealing of the directive being replaced. Finally, I take note of Mr Pronk's interesting suggestion of examining the feasibility of grouping together various directives.

President
The debate is closed.
The vote will be taken tomorrow at 10 a.m.

Insurance
President
The next item is the report (A4-0307/98) by Mrs Mosiek-Urbahn, on behalf of the Committee on Legal Affairs and Citizens Rights, on the draft Commission interpretative communication on freedom to provide services and the general good in the insurance sector (SEC(97)1824 - C4-0049/98).

Mosiek-Urbahn (PPE)
Mr President, Commissioner, ladies and gentlemen, to come straight to the point, the Committee on Legal Affairs and Citizens' Rights welcomes the Commission's initiative. The single European market has created an integrated financial market, and this has lead to increased competition and the free movement of persons and capital in Europe. Of course this also impacts on the insurance industry, where existing barriers have to be broken down gradually.
On 1 July 1994, the 'third-generation' insurance directives came into force, creating the conditions for an insurance undertaking to do business in the entire territory of the Community. The single market in insurance is based on the principles of mutual recognition and uniform authorisation, and makes it possible for insurance companies that are registered and authorised in one Member State to do business in any other Member State in the context of freedom of establishment and freedom to provide services. Prior inspection of contract conditions and premium rates has been dropped, but financial supervision of the insurance undertaking in the Member State of establishment has been stepped up.
Although there are indications of an increasingly integrated market and there is a more competition-based environment in the Single European Market, particularly in insurance products for what are known as high-risk companies, the effectiveness of the single market in insurance still remains restricted due to a number of legal and fiscal barriers and barriers arising from the policies of individual countries. Recently Eurostat also arrived at the same conclusion, expressly bearing out the Commission view and underlining the necessity and importance of this draft communication.
The Commission rightly thinks that one of the reasons preventing insurance companies from taking advantage of the fundamental freedoms in the EC Treaty is the uncertainty which still surrounds the interpretation of fundamental concepts such as 'freedom to provide services' and 'general good'. The inexact legal concept of the 'general good' is used in the Third Insurance Directives with respect to services as well as freedom of establishment, and means that in each case of cross-border insurance activity it must be ensured that the application of national legislation to foreign providers of services can be justified for compelling reasons of the general good.
In its extensive case law, the European Court of Justice has many times clarified and decided in individual cases the conditions under which legitimate non-economic interests can be recognised in the interest of the general good. The rules on the general good must apply to all persons or undertakings operating within the territory of the State in which the service is provided in so far as that interest is not safeguarded by the provisions to which the provider of a service is subject in the Member State of his establishment.
In addition, such requirements must be objectively justified by the need to ensure that professional rules of conduct are complied with and that the interests which such rules are designed to safeguard are protected. The usefulness of this communication from the Commission consists above all in the overview it provides of the important and typical instances of difficulties in interpretation. The Court of Justice has partly already clarified matters by means of judgments; some cases are still pending, and there are others in which the Court has not yet intervened. Therefore the communication provides the parties concerned with a useful and sensible guide.
The Committee on Legal Affairs and Citizens' Rights very much welcomes the fact that the Commission itself has made it clear in its draft communication that its communication does not in any way prejudge any interpretation of matters by the Court of Justice and is not normative. A Commission communication on pension funds has already been declared void by the Court of Justice in another case.
We cannot endorse the criticism made of the Commission for referring in its study to practical examples of what it considers to be infringements of Community law in cases which are still pending. Rather, the Commission's role as guardian of the Treaties requires it to bring its legal opinion, which may of course be examined by the Court of Justice, to the public's attention at an early stage and without qualification. We agree with the Commission's observation that the fact that cross-border business activities in the insurance sector are rather slow in getting started is also attributable to corporate policy. Most European insurers have hitherto obviously preferred to establish themselves abroad through takeovers and build up their network in the EU through subsidiaries.
But the introduction of the euro is going to have a huge impact on the insurance market in Europe. It should simplify the cross-border sale of insurance services, make it easier to compare products, and lead to a reduction in costs. So it can be expected that the euro will considerably boost the cross-border insurance business, which today could often be described as underdeveloped. That is another reason to have this communication at this time.

