European Constitution: Opportunity or Threat?

October 28, 2003

[Unedited transcript prepared from a tape recording]

8:45 a.m.	Registration
9:00	Welcome:	Radek Sikorski, executive director, NAI; resident fellow, AEI
		Walter Klitz, director for North America, Friedrich Naumann Foundation
9:10	The Emergence of the European Constitution and Its Meaning for Europe and the Transatlantic Relations
	Speaker:	Guenter Burghardt, head of the delegation of the European Commission to the United States
9:30	Federalism and Free Commerce—Constitutional Requirements
	Speakers:	Lamberto Dini, vice president of the Italian Senate, former prime minister
		Marc F. Plattner, coeditor, Journal of Democracy
	Moderator:	Michael S. Greve, John G. Searle Scholar, AEI
11:00	Coffee Break
11:15	Federalism and Individual Rights
	Speakers:	John Bruton, Irish MP; vice president, European People's Party; former prime minister
		Frank Vibert, director, European Policy Forum
		Jeremy Rabkin, professor of government, Cornell University
	Moderator:	Radek Sikorski, NAI
12:30 p.m.	Luncheon
	Speaker:	Stephen F. Williams, judge, U.S. Court of Appeals for the District of Columbia Circuit
2:00	Conference Adjournment
6:30	Reception at the Willard Intercontinental
	Speaker:	John O'Sullivan, editor, National Interest
8:00	Reception Adjournment

This conference is cosponsored by DaimlerChrysler Corporation.

PROCEEDINGS:

MR. SIKORSKI: Good morning, ladies and gentlemen. I'm Radek Sikorski. I'm the Executive Director of the New Atlantic Initiative here at the American Enterprise Institute. Welcome to the New Atlantic Initiative. Welcome to AEI. We are very excited to have today a conference on a subject of major importance for current and future trans-Atlantic relations.

New Atlantic Initiative, as some of you know, was set up in 1996 at the Congress of Prague and the immediate aim was to welcome the new democracies to the institutions and clubs of the free market democratic West, and by that we meant into the North Atlantic Treaty Organization and, of course, to the European Union.

So it's particularly appropriate that the New Atlantic Initiative should debate a subject that is in a way the crowning of this process. The EU on the first of May next year will welcome the new democracies as their members and has also agreed at the convention a draft of the constitution, a document that potentially can be the bedrock of a united Europe, whole and free, to use President Bush's speech in Poland earlier this year.

I have looked forward personally as a European to this constitution because I think Europe needs a document to which the people of Europe can relate, a document that will set the rules of the club once and for all so that current and future members can relax and start enjoying the facilities. I also look forward to more democracy in Europe, to delimiting once and for all what should be done at the federal level and what should be done at the national level, and I think we also deserve a document that is not only clear and not only forms a solid institutional foundation for the European Union, but, dare I say, is lovable.

And I'm very glad to say that we have a conference today which has gathered distinguished practitioners and distinguished theoreticians of this and I look forward to making up my mind whether or not the draft that is being presented is what I was hoping, I as a European was hoping to get.

We're very glad to be able to do it in partnership with the Friedrich Naumann Foundation. I declare the conference open and I would like to call on Mr. Walter Klitz to say a few words on behalf of the foundation. Thank you.

MR. KLITZ: Thank you very much, Radek. Mr. Prime Minister, Presidente, excellencies, ladies and gentlemen, it's my pleasure to welcome you to our conference on the European constitution. I am Walter Klitz. I am the Director of the Naumann Foundation in Washington, D.C. The Friedrich Naumann Foundation is one of the German political foundations which are associated to the political parties. As Radek just mentioned, I'm also, as a European, looking very much forward to this conference because I need to have some information, as well. Of course, I had the opportunity during a trip to Brussels and to Berlin to have some minor information about the constitution because discussion in Germany and in Europe only has started right now and I think we will have more upcoming events.

So I'm very glad to have this cooperation with the New Atlantic Initiative of the American Enterprise Institute and having one of the first conferences on the European Constitution worldwide. I would have loved to see more conferences in Europe, as well.

I just talked about a trip we had to Brussels and to Berlin and at least two participants which were in Brussels and Berlin with me, and with your permission, Elena, I want to quote from your letter because this is very interesting, what she just wrote.

She said, "For the first time, I began to see the European Union as an entity in its own right and not as a collection of countries that are loosely connected to one another." What does it mean? This means that our trip, first of all, was very successful, the first point.

Secondly, it means that the perception of the European Union in the United States seems to be differently than we perceive the European Union in Europe itself. It's been seen as a loose connection of nation states which is not corresponding to the situation we face in Europe as the integration process seems to be much deeper than it is perceived here.

I'm very glad and I'm looking forward to the contributions of our distinguished speakers today. When we were preparing this conference, one sentence of Chancellor Bismarck, the former Reichs Chancellor at the end of the 19th century came in my mind, who once said that if people would know about the ingredients of the sausage, they wouldn't eat it. He certainly didn't have in mind the European Constitution. Let's have a look in the ingredients and hopefully we will eat the sausage after this day.

Thank you very much for coming.

MR. SIKORSKI: Thanks, Walter.

Another thing of the Chancellor of Bismarck comes to mind. Of course, the politicians endlessly demand in the name of Europe what they didn't dare demand in their own name.

Ladies and gentlemen, we've made available to you copies of both the proposed constitution, which I think you'll agree is very impressive, and for comparison the United States Constitution. One of the principles of Marxist dialectic was that quantity transmogrifies into quality, I'd like to remind you.

I think it's entirely appropriate that as our first speaker should be His Excellency Guenter Burghardt, the Ambassador of the European Union here in Washington. Ambassador, the floor is yours. Thank you.

MR. BURGHARDT: Good morning and I thank both Radek and Walter for the initiative to discuss this very important subject. I am honored to be able to introduce the subject from a European and trans-Atlantic perspective. I have been invited by Radek to be forthright.

I am comforted by the fact that I'm joined by some of my colleagues, ambassadors of present and future member states here. I just recognize three--I'm sorry if I haven't seen others--Steven Ovakny from Austria, Noah Fohay from Ireland, and John Lewell from Malta, so I am not isolated in trying to present to you some of the gist of our thinking here around the subject.

Let me start by proposing a compromise between the two documents which you just showed, and this is how the future European Constitution looks like as a kind of blend between quantity and quality. I was just thinking about what would happen if the United States of America with 50 States would start to have an intergovernmental conference today and what the complexity of the document would be in comparison to the seven articles and ten amendments of 1787 of the 55 members of the Philadelphia Convention who met in those circumstances.

I just came back from a lecture tour in New Mexico last week and I was told there that New Mexico, the 47th State of the United States, joined only in 1912 after 50 years of military rule by Washington, of which they did not have the best of all memories. Of course, they had military rule by Spain before, so they could choose between what suited them better.

There are a lot of comparisons, of course, one can make between the process in the United States and the process in the European Union. Let me simply say one thing about it. The major difference probably, in order to make the European and American public understand in what historic circumstances these nation-building processes are happening is that the United States, which mostly was made up by Europeans--mostly, I say--by Europeans who had left this continent in order to look for new opportunities and new challenges and a new world, as we call it, those Europeans were able to form one nation. They did it at the expense of diversity because sometimes we call it a melting pot. But the big admiring thing about this is that this country, this vast country, was able to constitute one nation.

Now, compare this to Europe where we do not operate enlargement by purchasing of huge slices of land, like Louisiana, Alaska, and other places, but where we have to find the right plan to share sovereignty between a federal level, the European Union level, and nation states which remain nation states and do not have the ambition to become one single nation. This is why one of my former bosses, Jack DeLoras [ph.], tried to get a label for that when he talked about a federation of nation states.

So the big differences between the nation building which took place here and the kind of nation building which is taking place in Europe is that here, you have one nation, one government, one President. In Europe, we have to go through various phases of transition in order to bring together countries, member states who want to remain sovereign but not totally sovereign anymore because they are merging part of their sovereignty and assuming those responsibilities through institutions at the level of the European Union which form a separate and own level of governance, and we have to bring those levels of governance together.

Now, Radek, you said twice, once and for all. One of the nice things about the European Union, of course, is that we are a work in progress. The constitution, which hopefully will be the result of the process which is underway now, is a landmark, certainly, but certainly not the last step of European "nation building," quote-unquote, and therefore, one of the ambitions we must have is to remain flexible to adapt our process to requirements as they come along.

Now, let me make one or two sets of remarks around the subject of my presentation, which is to put our discussion of today into a European and trans-Atlantic perspective. By the way, I have some prepared remarks which I'm happy for Bill to leave them with you and to formulate and to sum up my thoughts in a few points.