Malone
Mr President, I am a lawyer and I also worked in the insurance industry, but I did not expect to be leading the Socialists on this matter this evening. But, obviously, Mr Rothley is still dealing with his onerous task of the Statute for Members and so on.
When I started my insurance career a long time ago - practically 30 years ago - I remember the first week I was in the company, and the boss told me: 'The big challenge facing us is that we are going to have to deal with competition from Europe!' Little did I think 30 years down the road that nothing would have changed, and I hope the same happens to duty-free.
As we know, over recent years we have adopted a considerable body of legislation aimed at achieving a single market in this sector. However, it is having no real effect. It is obvious to us all that the single market is just not working in this sector, especially when you look at the high cost of car insurance in my own country, Ireland. Young male drivers, for example, face insurance costs at least twice as high as in other European countries, and that is on top of the higher car prices in Ireland anyway. So that is not a single market: no competition there, no help to the consumer.
Member States have had sufficient warnings. The Commission must make full use of its powers under the EU Treaties, especially Article 169, to open up the market. Member States are adding too many cumbersome requirements to European directives, thus making it difficult for insurance companies to operate in other Member States.
In Ireland, insurance companies trying to operate in other Member States have highlighted problems to me, such as different rates of tax relief on premiums paid to locally established insurers; the requirement to appoint tax representatives - fiscal representatives as they are called (we are not familiar with this notion and most companies do not have to appoint such agents) - and to fill out detailed questionnaires; there are also the problems associated with different rules on languages, and finally, there is the vexed question of minimum policy terms.
In my view, insurance companies should not fear the entry of other European competitors into their national markets. A single European market should be seen as an opportunity rather than a threat. It would, of course, make it easier for other firms to enter, but it would also make it easier for Irish companies to do business abroad. I would like to agree with what the rapporteur says: the consumer must be looked after, and that means competition. I wish to congratulate her on her report.

Cushnahan
Mr President, I have noted very carefully what my Irish colleague has said. I am very surprised that she was working in an insurance company 30 years ago: I did not think she was that old, so she wears her age well.
I welcome the Commission's initiative in this area. Many of us had hoped that the single market would have produced strong competition in the insurance sector, resulting in lower premia for consumers. Regrettably, this has not happened and, clearly, no real single market in insurance exists at the present time. I agree with the honourable Member that it is disappointing, especially for young Irish people. They pay exorbitant rates for motor car insurance, and I had hoped, like many people, that competition would force prices down. I urge the Commission to investigate insurance rates for under-25s in Ireland to ensure that no abuse of the market exists. I welcome the fact that the Commission is investigating whether or not the general good clause is being misused.
Finally, I hope that with both this Commission initiative and the introduction of the single currency, we will witness more transparency, more shopping around by consumers and, consequently, the eventual creation of a real single market in insurance.

Sierra González
Mr President, there is considerable uncertainty surrounding certain key aspects of the general good clause concerning the freedom to provide services. In particular, these relate to the implementation of the directives on insurance. We should be aware of the dangers of the possible use of this clause as a means of discriminatory restriction.
In fact, as the report states, the harmonisation achieved through the directive of 5 April 1992 has not prevented insurance undertakings wishing to operate in Member States other than the one where they are domiciled from having to comply with cumbersome requirements imposed by the host state.
True, the relative failure to establish an internal market in insurance is not due solely to the tendency to interpret the general good clause in a biased way. Problems in the internal operation of the undertakings themselves have also played a part. Nevertheless, the clause must be clearly defined. In my view, it does not matter how this is achieved. The best way may be through subtraction, as the Commission - supported by the rapporteur - is suggesting, or there may be another way, but what is important is to arrive at a clearly stated legal position.
To sum up, if a clear legal position is to be established, it is essential to approximate the most important provisions of the law on insurance contracts and insurance conditions. Our citizens will then be able to shop around in an open market and make a choice which is in their own best interest, not that of the insurance undertakings.