From a European perspective, let me perhaps invite you to be forthright and say the following. The President of this country has made a famous speech here at the American Enterprise Institute in February and let me modulate one phrase which has been a little bit shocking for some Europeans and say it in a different way, and I would suggest the following.

The part of history has been written by the European Union and United States together over the past 50 years and the rest of history, I hope will be written together, as well, for some time to come. This should express to you, those who remember the phrase I am referring to, that what we should never forget is that the European Union process has always been embedded in a trans-Atlantic dimension.

That started with the Marshall Plan in 1947. It went on with massive support by successive American administrations, and let me just give you one date which is quite interesting compared to 2004, because when we talk about the European Constitution, we talk about the process which we hope will come to fruition by the end of this year and then to lead to a signature of a new treaty in the beginning of 2004 in order to coincide with the first of May, 2004, which will be the date where the next enlargement process will come into force with ten new member states, from 15 to 25.

Now, 50 years before 2004, 1954, a very major initiative had been taken in Europe which would have led to the European Defense Community and to European Political Community. This was an initiative by the six founding members. It failed by a small margin in the ratification process. Guess where? In France, in Paris, because France was not ready at this time to see such an autonomous development in Europe to happen. It was very short after, relatively short after the end of the Second World War. Although the United States were heavily supporting this and the United Kingdom was relatively lukewarm to that process.

I mention this because some of the ambivalences we heard in the discussion here in this country is that on the one hand, there is a tradition of American support from the Eisenhower, Kennedy, Bush father, Bush son administrations, and there is at the same time a kind of trepidation and hesitance when it comes to look at concrete achievements on the European Union side.

Let me give you three examples. When Jack DeLoras announced the 1992 program to complete the achievement of the internal market, some people here responded with very skeptical reaction, saying is that Fortress Europe, excluding all the rest of the world and just sharing the benefits among them? Well, I mean, you do not hear that anymore today, Fortress Europe. It was clear that this internal market of the European Union has been for the benefit not only of American business, but was a major step in the direction of global liberalization.

The Euro, when we started the project on the Euro, some very anxious people here said, well, what will that mean for the global financial system? Will it mean havoc? The Europeans will never get there. Now we have got there. The Euro has shown that it is probably the most visible symbol of merging sovereignty among the 12 member states who have introduced the Euro out of the 15, and the Euro, in a way, is the best example for answering the question the famous one from Barta Heistein [ph.], is this a process which at a certain point becomes irreversible?

Now, imagine a while that we would like to replace the Euro again by its ancient currencies which have gone into it. What would that mean in terms of turbulence of the international monetary system?

So we have reached a point of no return, and this is in the logic of the European construction process, because it is a process which, after the failure of 1954, restarted in the area of the economy, but with what we called a finality politic, an ultimate political objective which is political. And therefore, nobody should be afraid here that the Europeans also need to complete their process by adding a constitution, by setting the ground rules for, let's say the next 50 years to come, but also by equipping themselves with more significant capabilities in all areas, including the military area, and not in order to become a kind of threat to the United States of America, but in order to be better able to play the game of partnership, the concept of partnership and to reap together the benefits and opportunities.

So you provoked me by the title of my introduction, when asking the question of whether this was a threat or an opportunity. My answer is, well, if we would put the trans-Atlantic relationship into the strategic threat analysis post-September 11, I think we would really misunderstand the process. We should rather look at the opportunities which we must reap and which are in relation to the many challenges that we have to face.

By the way, I could add immediately that the three P's of the European founding fathers were peace, no more war between us, and they achieved that; prosperity, with the help of the Marshall Plan, get the European economy back to their feet; and partnership with the rest of the world.

And so we do not see any problem with the fact that the United States spends twice as much as the European Union member states on defense while the European Union spends three times as much on development assistance. We feel that this gives the opportunity to blend soft and hard power in the kind of mix you need in order to confront this overt challenge, to agree on the objective we want to achieve and then to use our capabilities in a complementary fashion to achieve them.

And, therefore, our three P's are not a threat, but some people felt it's a little bit provocative when they read the three P's in the national security document of the United States of September 2002, and those three P's are prevention, preemption, and preeminence. Now, this is certainly not the ambition of the European Union and we fear that those three P's could lead to a fourth P, which is putting people into opposition to each other while we are going for the fifth P, which is partnership.

So there is a game of words. There is a flow in two ways of stereotypes and caricatures and this has characterized too much the recent past of the trans-Atlantic relationship.

I hope personally, and this is what we are working for, that these things are exaggerated and that the challenge is out there from the economic to the political to the military to the anti-terrorism agenda, clearly show that there are no partners who are better placed in order to combine their forces than the new word which, after all, as I said, has been made up of a lot of Europeans who have come over here, and the new Europe, which is the Europe bringing nations together in a new political landscape, sharing sovereignty, and not creating problems among themselves which then need the Americans to come in and to solve our problems at great cost.

This is what I hope the spirit of this new discussion will be. The United States has invested in the European integration with the Marshall Plan in the late '40s. It has reaped the benefit after that of many Marshall Plans which have been financed by the Europeans. Just let me remind you that every year, we are spending 100 billion Euros, roughly, on a European--through a European Union budget, one-third of which is the transfer of resources from the richer to the poorer member states.

When it comes to the enlargement process, two Marshall Plans have been spent or are about to be spent, one from 1989 to 1999 on the so-called pre-accession strategy, which was designed to help the new member states to come up to a level of development which will allow them to compete as full members in the European Union, and the other one on the transition to actual membership.

The stability and prosperity the Europeans have created, instead of being a place where conflicts erupt, leaving aside for a moment the Balkans, which are the only exception to that, they come for free for the United States. We are not holding, organizing any donor conferences to pay for enlargement. We are doing that and this is our own obligation as Europeans. Both business and politics is benefitting from that.

Now, I have tried to describe somewhat the general environment around which the intergovernment conference and the European constitutional process are taking place. I am happy to leave it to those here on the podium who have been more instrumentally and directly involved in that process. My own experience when it comes to treaty modifications and intergovernment conferences reaches back into the time of Jack DeLoras, but when I look back at this, I am amazed again to see how quickly there was a succession of those kind of conferences, which is a clear sign of the dynamism of the process.

We had--I mean, I was still there when we had our first enlargement already there in 1973. But when we got into the '80s, right before the fall of the wall and the unification of Germany and the disintegration of the Soviet Union, we had the Single European Act of 1985. We had the Masters Treaty of 1993. We had the Uncident Treaty [ph.] of 1997, and the Nice Treaty in 2000.

And then here in 2004, we are about to consolidate this process with the many different questions which it poses and which you will find back in my prepared remarks into a European Constitution which will be the kind of point of achievement of 50 years of deepening and widening, but which will then have to find a new balance in the real politics and this balance will probably have to last for another--this is at 50 years--for another one or two or three decades and will be revisited regularly, I am sure, in order to be adapted to the requirements.

But let me end with--I would suggest the credo, those who are working in unifying Europe and making it a strong partner of the United States at the same time, that we should never forget that these two things, European integration and trans-Atlantic partnership, should be two sides of the same metal and that we should never put anybody in front of an artificial choice. Europeans are in Europe. That's our geography. That's the place where we have to take our responsibilities, but not in isolation. And if you look around for partners, then the United States is the most natural partner for us and we hope vice-versa and this should be the solid basis on which we should discuss issues like the ones you have on the agenda for today. Thank you.

[Applause.]

MR. SIKORSKI: Thank you very much, Ambassador, and the Ambassador will answer your questions along with the other panelists when they finish.

I now pass the baton to Michael Greve, a scholar here at the American Enterprise Institute and Director of our Federalism Project.

MR. GREVE: Thanks, Radek. Prior to this conference, Radek ordered me to be provocative, so I'll say a few provocative words, hopefully, then have the proceeding go over to the distinguished panelists here.

Like Ambassador Burghardt, I'll take my bearings from this title starting with the word "constitution." Of course, the Europeans call this product a constitution. President [indiscernible] has specifically compared the process that led up to this to the Philadelphia Convention and his own role to that of Thomas Jefferson, who, of course, was not in Philadelphia and had he been there, we might not have a Constitution.

But the question that arises about that view of the matter is really, as Marc Plattner, one of the panelists here has once observed, and maybe he'll expound on that observation some more, the European Union is, beyond a doubt, the most ambitious state-building enterprise in the modern world, and yet the Europeans really don't believe in a state in any meaningful sense, in a state that insists on its sovereignty, and that contradiction carries over into constitution writing, it seems to me.