Ullmann
Mr President, Commissioner, ladies and gentlemen, both the Commission communication and the report by Mrs Mosiek-Urbahn deal with a central concept in the interpretation of Articles 59 and 60 of the EC Treaty on the freedom to provide services. We know that in its insurance judgment of 4 December 1986 the European Court of Justice identified the 'general good' as justification of the restriction of this freedom to provide services. But even a lay person in legal terms would see at once that such a broadly framed concept as the general good has to be protected from falling prey to misinterpretation. That is exactly what the Commission communication aims to do.
Like the rapporteur, we should support the Commission, and I also think that we should be behind her in encouraging the Commission to resume its efforts to approximate the provisions on insurance contracts, which have become bogged down, and to make its legal opinion known in spite of the fact that procedures are pending. I hope that in future this will be a reason for many policyholders to be thankful to both the Commission and the rapporteur for their commitment to the freedom to provide services. Perhaps even Mr Cushnahan may yet have cause to be pleased about this.

Monti
Mr President, I thank Mrs Mosiek-Urbahn and compliment her on her report. Almost four years after the entry into force of the third insurance directives, the European passport system which they introduce has already had a major impact on the operation of the market. The abolition of insurance premium controls and the prior notification of policy conditions have increased competition on national markets, especially in respect of certain types of activities previously excluded from competition. Nevertheless, the Commission has noted that the potential of the single market has by no means been exploited to the full yet, as various speakers have mentioned.
Our contacts with economic operators - insurance companies, brokers, insured persons and consumers - lead us to conclude that the main reason for this lack of integration is the Member States' diverging interpretations of two fundamental concepts of Community law: freedom to provide services and the general good. These differences in interpretation not only tend to produce considerable legal uncertainty, impeding the development of the market, but also serve to perpetuate the national barriers which prevent the single market from functioning properly. Clearly, there are legitimate targets for protection by the Member States in the name of the general good, the most significant being perhaps consumer protection. I can assure you that the Commission has no intention of calling into question any genuine concerns in this regard.
It is equally evident, however, that in many cases the Member States make excessive use of the discretion conferred on them by the concept of the general good, to justify applying their whole panoply of national regulations to foreign service providers. Rules on the general good are not in fact harmonised at Community level; nor would it be possible to do so, since national interests vary from one Member State to another. The concept of the general good should nevertheless be interpreted very restrictively, in that it limits the fundamental freedoms established by the Treaty. Improper use of this concept by Member States can be avoided through compliance with the criteria established by the case law of the Court of Justice: non-discrimination, proportionality, necessity and non-duplication. These criteria for ascertaining the general good circumscribes the legitimate use of this concept.
In order to remedy this situation, the Commission deemed it necessary to draw up the draft interpretative communication in terms which clarify its proposed interpretation of the concepts of freedom to provide services and the general good. The Commission intends in this way to provide greater clarity and legal certainty concerning the scope of these two concepts. I must say that, as you know, a similar initiative in the banking sector has proved most useful.
Having set the scene, please allow me now to comment briefly on the European Parliament's report. I wish once again to thank the honourable Members and in particular the rapporteur, Mrs Mosiek-Urbahn, for having taken part in these consultations and conducted a thorough analysis of our interpretative communication. The report from the Committee on Legal Affairs focuses mainly on the question of the general good, which is in fact the main issue dealt with in the communication. The report corroborates the Commission's view that diverging interpretations from one Member State to another constitute a major impediment to the proper functioning of the single market in insurance. Finally, it endorses the use of practical examples and defends the right of the Commission, as guardian of the Treaties, to express its own legal opinion.
I would moreover stress once again that the purpose of our communication is to improve transparency and clarify Community legislation, whilst at the same time increasing legal certainty. It is clear, however, that this interpretation by the Commission can neither be binding on Member States nor impose fresh obligations on them. Nor does it prejudge the interpretation of the Court of Justice, which obviously is ultimately responsible for the correct interpretation of Community legislation. I would also recall that the Commission is likewise duty-bound to bring infringement proceedings against Member States in the event of serious violations of Community law.
Encouraged by this resolution from the European Parliament, we shall now be even better placed to complete our work by adopting the final version of this interpretative communication.

President
The debate is closed.
The vote will be taken tomorrow at 10 a.m.

Preferential tariff arrangements
President
The next item is the report (A4-0262/98) by Mr Nordmann, on behalf of the Committee on Development and Cooperation, on the Commission communication on the management of preferential tariff arrangements (COM(97)0402 - C4-0447/97).