This is a very, very ambitious document, but, of course, the Europeans don't believe in a constitution that is, at a minimum, A) somewhat permanent, and B) if its federal constraints to central authority, as Ambassador Burghardt said. This is a process and this is just sort of one little road sign, or maybe a big road sign, on some larger path that leads somewhere else. And by the same token, this document, I think, is all authority and no constraint. There's sort of a nod to subsidiarity, but subsidiarity then becomes whatever Brussels says it is.

So the question you have to ask yourself, and maybe the panelists can talk about this a bit, is in what sense is this actually a constitution?

And so, too, with the second part of this conference title, "Threat or Opportunity," you have to ask yourself, it seems to me, threat or opportunity for whom? If you live in Africa and the European Union cuts off your food supply or refuses to trade with you because its own rich citizens obsess over genetically-modified organisms, I suppose the phrase or the alternative has an obvious meaning. Similarly, if you're Polish or if you're in one of the candidate countries that are slated for accession, it makes sense to ask yourself, is this a threat or an opportunity? And I suppose if you're Polish, if something that's basically being brought to you by Germany might at least constitute an opportunity that's a step forward.

But the question is, does it make sense for either the Europeans or the United States to phrase the question that way? The European political class has long persuaded itself that this isn't just an opportunity, this is a mandate and it's irreversible and you're not allowed to secede from that process and that view.

As for the European people or peoples, I suppose some of them may get to vote on this document, some of them may get to vote more than once if they don't vote the right way the first time, but fundamentally, it isn't something that, it seems to me, engages their daily lives as sort of a threat or opportunity, with the possible exception of the British Tories who haven't made up their minds.

And if you look at it from the United States, we actually had a conference on this subject when the constitutional convention in Europe got started, and on that occasion, one of the panelists, I think Bill Kristol, described Europe as Canada with castles. It's a big place. It's a big place to trade. It's a fun place to visit, but you really doubt that Colin Powell or Condi Rice wakes up in the middle of the night and asks herself or himself, oh my goodness, what are they doing to us now? In some ways, we have much bigger problems to lose sleep over.

Now, of course, the European Union wants to project its model, both the multinational aspects of its model and the social aspects of its model, into a larger multinational, global concern or agenda and framework, and I suppose there's a constituency for that in the United States. It's called the New York Times, but it would be somewhat parochial, I think, to suggest that the Europeans should stop or arrest their model because we have people in the United States who are susceptible to its temptations.

And it's even harder to see the opportunities, it seems to me. There's, of course, the promise that the European Union might liberate markets, and that will be good for us, as Ambassador Burghardt said, but it seems to me this document, arguably, at least, all cuts in the other direction. It's intended to create the political apparatus to harmonize away the competition that has accidentally broken out.

So the answer to the question, threat or opportunity, maybe it's neither. With that hopefully provocative remark, I don't know, I'll leave the proceedings here to our distinguished panelists.

Lamberto Dini will speak first. We're very, very grateful for his presence. He's the Deputy Speaker currently of the Italian Senate and the President of the political party, and you'll have to excuse my pronunciation, [indiscernible]. He's the Vice President of the European Liberal Democratic and Reform Party and he was a member of the European constitutional convention. He served as Minister of the Treasury, as Italy's Foreign Minister, and as its Prime Minister in 1995 and 1996, and for 15 years was the Director of the Bank of Italy.

After that, Marc Plattner will discuss the subject at hand. He's the co-editor of the Journal of Democracy at the National Endowment for Democracy. He joined the NED in 1984, and until 1989 served as its program director. He was a fellow at the National Humanities Center in research at Triangle Park, North Carolina. He was an advisor on economic and social affairs at the U.S. mission to the United Nations and a program officer at the 20th Century Fund in New York City.

Prime Minister Dini, please.

MR. DINI: Mr. Greve, I will address the issue posed by the title of this conference and, therefore, maybe I will not answer the questions that you have raised, in what sense it is a constitution.

First of all, it is a constitution because it will define the rights of individuals in Europe, that is to say, defines European citizenship, what it means to be European.

Now, second, a constitution is not designed to resolve policy issues, be they trade issues or other issues on which we mind. The U.S. Constitution does not speak about policies. It speaks about principles, and that's what the European Constitution does.

Now, I will argue the European Constitution an opportunity and not a threat to a trans-Atlantic relationship. I think, indeed, that it strengthens the trans-Atlantic relations because, first, it makes European integration more comprehensible in the United States--that's what the expectation, why--because it simplifies the European edifice which has sometimes been opaque and hard for Western political cultures to grasp. The lack of clarity, the slowness of the process of integration and its contradictions have often caused American public opinion to be skeptical about the deadlines and objectives the member states have set themselves ever since the Treaty of Rome.

The constitution clearly reveals the partial renouncement of national sovereignty and sets a course resembling, I say resembling, that followed in the past by the 13 newly independent American colonies, where loyalty to the individual States was initially stronger than that of the new federation. It is sufficient to recall General Lee's choice in the Civil War, to give priority to his obligation towards his home State of Virginia until he became the commander of the Confederate troops.

Naturally, the European Constitution does not answer all the questions that are still open. Some choices are deferred. But here again, the history of America can help us to understand. In the beginning, the divisive problem of slavery was left unsolved, unresolved by the U.S. Constitution.

And like the United States, the European Union has almost completely recreated itself in the last ten years in a process that has absorbed an immense amount of energy and which may have held back our growth, the growth of our economy. It has had to concentrate its attention on four structural objectives, the internal market, the single currency, enlargement, and now the constitution.

The European Constitution is the first attempt to create institutions at a continental level that are an expression of popular sovereignty in terms of States and peoples. In the first place, it is thus as was the American Constitution, a path-breaking experiment. It sets out to achieve that harmony among the member states which would put an end to the recurring vain disputes that according to Guenter were the prerogative of this, of the European continent and not of the other side of the Atlantic.

Furthermore, the constitution codifies in a vast part of the continent principles embodied in the American tradition, which, thanks to the United States, have become part of European culture. It forcefully stresses the primacy of an economy open to the rest of the world, one of the 14 points promulgated by Woodrow Wilson. It promotes growth without inflation and [indiscernible] public finances, principles that were also embraced at Bretton Woods while the war was still being fought as the basis for the reconstruction of an increasingly interdependent world.

The single currency prevents the countries of the European Union from indulging in budget deficits and giving ephemeral and distortional support to the economy.

The constitution forestalls egemonic [ph.] temptation in the old word, temptations against which the United States had to intervene three times in the 20th centuries, even though on the last occasion, the Cold War, the guns were silent.

In the provision of form elaborated by the convention, the constitution provides a system of checks and balances between European institution and member states and among the latter. This is an exercise in political enlightenment comparable to the drafting of the American Constitution at the end of the 18th century. The constitution being negotiated in Brussels that leads to the enlargement of the union towards the South and towards the East, just as the American Constitution provided an institutional foundation for the Western expansion of the United States with the acquisition of new territories beyond the Mississippi and then the Rocky Mountains.

Lastly, the European Constitution codifies the dual sovereignty of states and peoples in the new voting mechanism in the council based on the majority of States and the peoples in the same way as the composition of the Senate and the House of Representatives in the American Constitution.

The second reason why the constitution is an opportunity, it makes the European Union a partner on an equal footing with the United States. It makes possible to overcome the union's old dichotomy, economic giant on the one hand and political dwarf on the other. Thanks to the new roles, the European Union would be in a position to take external action with a clearly recognizable face, since it will be endowed with full legal personality.

Thanks to the extension of majority voting in the council and a clearer location of powers with respect to the member states, it will be able to decide more rapidly in matters such as trade policy, where convergence between Europe and the United States is essential if they are to contribute together to the management of the world economy.

Moreover, in foreign policy, constitutional force will be given to objectives, enabling the union to cooperate even more effectively with the United States in tackling the new threats. Consider, for example, the inclusion of the fight against terrorism among the condition of its security with an enlargement of the so-called Petersburg tasks. European defense, often rightly accused by America of being inadequate, will be rendered more credible in terms of the modernization of its armed forces and the level of their equipment. The new institution contemplates an armaments agency and the convergence of military structures towards models that will permit their use in far-off parts of the world.

The constitution codifies a much broader notion coinciding with [indiscernible] evolution of the Atlantic Alliance of the principle of advanced defense, according to which the outer limit of the union's security is no longer, as in the Cold War, the Elbe River, but extends to far off regions such as Afghanistan and Iraq.

Europeans have accepted terrorism as a new threat and adapted their command structure accordingly, agreed with a global role for NATO. The constitution will permit further updating of the strategic relationship between Europe and the United States, a relationship that until just a short time ago was based on a mutual interdependence in view of the old words geographic collocation typified by German and unique nature of the threats that are presented by the Soviet Union.

In today's world, security requires a more political approach and constant analysis of the threat and the ways to cope with it. In this respect, it is essential for the future of trans-Atlantic relations for NATO to become once more the preferred forum for defining a common strategy. It has not been so in recent years, as we know.

It is instead necessary to overcome the tendency to make NATO into a sort of reserve structure, a tool box for coalitions of the willing, thus frustrating the institution's role as the place for the upstream coordination of every decision. Iraq has shown that every attempt to structure Europe in agonistic terms vis-a-vis the United States ends up by dividing, not uniting, the continent.

The United States will always be able to mobilize a sufficient number of partners to create a conflict between what has been called Old and New Europe. In the absence of complementarity, the NATO response force will undermine the efforts to create a European rapid reaction force, since the units assigned to the two structures are practically the same.

On the other hand, while the majority of the European countries will not accept an antagonistic role vis-a-vis the United States, the limited resources they possess naturally suggests they are coming together to ensure they are used more efficiently.

It is possible to imagine a division of tasks--

[Break between sides of recorded tape.]

MR. DINI: --tackle the challenges on its doorstep while NATO would concentrate on those on a larger scale and farther away. However, such an allocation of responsibilities will not mean reserving behind-the-lines tasks to the European Union because it will continue to participate through NATO in global operations. This would also allow the use of Europe's scarce resources to be optimized.

But the decision making of NATO could be revised with respect to the classical pluribus unum formula. A dual reorientation of NATO can be discerned. On the one hand, a global range of action, on the other, the use of force even without the agreement of all the allied, for example, to change a hostile regime or for [indiscernible] threat.

Such an evolution increases the need for really political coordination. It is possible to imagine that if some country disagreed with a military operation, they would decide not to participate as it is provided for in the new European Constitution. This will increase NATO's flexibility with all the countries naturally undertaking not to impose intervention decided by the majority. In other words, the sort of a coalition of the willing, but within NATO itself.

The new constitution provides not only for the European Union to play a larger role in security and defense matters, but also for countries wishing to cooperate more closely in this field and possessing the means, the necessary means, to create an advance guard that others can join later.

America should not fear, as the debate of the last few weeks would suggest, that this may lead to an alternative European pole. It is hard to understand why America should oppose such a development, which is made all the more necessary by the disparities between the European Union countries in terms of their defense capabilities.

The third reason is that the constitution makes it possible to create a more solid foundation for legitimizing the use of force. European Union, which shares values with the United States, they are embodied in the charter fundamental rights included in the constitution, will contribute better in the future to legitimizing the international use of force by its chief partner.

For the United States, it is important to avoid the temptation to have the course to force not based on institutional consensus and instead to work patiently to resolve conflicts and not to want to intervene every time with a sword. Terrorism cannot be defeated by destroying the countries in which it installs its bases because it slips away from the ruins to proliferate somewhere else, strengthened by the hate those ruins have generated. Above all, it is necessary to reaffirm the primacy of institution with respect to ad hoc coalition, which appears to be America's preferred solution today.

European history is full of conflicts between coalitions that were ended by peace treaties, but in the last 50 years, Europe has moved in the opposite direction towards an increasingly important role for institution. There's low transition from Miternik [ph.] to Monet. We would go back to where we have come from if we accepted the idea of acting unilaterally and ignoring the information on institutions because they inhibit the deployment of force.

All institutions permit longer-term political planning. Above all, only institutions can build peace, to bring together the consensus and resources necessary to achieve stability. The clearest example is Iraq.

The new constitution contemplates the cycle of the European Union as a profoundly democratic institution, thanks in part to the latest reforms, such as the enhanced powers of the European Parliament, and offers a higher level of international legitimacy to every action that has European support. Moreover, it is only through institutions that it will be possible to heighten Europeans' perception of the threat, to overcome a pacifist bias that would tend to leave military action entirely up to the United States.

Otherwise, new members of the union, such as Poland and the Czech Republic, will take a suspicious view of the convergence between Moscow, Paris, and Berlin. They would certainly prefer the protection of a far-off and reassuring America to that of their closer historical neighbors.

Finally, the constitution offers an opportunity for a solemn recognition of the European Union by America. The launch of the constitution, hopefully during the Italian presidency, and in any case it's signed in Rome next spring, should also be an important opportunity for the United States to solemnly reaffirm its support for the integration process.

Doubts about Americans' attitude towards political and especially military union in Europe have recently emerged on this side of the Atlantic. The impression has sometimes been given in the last few decades that America has passed from supporting, even promoting European integration to an attitude of benign neglect, as in the case of the single currency that has been noted earlier, and to forms of outright hostility related in part to the definition of European security and defense policy.

The launch of the new constitution could be the occasion for America to solemnly negate this European perception. Thank you.

[Applause.]

MR. GREVE: Thank you very much, Mr. Prime Minister.

Marc Plattner?

MR. PLATTNER: Thank you, Michael. It's a pleasure for me to be on such a distinguished panel and perhaps I'll begin with an autobiographical note that in some small way might justify my presence here.

I spent the period from October 2002 through June 2003 as a visiting fellow at the Robert Schuman Center for Advanced Studies at the European University Institute in San Dominico [ph.], [indiscernible], and in Italy. While I was there, I was working on a study of globalization and democracy, concentrating not on the economic dimensions of globalization but the question of its political impact, its implications for national sovereignty and hence for democracy.

And in this context, the European Union where the pooling of sovereignty had gone farther than in any other part of the world was a natural place to focus. In fact, I spent a lot of time studying the European Union, listening to the discussions that were going on.

In fact, if I may be permitted a moment of publicity for the journal I edit, we have in the current issue that's just come out a series of articles making sense of the European Union, with four distinguished European contributors and an introductory essay by myself trying to make some of the issues and provide some of the background to make the EU more intelligible to non-European observers.

But in any case, when I went over to Italy, I was particularly excited by the prospect of being in Europe while a convention chaired by President Valery Giscard d'Estaing in Brussels was drafting what was billed as a new European Constitution. As someone who had spent some time studying the American founding period, this naturally conjured up visions in my mind of the Philadelphia Convention of 1787 and I thought I was going to be in Europe for the unfolding of a momentous and world historical event or series of events.

But I quickly observed that few Europeans shared this sense of excitement, because there was very little in the way of prominent media coverage of the debates going on in Brussels. At the European University Institute, which is an advanced--a center for advanced study, give Ph.D. programs in the social sciences, there was considerable interest. The EUI is a kind of European enclave, a genuinely European institution located within Italy. So there was considerable interest there. But most Europeans, from what I could tell, did not feel that their destiny was being forged in Brussels by the convention that was meeting there.

Now, I had also expected the debate over European unification to mirror what had been the historic U.S. contest between federalists and anti-federalists, but I was quickly disabused of that notion. The historic American debate had been an argument about the proper locus of sovereignty and the appropriate scale of the state.

There was some discussions along those lines in Europe, particularly among politicians, but in scholarly and intellectual circles, the predominant tendency was not to argue about where sovereignty should belie, but instead to call into question the very concept of sovereignty and not to argue about how big the state should be, but instead to engage in speculation about how the era of the modern state was coming to an end.

I've been much struck by the way in which the European equivalent, with proper adjustments being made, of both the federalists and the anti-federalists in the American context, both these camps in Europe see the new constitution precisely as a threat, even as a disaster. Probably you're all familiar with the views of British Tories, who see the constitution as bringing into being an oppressive superstate that will stamp out individual rights and national freedom.

But what has struck me is that from the other side, old fashioned European federalists regard this new constitution as a victory for the selfish nationalisms of the European states that dooms the hope for common action that had been the goal of their movement for half a century.

Shortly before I left the European University Institute at the end of May, I heard a talk by Giuliano Amato, who's another former Prime Minister of Italy, a predecessor and also a successor--

MR. DINI: Yes.

MR. PLATTNER: In any case, he presented the view that both the traditional, what is sometimes called the intergovernmental view that really it's the nation states that should maintain preeminence, that on the one hand, and on the other, the old federalist view that Europe should become a real continental state, not unlike the United States. Amato characterized both of these views as outmoded and he said, in fact, that he had taken a lot of criticism from his friends in the Italian federalist movement by stating this point of view.

Now, Giscard d'Estaing himself, in his report to the European Council at Thessaloniki [ph.] introducing the new constitution, went even further, characterizing both of these what I would call traditional positions actually as extremist positions. Let me read a quick quote from him.