Nordmann
Mr President, the report that I am to present on behalf of the Committee on Development and Cooperation relates to issues that go quite far beyond the scope of the Union's development policy, as it involves suggesting improvements to be made in the management of the preferential tariff arrangements that the Union grants to some of its trading partners. This is done in several forms: for some countries it is in the conventional form of negotiated cooperation agreements, in particular, of course, within the framework of the Lomé Convention, but also in the form of autonomous preferential tariff arrangements such as the Generalised System of Preferences, which is unilaterally granted by the Union.
It seems that these preferential tariffs are subject to a certain amount of fraud, and the irregularities that have been uncovered, for example, amount to the very substantial sum of ECU 220 million. This fraud affects textiles, fisheries products, industrial products and agricultural products, and one of the main attractions of the Commission communication is that it lists the products affected by fraud. The mechanism of fraud here obviously involves the misuse of the certificates of origin that are granted by the customs authorities of the trading partners and that involve many cheques drawn on the Union's funds. The only thing is - and here lies the limit of the comparison - that in the case of cheques that have no funds there is no payment, and the surplus comes from the Union's funds and therefore from the Union's taxpayers.
The fight against fraud, which is the main objective of the Commission communication, involves a certain number of improvements to the system and a certain number of control measures as well as training measures, especially for the trading partners. Indeed, it has to be said that they do not always have the technical and administrative infrastructure to combat fraud where it is not actually encouraged, and this is something that also has to be recognised. The Commission communication looks at a number of actions to be undertaken. We would also like to add that we must raise the awareness of and encourage greater action on the part of the Commission's delegations in the partner countries, which should play a driving role in this field.
The Committee on Development also hopes that there will soon be an initial assessment of the impact of the new 'binding origin information' procedure. This should allow importers in the Union to ascertain, before customs formalities have been completed, that the products qualify for preferential tariff treatment. This binding information procedure gives some sort of customs validity to the products for three years.
We also hope that the penalties mechanism that was put in place in 1995 will be effectively applied, when appropriate. Up until now it has only been used once and that was in a case arising from social problems and not from commercial fraud. We hope that it can be implemented.
To conclude, I would like to point out that, notably in a very interesting hearing before the Committee on Budgetary Control, which in the end did not, unfortunately, give an opinion on this issue, the debate was centred around strengthening the legal certainty of importers. In this respect, there is a difference in perspective between the report by the Committee on Development, which mentions that certainty, which must be improved, and the opinion by the Committee on External Economic Relations, which gives great emphasis to the problem. We think that the responsibilities must be shared and that the Committee on Development's wording is undoubtedly more balanced than the opinion - and this is quite normal as it comes from the Committee on External Economic Relations - that highlights only the issue of the certainty of importers. This is the reason for the indications that I have given regarding the amendments, and I wanted to make that clear now.