He says, "In the course of the debates," this being the debates at the constitution, "extreme solutions were gradually set aside. The idea of creating a single European federal state which would ultimately swallow the identity of the member states, which some people supported at the beginning of our work," that's the traditional federalist option, "was gradually abandoned as inappropriate for the structure of the new Europe. Similarly, the watering down of Europe in a confederation comprising only unshared individual interests by depriving it of the means of actions it needs was rejected almost unanimously." Then he concludes, "In the final analysis, we recognize the dual nature of the European system," and he talks about the dual nature of being both a union of people and a union of states.

MR. DINI: [Inaudible.]

MR. PLATTNER: Well, I'll go on to say something about that. This point of view about this dual nature, neither fish nor foul, is something that's made frequently in the sense Ambassador Burghardt stated again this morning. Both Tony Blair and Jacques Chirac have repeatedly emphasized they were opposed to what they called the European superstate and they insist that the nation state remains the bedrock of the European Union.

Even German Foreign Minister Joschka Fisher in the celebrated speech he made in May 2000, which is often given credit for setting in motion the events that led to the convening of the convention and hence the drafting of this new constitution, even Fisher, though his speech seemed to be calling for a kind of federalism--he used the term federation--was quite ambiguous about that, insisting on the continuing and critical role of the nation state.

Tony Blair has argued that this in-between position or dualist position reflects the wishes of the European people who want a European Union that is more than a free trade area but less than a federal state, and I have no doubt that this is probably true. This is probably, if you polled Europeans, they would want something like this.

But what people want--the fact that people want things doesn't necessarily mean they're work. If you take polls, people want less taxes and more government services. The question is whether this is a combination that over the long run will prove coherent, and I would say that it's difficult for an American schooled in American history and the American Constitution to think so.

Our national union necessarily resulted in the diminution in the power and the independence of our States, as well as the attachment that citizens have for them. I'm from Maryland. I suppose I root for the University of Maryland in football, but it's hard to think of another serious way in which my attachment is to Maryland. I'm an American. I think for almost all Americans, that's the case.

The example of Robert E. Lee that you cite, I think is very appropriate here. The key event in American history, in a way, was our Civil War, precisely which pitted loyalty for the States against loyalties to the nation. The dilemma of Robert E. Lee is very much seated in our national consciousness.

Precisely, that means that you can't have it all. You can't have both sovereign states and a sovereign union of those states. This view is one that's been expressed very clearly in the, you know, the great commentary on our founding document, the Federalist Papers. Here's Alexander Hamilton in Federalist 15 characterizing the opponents of the constitution that was drafted by the Philadelphia Convention, and I quote.

Well, he says they aim, "at things repugnant and irreconcilable, at an augmentation of federal authority without a diminution of State authority, at sovereignty in the union and complete independence in the members. They still seem to cherish with blind devotion the imperial monster of an imperion in imperio [ph.]."

The Federalist goes on in the subsequent numbers to support this reasoning, both by appeals to the nature of man, but also to a very careful study of the experience of previous confederations. "Because men love power," Hamilton concludes, "those who exercise sovereignty are likely to resist attempts to constrain or direct them. Thus, there is inevitably a centrifugal tendency in attempts to unite sovereign bodies."

The conclusion that they draw is emphatically stated at the end of Federalist 20, a paper that's sometimes jointly attributed to Hamilton and to Madison, namely that "a sovereignty over a sovereign, a government over government, a legislation for communities as distinguished from individuals, as it is a solecism in theory, so in practice, it is subversive of the order and end of civil polity by substituting violence in place of the mild and salutary coercion of the magistrate."

Well, what is the response of European thinkers to the point of view that's stated so forcefully in the Federalist? They say, as I understand it, that basically the very notion of sovereignty is a relic of a now-fading age in which the states, the nation state reigns supreme, an age they often date as beginning with the Treaty of Westphalia in 1648.

But if the era of the nation state is passing, these old notions of sovereignty may no longer apply. We can have all kinds of dual sovereignty, overlapping jurisdictions. Many purists of the European Union are very fond of the Holy Roman Empire. There is a considerable literature that talks about the neo-medieval character of the European Union.

But more common still is to talk about it as post-national, post-Westphalian, post-modern. The European Union is the first post-modern state, and this is said not just by many distinguished European thinkers, by other theorists of international relations, as well.

And the most illuminating discussion that I have found of the nature of the European Union is by one of the most distinguished international lawyers who has worked on the EU, Joseph Wiler [ph.], who used to be at European University Institute, I believe is now at New York University Law School. And he argues that the European Union combines what he calls a federal constitution or legal structure with a con-federal, or really intergovernmental political structure. The EU, he says, has accepted the constitutional discipline of federalism but without becoming a federal state.

In other words, I'm not sure if he uses the phrase but others have, the European Union is federal but it's not a state. It's a federal non-State. But the question then is how effective can a non-state be in the long run, either in terms of on the world stage, in terms of prosecuting a coherent foreign policy, or what is of more interest to me and more important to me, in governing itself in a genuinely democratic manner.

But let me speak briefly about the first. Is the EU really serious about becoming a world power? That presumably is the threat that was partly implied by the title and some in the United States have seen the EU as a threat in that way, a challenge to American dominance. This is not something that keeps me up at night.

Tony Blair, again to quote him, has suggested that he wants Europe to become a superpower without becoming a superstate, in other word, a world power that's not a state. I don't think it's going to happen. I believe to conduct a coherent foreign policy, coalitions of the willing, or unwilling, whatever, do not suffice, that you need the coherence that a state brings.

This is without even getting into the question of military capability. The fact that most European states are not serious about defense spending seems to me that they don't really have an aspiration that goes beyond rhetoric for playing a truly major role on the world stage. They are influential in terms of soft power, and that counts for something, I don't deny it, but it's not going to make them a world power and I certainly don't fear the EU as the next threat to the United States, although they can certainly make various international problems much more difficult for the U.S. But again, my bottom line would be that a non-state cannot compete with powerful states in the arena of international power.

My view about the constitution, the new constitution, is that it really doesn't change anything fundamental because it doesn't begin to transform Europe into a real State. Europeans don't believe it does so. That's part of the reason there's not that much interest in it, and I think they don't want it to. Basically, they're not ready to give up their national statehood in favor of the European state.

Again, one can quibble about details of the constitution, but I don't think even most of its supporters see it as--well, it doesn't bring the kind of finality that in a way Joschka Fisher was calling for. It's seen as one step, perhaps an important step in a process. The notion that this process has been so successful because it brought about or succeeded in bringing to fruition so many important treaties strikes me as a rather odd criterion.

In an essay by Lord Dahrendorf [ph.] that we published, he says--this is something originally written a couple of years ago--that it would be wrong to try to write something that might be called the European Constitution, but there's no need to go to Latin America to see what happens when constitutions not based on the people's true aspirations are continually being written. It's no coincidence that Latin America is the graveyard of constitutions and I don't want Europe in its turn to become one.

Again, it seems to me that the fact that you have a succession of fundamental treaties is hardly an argument for the success of the process in a truly serious way.

But let me conclude then with the question of democracy. It's been widely acknowledged, I think in all sides of the debate for over a decade, that the European Union suffers from what's called a democracy deficit. In fact, you can pick up the Encyclopedia of the European Union, a very valuable publication, by the way, and look for an entry and you'll find one under democracy deficit, which more or less begins, for the past decade, it has been agreed by everyone that the European Union suffers from a democracy deficit.

The Laken Declaration [ph.], which was an intergovernmental declaration that led to the convening of the convention, emphasized the need to make the European Union more democratic, to bring it closer to its citizens. It cited this as a key motivation for engaging in the effort of the convention.

But I would say, although people have praised other aspects of the constitution, very few have said that it in a significant way closes the democratic deficit, really brings the European Union's institution closer to the people. Yes, there have been a few enhancements to the powers of the European Parliament, but I think everyone acknowledges that the European Parliament has nothing like the powers of a genuine national parliament.

And I think the problem of a democracy deficit is inherent in trying to build what I refer to as a federal non-state because I think that democracy, in fact, is firmly linked to the state and to the notion of popular sovereignty, the notion that government must be accountable to the people.

Let me--so I'd say it's the modern nation state that has provided the indispensable framework for building a political order that protects the rights and heeds the voices of the people who belong to it, its citizens. Two of the leading contemporary scholars of democracy, Juan Lins and Alfred Sapon [ph.], have affirmed the necessity of this link with particular forcefulness, and I quote from them.

"Without a state, no modern democracy is possible. Modern democratic government is inevitably linked to stateness. Without a state, there could be no real citizenship, and without citizenship, there can be no democracy."

Again, I'm not denying that the individual European nation states are democracies. They are. They have real parliaments and governments that are accountable to their citizens. But without making the European Union into a state, I don't think you can achieve that on the European level.

So if one believes that democracy is firmly tied to the framework of the state, it's difficult to see how a solution to the democratic deficit that is neither intergovernmentalist, on the one hand, or fully federalist on the other, can be found. And again, I'm not a Euro skeptic in the sense that I think there's no way to democratize the European Union. I think a genuine federal state is a possible democratic solution. I just think it's not the solution that Europeans want anymore and that the current constitution is pointing to.

I would say today that the European Union--there's a curious situation. The EU enjoys a supremacy over its member states in moral and legal legitimacy--a constitution reaffirms that--but the member states retain the supremacy in terms of democratic and, hence, political legitimacy, as well as real power and resources. But if the EU were to gain full democratic legitimacy, I think the inevitable result would be the subordination of the member state. If you have this overarching structure and it's genuinely democratic and responds to the will of the European people, clearly, it's superior to the member states. I don't think you can get around that.

So again, I would say the European Union had many remarkable achievements and has, in fact, helped to bring peace and prosperity to Europe. It's extended that peace and prosperity and helped to consolidate democracy in Southern Europe a decade ago, two decades ago. It's now promising to do the same for Central Europe. These are very real achievements. I would say if the European Union were to remain more modest in its goals, I think it can continue with these successes.

But today, I think we're in a situation where its aspirations have far exceeded the structure that it's adopted and the sacrifices of national sovereignty that it's really willing to make. So unless it's ready to become a real federal state, which I don't think it is, I think its aspirations will remain unrealized and some aspects of integration may have become irreversible, but I still fear that they may unravel and the unraveling of the EU would be a very ugly sight to behold.

So in this sense, I don't see the EU, a European integration as a threat to the United States. I fear, though, that the form it's taking and some of the unrealistic ambitions combined with inadequate structures make it a threat to itself. And again, my view is that the coming apart of the EU would really be a threat to democracy in the world. Thank you.

MR. GREVE: Thank you, Mark.

[Applause.]

PANEL RESPONSES

MR. GREVE: Before we move to Q&A, I want to give the panelists an opportunity and Ambassador Burghardt a chance to respond. If one of you could just help me, and I think members of the audience with just sort of a factual matter.

Upon information and belief, the IGC in Thessaloniki didn't go as well as could have been expected and I just wonder what's happening next. Will this be revised, revisited, reopened? And then what were to happen, or what would happen if one or more countries actually vote on this and say no? It's a factual question which I don't know the answer to.

MR. DINI: I listened with great attention to Marc Plattner's remarks. In a way, all that he's saying is that Europe is not going far enough. That's what he's saying. But, of course this is not the experience of the American colonies. This is the experience of independent nations that have decided to get together. So it cannot be compared.

Actually, I think that the European Union is the major historical development of the last 50 years except for the fall of the Soviet Union. When in the world democratic nations have decided to get together and give up part of their sovereignty, or better to share their sovereignty within the union? They're not giving up their sovereignty. Their sovereignty will be shared within the European Union.

So it is, I must say, an experiment adock [ph.]. There is no precedent in history, the nations getting together with the objective of creating tomorrow a federation or a federal state. But we have in the constitution written united in diversity because, of course, we are pulling together countries of different positions, of different history, and so on. It is a miracle that you can put together the text of a constitution to which everyone will abide and in the end will accept, with some modification that may be made by the head of governments.

Now, you said there are those that are opposed to the European superstate. Of course. This, as you said yourself, the reading, the statement by Giscard d'Estaing that the dual nature of this union, which is unique. It is a union of people because we have a European Parliament. And no matter what can be said, the European Parliament is going to gain a lot of power because most, and I would say except for, let's say the resources of the budget and so on, all the legislative proposals of the commission and council need co-decision by the European Parliament.

And the European Commission is accountable to the parliament, and we do know, indeed, if there was wrongdoing, the European Commission has been dismissed in the last period. So it is accountable. So it's not that there is not accountability.

So as I'm saying, there is a unique, unique formation, this one. Obviously, there are those who are more intergovernment or those that are more federal. I think that this draft of this constitution is, I'd say the compromise that could be reached at the highest possible level, that we couldn't go beyond if we were to present a single project, a unified project without option, without majority or minority views, and this, I think, is the accomplishment of this and maybe also, if you talk to the Italians such as myself and many others, maybe, as you're saying, you said yourself, the constitution does not fulfill all the desires and all the requirements, that some of us would have wanted to have a more federal state. Others would disagree and would prefer to keep this balance this way.

But President Giscard d'Estaing, who has presided over in an eminently manner this convention, that by the way, it was a democratic body composed in large part by members of the national parliament, so elected people, elected officials. The majority of national members of national parliament, then the members of the European Parliament and one member for each government or member state in the country.

Indeed, I think the method has been democratic and it is becoming more democratic. I think we are closing the gap on the democratic deficit in many ways, as I said, with the powers trusted to the European Parliament, but also bringing the matter of subsidiarity, the principle of subsidiarity in relation to legislative proposals of the commission subject to the scrutiny of national parliaments.

So if national parliaments, the number of national parliaments find that some legislative proposals of the commission trespass limits of the competence that have been assigned to the union, then the commission will have to review or to reconsider or to withdraw its proposal. So there is also this element, I think, in filling the democratic deficit, which I think is important.

Now, of course, all the indications and the comments you made, Mr. Plattner, as I said at the beginning, tend to indicate that Europe is not complete as yet. It is in a dock, partly in which you have intergovernmental functions, everything by the states, and you have federal functions exercised by the commission, by the European government.

But if we look forward, I think it is to be expected, and these results or the conclusion in the convention, that in the course of time, more functions will be managed according to a federal system, is to say the community mattered. It will take time for this to evolve. It will take another decade. It might take a little bit more. We will come to a single presidency of the European Union. That, too, is not excluded, is made possible by the text of the constitution itself.

You said, if not the constitution, indeed the words that have been chosen are very careful. They say it is a treaty establishing a constitution for Europe. If there is one factor that I think does not make it a full constitution are the revisions provisions which still require unanimity.

Now, all constitutions provide for special majorities to revise a treaty or to revise a constitution. Now, if it has not been possible in a Europe of 25 to have revision provisions for the constitution to be decided by majority voting, and that, too, this is another matter where we will have to come back.

Now, on the common European foreign and security policy, obviously, Europe cannot have the ambition to become a counterweight to the United States. This is not the purpose. It is to be more effective in the use of its own limited, limited resources. That's what we are aiming at.

And also, to the extent possible, and this is subject, of course, to the constitution provisions in this regard, to move Europe to speak with a single voice internationally. Now, in this, the constitution made progress. It doesn't make all the progress that will be required, but I think the situation that we were confronted with with the Iraqi situation will not be repeated once this constitution is approved.

MR. PLATTNER: Can I just add on that last point--

MR. GREVE: Yes, sir.

MR. PLATTNER: --why would the constitution change the kind of division of opinion you had among European states regarding Iraq, and why is it necessary on those kinds of issues that Europe speak with a single voice?

MR. DINI: Because Europe has, I think, an ambition that must be recognized, to have a weight internationally that is comparable to its economic dimension. This is it. I said myself, the dichotomy of an economic power and a dwarf political weight. There is no reason why Europe should not have more weight in the international decision.

In point of fact, each time that the United States goes it alone, by itself, it creates problems for itself and for the rest of the world. Unilaterally, we will get nowhere. To govern the world, you need the policy, you need the policy with its rights, and above all you need institutions, institutions that are able to translate the principles that are brought forward and the reason by saying this case by the U.S. Government to translate them in consensus internationally, and without consensus, the world cannot be governed. This is the key point.

Now, I think that Europe, together with the United States, constitutes the West. We are the West together. We are the Western civilization. And together with the liberalization of NATO, which has been pushed aside in recent times, I think we can have a better word in taking decision by consensus, with the strategy being developed and discussed to reach the consensus, international consensus. In this way, I think we can have more weight together.

MR. GREVE: Mr. Ambassador, please.

MR. BURGHARDT: Well, let me add a few brief remarks. I, of course, agree completely with Lamberto Dini's last statement. I would just like to make an appeal that when we have a difficult subject like this one, to try--we make every effort necessary to understand each other.