van Dam
Mr President, as draftsman of the opinion of the Committee on External Economic Relations on this matter, I read Mr Nordmann's report with great interest. At the beginning of his report, he rightly points to the importance of the preferential arrangements in Europe's trade policy. The main aim of this, fostering the development of less developed countries like the Lomé and ACP countries and helping applicant countries prepare for membership of the European Union, deserves our full support.
The problem is that the reality falls far short of the ideal. Not for nothing did the Council ask the Commission in May 1996 for a study of the matter and for proposals to improve the system. The Commission points in its communication to fraud over the rules of origin and a significant portion of Mr Nordmann's resolution, the first nine paragraphs, deals with this in greater detail. Of course we have to work hard to counter fraud, in the interest both of the European Union and of the beneficiary countries. The Commission places the emphasis mainly on direct measures against fraud, using supervisory bodies and penalties. To my mind, more has to be done to counter fraud by indirect means. The preferential tariff arrangements should be made more effective. That may prove more beneficial than penalties, control mechanisms and all the other administrative rigmarole. What I have in mind is more flexible and simpler rules of origin and improved cooperation between Member States and beneficiary countries. An early warning system, whereby the importer is alerted early on to possible irregularities, may be useful too. But that means the current inadequate system has to be faster and more reliable, as Mr Nordmann advocates in his report.
A second consideration is protection for importers in Europe. I was disappointed that the Commission communication contained nothing to protect those who import things in all good faith. This was precisely one of the reasons which prompted the Council to ask the Commission for a communication. The Council wanted the confidence of importers and the validity of certificates of origin to be protected, so that they no longer faced sky-high duties and the risk of going bust. On this precise point, the Commission has done nothing. That is unfair. Mr Nordmann alludes to this obliquely in paragraph 10 of his report, but it has to be raised more specifically. Our starting-point has to be that the risks must not be borne by the importer alone. For this reason, I have tabled Amendments Nos 3 and 4 to paragraph 10. They derive from the opinion which the Committee on External Economic Relations adopted unanimously on this subject. Amendment No 5 is from our Committee too, and takes up the Council's question. It concerns importers who, in applying the preferential arrangements, are disadvantaged by irregularities in the decisions of beneficiary countries. I would urge the Commission to put forward a proposal to protect them where they cannot reasonably be expected to have known about such irregularities.
Lastly, given the aim of the preferential arrangements, I think it is important that they should also benefit the least developed countries. So I urge the Commission to ensure that the system really does improve the market access of these most vulnerable countries. This is the thrust of Amendment No 6, once again tabled by the Committee on External Economic Relations. I hope that the rapporteur, Mr Nordmann, will incorporate these crucial amendments into his resolution, which is an excellent one. The improvements which I advocate are of great importance to the continuing existence of the preferential tariff arrangements. The Commission's communication is helpful, but does not go far enough on these points. So it is up to the European Parliament and the Council to act. The present situation is bad not only for the least developed countries, but also for firms in the European Union. Given this situation, I believe that we have to conclude, irrespective of political allegiance, that the current system is ineffective and unfair. We should take action accordingly.

Maij-Weggen
Mr President, Mr Nordmann and Mr van Dam have studied this whole issue from the point of view of their respective committees and have thus largely made comments of a technical nature. I should like to make some comments which are rather more political, on this proposal and on Mr Nordmann's report.
Firstly it would seem, superficially, that the purpose of the system of preferences is to enable a number of third world countries to export their products to the European Member States on more favourable terms. The reality of course is rather different. The reality is that these products compete with products from our own European Union, and that is the main reason for charging import duties on products from the third world. We then ease that burden a little by lowering the rate of duty imposed. I say this because I think this system of preferences is viewed from within the European Union as a kind of concession to the developing countries, whilst the developing countries themselves see it above all as a minor concession, in areas where the European Union is struggling and setting import duties which are far too high, largely to protect farm products produced within the European Union itself. In all honesty, it is actually a somewhat hypocritical system. That is the first point I wished to make. It is a general political observation.
When we then find that massive frauds are perpetrated on the system in the developing countries, we have to ask ourselves what is the point of such a complicated system and what is the need for it. ECU 220 million, or half a billion Dutch guilders - that is a lot of money, if it is indeed the total sum being lost through fraud.
And knowing where that money has gone - into textiles, fisheries, agriculture and the countries of Asia - I really wonder whether far more fundamental changes to the system are not warranted. The rules of origin should be radically revised, for example, but perhaps we should concentrate the whole system rather more on the really poor countries and not have to keep adapting the current system in this way.
Since we have a system of penalties and sanctions for humanitarian reasons, why can we not apply these sanctions in cases of fraud and abuse? If there is real abuse of the preference system, I think sanctions could be imposed there too. Perhaps Mr Monti will tell us what he thinks of that idea.
Lastly, I agree with Mr van Dam that if importers are losing out under this system, that is a very good reason to review the whole procedure.
That, Mr President, is my political critique of the system as a whole, but the essence of my criticism is that it is a hypocritical system, because we start by charging duty on goods from the third world and then take a bit off again, all because of the scale of protection given to agricultural products, textile and fishery products in our own European Union. It is hypocrisy, it is a cheap trick, and as we know the European Commission can do little about it. Perhaps it would be better to get rid of the system altogether.