I don't think it leads us very far to speculate, whether it is in the reflective mood of yesterday or in the excitement of the European Parliament about what the people would wish here or there. We have polls. The polls indicate that there where the member states are the most reluctant to pool sovereignty, which is foreign policy and diplomacy, the people wish more Europe. You get overwhelming majorities, 70 to 80 percent, when you ask the question, do you agree that there should be one prime minister for the European Union, that the union should be more effective on the international state.

So I do not believe those who, on the one hand, accuse the process we are conducting now to be one leading to a superstate, and on the other hand to indicate or to suggest that nobody believes in that. I think this is a discussion with least ambivalence.

Let me just make two suggestions. One, we should address all this with a certain degree of intellectual modesty. I heard the other day a very respected American scholar saying that the United States, in fact, needed until the beginning of the 20th century before it geared up to a kind of powerful nation it is now, and that until the end of the 19th century, the discussion of whether there should be a Federal army or whether the States should do more in certain areas was still undecided.

Let me just refer to the fact that the Federal Reserve system was created in 1913, while the European Federal Reserve system was created 40 years after the inception of the European integration process.

So this is just an example that the two processes we are talking about, the United States on the one hand, European on the other, respond to different historical contexts and, therefore, in different speeds, in different ways. And if Alexis de Tocqueville were to rewrite his book today about democracy in America, I think he would be tempted to add a few chapters to it, including on the question of the balance between liberal, or individual freedom and the needs--what is necessary in terms of constraints to fight terrorism at home and abroad. It's a very interesting debate here, much more acute than it is in the European Union.

Now, my second remark is--

[Break between recorded tapes.]

[Tape 2 was blank on both sides.]

QUESTIONS AND ANSWERS

[In progress.]

MR. VIBERT: --the government, to some extent, does not really represent the country, but is under the influence of interest groups that for the most part are corrupt. Some of you know the Transparency International results. And at the same time, there is an overwhelming wish on the part of the population to become part of the West after we hope we got rid of communism. That is a short glimpse into the situation in my country, possibly not quite dissimilar from the other post-Communist countries.

At the same time, we see the European Union slowly groping towards something that's becoming, in my opinion, more workable. We have seen socialist elements in the European development, but we have also seen what Mr. Bruton spoke about, the liberalization of some of the aspects of what Europe is about.

Now, in my country now, there is also a discussion about the constitution, but there is a strong feeling, at least on my part and some other people, that in fact, this is a pretext to prevent the country from becoming a member. You can see, in fact, and this is personal and you can think biased or paranoic, you can see the Russian influence behind those kind of throwing sand into the wheels against success for European cooperation. Thank you.

MR. : What's the nature of the sand?

MR. VIBERT: Corruption, prevention of real representative democracy. Let me give you an example. In 2001, our country's intelligence agency reported, and I quote, "The Russian secret services are penetrating government ministries and local administration," whatever could have been meant by this. This was a public report. "They are organizing disinformation campaigns in the public media and they are reviving and strengthening their influence networks."

That's again something that the public discussion didn't exist. There was no public debate on the issue after the first two days of excited headlines in the newspapers. There is this influence and it's an influence--it's a power influence on the part of Russia. Thank you.

MR. SIKORSKI: We will take it from you, or would everybody like to tackle that one?

MR. : I would just like to comment on your point about interest groups. It is the case that Brussels is very much the stage for interest groups. It is not a political stage and Europe is not a political space where individuals feel they can make a difference by participating.

I think this gets back to the point about Muslim minorities. De Tocqueville made this very powerful point, I think, that the American identity was bound up with a sense of the early Americans felt that they were participating in American processes and building the American nation, and people in Europe did not have that sense of participation. It has been a project of their lead and this constitution is not going to solve that problem.

MR. SIKORSKI: Madam?

MS. : Hello. Sunjun Choi at Institute for Defense Analysis. My question is is ESDP. I am [indiscernible] views in the recent development of Tubury Initiative as well as [indiscernible] corporation. In Tubury Initiative, Europeans argue that you should take more [indiscernible] work for military operations. However, what is still unclear is that undecided as whether EU should be able to manage the conduct of mission once they're underway.

My second question is, my impression is that [indiscernible] summit, there was some sort of compromise made by Prime Minister Blair and Schroeder and Chirac regard to the structure of the corporation. EU constitutionally amends [indiscernible] was dequired [ph.] unanimity. Thanks.

MR. SIKORSKI: I think, Prime Minister, it's one for you to answer for the Gang of Four who tried to put together, the staff, the EU staff.

MR. BRUTON: I don't think this project of a common EU defense staff in Terverne should be seen in the United States as in any way threatening development. It is the case that the United States has felt from time to time that it will build coalitions of the willing within NATO, in other words, it will have structured cooperation within NATO, leaving some people out.

Therefore, I don't think we should see by inference that there's anything after NATO that Europeans would wish to do some things together additional to what we're doing in NATO, just as the United States does some things with some people in NATO additional to what it's doing in NATO. I think the same standard of judgment should apply.

Now, I think as to--I can't really--I don't know enough to deal with the issue of the management of the conduct of missions that you refer to. The EU isn't, I would say to Jeremy, a narcotizing project which is intended to put people to sleep. We have had extremely lively debates in my country on the European Union and the people are freely voters. Time and time again, they have voted yes to extension to the EU Parliament. Every one of the EU treaties has been put to the Irish people and they have voted yes, yes with eyes open.

Of course, in all democracies, not everybody is an expert in every aspect of every treaty, and therefore, everybody is voting, quotes, "in ignorance," end quotes, to some degree. But people have voted with their eyes open and every one of the treaties we put to the people.

The nation may have been put on the table here before the American people, but you didn't have a referendum in 1783. We've had referenda in a lot of countries. You didn't have participation in 1783 in the decision of the women of the United States. You didn't have participation of the slaves of the United States in the decision to adopt the U.S. Constitution. That doesn't make it an invalid constitution.

I think we shouldn't be--we should obviously judge things by the standards of today, but huge efforts were made by the convention to ensure that everybody could participate. Everything in our work was open and individuals were invited to take part. Now, most individuals don't have the time to take off to study the EU Constitution, but if you were to ask the average voter in County Mead, which is the county I live in in Ireland and represent, exactly what are the powers of Mead County Council, they wouldn't be able to ask answer the question. If you were to ask the average American, what are the powers of your county government and what's the difference between the powers of your county government, your city government, and your State government, I don't think they could answer that question either.

So the fact that individuals don't participate fully in every detail of EU construction doesn't mean that it isn't valid. So, I mean, I would say that individuals do participate insomuch as is possible in the EU democratic process.

Personally, as Lamberto knows, there are--let me say this. There are three decision makers in Europe. There's the Council of Ministers, which is democratic in the sense that every minister there is democratically elected. There's the European Parliament, which is democratic in the sense that every MEP is democratically elected. And there's the commission, which has the right to propose legislation but not to make the final decision. That's the one element that isn't democratically managed.

I would have liked to have seen the President of the European Commission elected by the people of Europe by universal suffrage. I would not have liked to have seen him elected by the Parliament as some wanted because I think that would have interfered with the separation of powers, which is a great American insight. The separation of powers is a great strength of your system which I think we should have in Europe.

And that's why I wanted a separate election for the president of the commission. We didn't get there this time. Please God, think we can get there the next time with your support.

MR. SIKORSKI: A last intervention from someone who has a great deal of experience in multilateral institution, our senior scholar, Jeanne Kirkpatrick.

MS. KIRKPATRICK: Thank you. I've been--I'm a great admirer of the American Constitution, let me say, and also several European constitutions. I've been thinking, and as Jeremy Rabkin argues frequently, I've been thinking as I listen, however, particularly--well, when I listened to our Irish participant talk about if you don't like it, you can leave, and Jeremy talk about, just make it clear, yes or no, and I thought about the skills with which our Founding Fathers wrote our Constitution, which I think was remarkable.

Despite that, we had a Civil War when a State decided to leave. A State which had decided yes decided no and we had the most dreadful war that Americans have ever engaged in. I think there were more people killed literally in the Civil War than in any since then.

My point is simply this, that the European Constitution and the European project, which I have found enormously interesting to watch the development of, we will, I think, not know for certain how permanent it is or what the terms of that permanence are until there's been some time and some experience, and I think that's inevitable. That's all I want to say.

MR. SIKORSKI: Thank you very much. Thank you, Prime Minister. Thank you, Director, Professor.

We now proceed to lunch and I'm greatly looking forward to our lunchtime speaker, Judge Stephen Williams. Thank you.

[Luncheon recess.]