Mendes Bota
Preferential tariff arrangements, whether under the Lomé Convention or the generalised system of preferences (GSP) are still under-used because of contradictions between the European Union's own policies. While recognising these systems as a strong weapon for helping the developing countries and a vital element of cooperation policy, the Union sticks so closely to the demands and red-tape bound up with rules on origin that they become a protectionist practice which defends European industries to the detriment of their competitors in the developing countries who are supposed to be benefiting from them.
Many of the least-developed countries will not have any opportunity to compete in the open and free international market. Throwing them into the lion's den of the World Trade Organisation is tantamount to condemning them to eternal poverty and suffering. Putting an end to the preferential tariff arrangements is therefore out of the question. Not only are they necessary but greatly improving them should be one of the EU's priorities. That does not mean turning a blind eye to fraud or tolerating beneficiary countries' lackadaisical or uncooperative attitudes. But fraud cannot be combated without an effective and practicable system of sanctions. Suspending the benefits of a preferential tariff arrangement, a sanction so far only applied in the case of Burma, should not be limited to cases of fraudulent trading practices, unfair competition, slavery, forced labour or relations with the drug trade.
Certain countries benefiting from the GSP have high incomes. Countries where child labour and discrimination against women are the rule continue to benefit from the GSP. But let us not exaggerate. The ECU 220 million of fraud detected comes to only 0.25 % of the Community budget. What is more serious is the fact that an excessive onus is placed on European importers when it comes to checking certificates of origin, a discouraging factor for trading with the beneficiary countries of this system of customs tariff exemptions or reductions. That responsibility, as the rapporteur has said, has to be shared. We support the consensus reached between the Council, the Commission and the European Parliament on the measures needed to increase the exchange of information, strengthen the control mechanisms, reduce red-tape and apply the system more flexibly. But now we need action not words.

Rübig
Mr President, ladies and gentlemen, as a member of the Committee on Budgets, I am always concerned with speaking out in favour of fair structural conditions. I would like to come back to what Mrs Maij-Weggen said. I think that in principle we should from time to time reflect on the worth of certain regulations, and attempt to lay down objective criteria as to where provisions are still relevant and where they could be removed.
Own resources is a sensitive area for us because it consists of amounts of money which are important for the EU. I think that it is very easy to use forged certificates of origin, because monitoring the flow of goods (which is often independent of financial flows), and dealing with the accompanying papers and the people involved in the operation is so difficult. Any groups that have specialised in fraud would of course know the weaknesses of our system and also how to hide their cheating by staggering the four flows into a favourable chronological sequence.
I think it is necessary to offer better training in this area. There has been some progress, but it might be necessary, especially in the field of statistics, to develop increasingly precise methods in order to determine what the likelihood of fraud is in each of the four flows. I would also like to point out our request that OLAF should, together with the Court of Auditors, undertake intensive monitoring. There is also of course the issue of jurisdiction, and of who is really laying down the measures that will lead us to fair structural conditions.

Cushnahan
Mr President, the image of the European Union has suffered greatly because of recent scandals relating to fraud. If we do not close the loopholes that facilitate fraud we will compound our problems, resulting in increased cynicism and hostility towards the European Union. It is therefore frightening that the Commission's 1996 Annual Report concludes that there were irregularities to the tune of ECU 220 million in the EU's system of preferential imports.
Mr Nordmann - I congratulate him on his report - is correct to cite the need to tighten fraud detection systems in the countries of origin. Unfortunately the preferential tariff arrangements enable goods to be imported into the EU from under-developed nations, either duty-free or at a reduced rate. Regrettably fraud occurs by falsifying certificates of origin.
While the Commission is correct to propose simplifying the rules of origin, I support the rapporteur in his view that all risks should not be borne by EU-based importers and furthermore, that the poorest countries should not be penalised in any reform.

Monti
Mr President, preferential tariff arrangements have become a mainstay of the European Union's external economic relations. They are difficult to manage because of the need to play off political interests against economic ones; as Commissioner responsible for both customs policy and the single market, this matter is of particular concern to me. I wish to express my sincere thanks for the work of the rapporteur, Mr Nordmann, and to the Committee on Development and Cooperation for having highlighted so clearly that the challenge of improving on the present system for the future lies in establishing a balance that more effectively meets today's economic requirements.
When discussing preferential arrangements, account must be taken of all the aspects involved: trade policy, development aid, public funds, customs rules, industrial interests, importers' liabilities, etc. This whole set of issues must be addressed in the search for a solution to the current problems: taking isolated measures affecting individual elements would only distort the system and could ultimately compromise its credibility. Every economic operator must fulfil his obligations: the beneficiary country - and on the subject of beneficiary countries I would remind you, in relation to the remarks made by Mrs Maij-Weggen and Mr Cushnahan, that the European Union is the biggest donor of preferences; the Union grants new possibilities of access to less developed countries through specific measures and derogations - must guarantee that the products exported satisfy the conditions of admissibility, especially the rules of origin. The importer, for his part, must assume the normal commercial risk associated with all commercial transactions. The importing country must guarantee that no fraud is committed and that public resources are safeguarded.
I realise that economic operators have felt themselves to be particularly disadvantaged by certain irregularities which have occurred in the past. The Commission has taken due note, and I should therefore like to comment on the matter of importer liability. There are - I would recall - two types of customs rules: the first, rather outdated and abandoned some time ago by the Community and the Member States, consists in checking every single consignment of imports as it is cleared through customs. This cumbersome procedure, which is feasible only when few goods are moving around, does have one advantage: as soon as the goods have been cleared through customs, the importer knows whether or not everything is in order from a regulatory point of view. Thus there is no need for subsequent checks.
The second type of rules is much more up-to-date and was adopted by the Community in 1992 through the Customs Code; its purpose is to promote trade. Imported goods are no long subjected to systematic checks, and thus their freedom of movement is not slowed down. Only a small percentage are checked at the time of customs clearance. But in return for this freedom, importers must assume legal liability. That is why the Community's customs authorities may demand that for a certain period of time - three years, which moreover the Commission has recently suggested to the Council should be reduced to two - customs duties must be paid on goods which have been imported.
At the same time, I am aware of the administrative shortcomings in certain third countries, which create both economic and legal uncertainty for operators. We are exploring suitable measures to remedy this situation. I would merely emphasise the main principles which we believe should guide us in our efforts. These are the guidelines contained in our communication of July 1997, the thrust of which was to prefer a global approach to this problem on the grounds that - as I said a moment ago, and as I think has been confirmed by this evening's interesting debate - to focus on an individual aspect in isolation, neglecting the others, would not lead us very far.
This same reasoning was followed by the Internal Market Council on 18 May 1998. The Commission is therefore of the opinion that the following should be promoted: first and foremost, a responsible approach by all operators of these arrangements and better cooperation among them; secondly, improvements in the rules on origin; thirdly, greater awareness in the beneficiary countries and an offer of assistance to their customs administrations; and fourthly, an examination with the Member States of customs-related and financial measures to be adopted. Finally, it is important in the Commission's view to seek to improve the mechanisms designed to enhance the security of commercial operations. I am thinking, in particular, of the introduction of effective penalty clauses into preferential arrangements, supported by a mechanism for providing regular information to importers, like the one put forward by the Commission in its recent proposal on the new generalised system of preferences. I would also refer you to other measures encouraging greater recourse to the 'binding origin information' procedure.
In conclusion, Mr President, I would reiterate what I said at the outset: we cannot envisage measures relating to just one element of the system, for example merely extending the notion of good faith on the part of importers. Here I am pleased to note that Mr Nordmann's report gives strong political backing to the Commission's initiative to update the management of preferential tariff arrangements. The challenge for the future is the need to combat fraud effectively, whilst at the same time shouldering our responsibilities to third countries and to economic operators. I am gratified to note that the Committee on Development and Cooperation broadly shares the Commission's intended approach in this difficult area, and I hope that Parliament as a whole can endorse this reasoning.

Rübig
Commissioner, I have a further question. We have of course a system of penalties in this area. Do you think that we might make more progress with a system of incentives or that, in the course of time, this could be turned into a system of incentives?

Monti
Mr Rübig, we see assistance and cooperation between administrations and, in the final instance, penalties as complementary. As you know, the system is currently in the throes of change, and we are striving to improve it with this cross-cutting approach, whereby no aspects can be overlooked, I believe, including the possibility of penalties. I think we are right to maintain that cooperation and assistance are a step in the right direction, in an area which - I would emphasise - is highly complex and requires many conflicting demands and interests to be taken into account.
I thank you once again for the suggestions and encouragement which the Commission has drawn from this debate.

President
The debate is closed.
The vote will be taken tomorrow at 10 a.m.
(The sitting was closed at 10.25 p.m.)