A F T E R N O O N S E S S I O N

MR. SIKORSKI: Ladies and gentlemen, may I have your attention, please. Our lunchtime speaker will be Judge Stephen--thank you, Michael. Order, order. Judge Stephen Williams, who was appointed to the United States Court of Appeals in 1986, has kindly agreed to share with us his reflections about constitution making.

He became a senior judge in 2001. From 1969 until his appointment to the bench, Judge Williams taught at the University of Colorado School of Law. During this time, he also served as a visiting professor of law at the University of California-Los Angeles, the University of Chicago Law School, and at Southern Methodist University, and was also a consultant to the Administrative Conference of the United States and the Federal Trade Commission.

Judge Williams was engaged in private practice from 1962 to 1966 and became an Assistant U.S. Attorney for the Southern District of New York in 1966. Ladies and gentlemen, please join me in giving a warm welcome to our speaker, Judge Williams.

[Applause.]

JUDGE WILLIAMS: Prime Ministers Bruton and Dini and other distinguished guests, it's a great honor to speak before this group. I feel for an American lawyer, it's a bit as if one were given 20 minutes with James Madison in the summer of 1787--perhaps at the end of the summer, less valuable than at the beginning of the summer, but still an opportunity to speak with people who are involved in a terribly important task. Of course, if I were given 20 minutes with James Madison in the summer of 1787, the first thing I would have said was, "Can I get you a cup of coffee, Mr. Madison?"

[Laughter.]

JUDGE WILLIAMS: I certainly would not have offered advice. The only justification really for me to add to what Madison himself has so well said is that we have 200 years since then and perhaps have learned something. Actually, of course, the lessons of history are always--people draw totally different lessons from the same history, so I'm not sure that one can confidently say that what I'm about to say represents really learning from those 200 years.

I want to talk about, very briefly about the purposes of a federal system and then turn to one of those purposes and try to see what it implies in terms of allocation of powers to the central entity.

One obviously important purpose, it was very important one saw in all the discussion this morning, is geopolitical questions, and that's certainly beyond my competence and I will not address that.

Economics provides a more limited set of goals and they, of course, were vital at the founding of the institutions which brought the European Community to where it is, starting with the European coal and steel community. That, of course, had political purposes, but the means by which the political purposes would be achieved were, in fact, economic integration.

In terms of economics, presumably, if one wants putting it at the very highest level of generality, the federal system to improve the economic welfare of the peoples of the community. And I should say that throughout, whenever I refer to economic, I mean it in a pretty broad sense. For example, I will talk quite a lot about environmental regulation and I certainly include very much environmental amenity as an aspect of economic welfare, broadly conceived.

At least one idea of federalism, and to me a central one in terms of the goal of enabling increases in productivity for the economic welfare of people, is competition among governments. I'll put aside, although they're very closely related, two things. One is governmental experiment. Some of you know, I'm sure, of Justice Brandeis's discussion of the States as laboratories for ideas, and that is an important function.

Another one, of course, is the appeal to different tastes. People are drawn to particular combinations of circumstances can move and enjoy the benefits without requiring that others do so, without requiring that the same regime be applied everywhere.

In thinking about competition among governments, I picture governments essentially as firms. That is to say, you want governments, just as you want firms, to produce the most or best output at the lowest possible price. In the case of governments, the price takes two forms. The most obvious price is obviously taxes. For regulation, the price is the cost of compliance. That's the primary price. There's also the mechanics of enforcement, but the principal price is the cost of compliance.

So you want to have a system in which the member states of a federal system compete with each other under a set of rules which will give them incentives to improve, essentially, the benefit-burden ratio of their activities.

But you also want to make sure that this competition is on the merits. Again, going back to the business comparison, you want the firm that builds the better mouse trap to get the customers, not the firm that puts a bunch of nails on the highway to the competing firm's plant. So it is competition on the merits that we seek to foster.

Now, where there are real physical externalities between the member states, you have a clear risk of unfair competition in the sense that if New Jersey has a--if there's a plant in New Jersey, which as you all know is just to the west of New York and the prevailing Westerlies will carry pollution into New York, it's fair to say that if a plant in New Jersey which would pollute seriously in New Jersey may well not be subject on the basis of New Jersey law alone to optimal regulation. New Jersey has-- [gap in recording] --New York. So that is a clear case, the pollution crossing the border, where you would want central intervention.

Before going more into that, I want to raise the question, what are the member states competing for? I mean, businesses compete for business and ultimately so that they can make a profit so that they can pay their investors. What are states doing?

It seems to me that fundamentally, states are competing for productive citizens. Let's say you want the measure of a state's success in a system where the governments are competing on the merits. The well-competing states will attract productive citizens and the others will not.

So what sort of rules are implied, and I'll divide them into negative and positive. The United States Constitution has a clause that does not exist, the negative Commerce Clause, which is probably its most important, oddly enough, and this is the set of rules developed spontaneously by the Supreme Court to stamp out member state--I float back and forth between member state, which is suitable for the European context, and State, for here--stamp out member state legislation which creates a distorting effect on the competition. Incidentally, not only the competition, of course, between State governments, but the competition between individual firms in different States.

The doctrine has developed, first, that the Supreme Court stamps out any kind of explicit discrimination that it finds. The most obvious example of that is tariffs, which are actually explicitly precluded in the Constitution, anything resembling a tariff, and certainly anything that explicitly discriminates between in-State citizens and out-State citizens.

It gets a little complicated when you're talking about special benefits for which in-State citizens have been paying on a long-term basis for taxes. I think it's an incredibly difficult question. No institution can produce a perfect rule for that, but the Supreme Court clearly recognized the problem and has tried to deal with it.

A rule against explicit discrimination, however, is not enough because State legislators are ingenious. If told that they cannot use explicit discrimination, they will use other devices. Turning, for example, to the European context, it is certainly easy to imagine the French government developing rules with respect to the permissible sale of cheeses or labeling of cheeses by which, by happy coincidence, cheeses made only in France have a special advantage while cheeses made elsewhere in the European Community are disadvantaged.

So any kind of system which is trying to preclude explicit discrimination, I think has to have a back-up system and the Supreme Court has doctrines which attempt to handle that.

I happen to think the Supreme Court development on this is all pretty good, although Justice Scalia, whom I greatly admire, regards much of it as totally unconstitutional, but anyway, it does seem to me that it works fairly well.

There is one missing item in the U.S. negative Commerce Clause jurisprudence that deserves mention and that is choice of law rules of States. At the present moment, essentially States have pretty much free reign in choosing what law, their own or another State's, will apply in a particular lawsuit, and this certainly enables, and it's an empirical question the extent to which States have actually exploited it, but it enables States to flip back and forth between rules which, when their citizens' welfare is involved, favor them and where others are involved, or between them in different context, they are able to essentially favor their own citizens.

Just why the Supreme Court has not ventured into that area, I'm honestly not sure. At any rate, it is a gap. But on the whole, it seems to me the American record in stamping out member state discrimination has been fairly good.

The institutional mechanism is quite good, I think, too. The courts are sort of the first line of defense. They are reactive to initiatives by the States. Given the difficulty of anticipating in advance particular areas of attempted State discrimination, that seems to make sense, to have the main barrier be a judicial one as a reactive institution. However, it's well understood that Congress can act in this field, too, doing equivalent things. Where some pattern has become apparent, it can adopt rules for a specific area which attempt to draw the line between permissible and impermissible State rules.

Now we turn to the question of affirmative powers to be given to the central entity. And here, notice that the problem to be gotten at may be inaction, or inadequate action, by the member state, so that in my original example of the New Jersey pollution flowing into New York across the Hudson, what may be problematic is simply that New Jersey didn't do anything or didn't do enough to handle that. So the question essentially is, what are the justifications that can be invoked in favor of central government intervention and replacement of State inaction with some Federal rule?

I should say here that my view on this is a good deal more conservative than President Clinton's. You may recall that he famously used, after a prize fighter had bitten the ear of another prize fighter, "I don't know what the Federal role in this should be." For me, that's fairly easy. I don't think it's necessary to have a Federal rule on ear biting.

[Laughter.]

JUDGE WILLIAMS: In any event, at a very general level, one can say that one needs this central power where some kind of collective action problem will prevent the States from working out properly for themselves. A very obvious example is the pollution crossing interstate borders, which I've already dealt with.

What about pollution that doesn't cross borders? And here, the discussion almost always turns to metaphors, one being the level playing field and the other being the race to the bottom. I want to focus on whether those are sound principles for central control.

I've posited that states essentially want to attract productive citizens. Of course, in the course of attracting productive citizens, they want to attract firms. What do firms involve? Well, at one level they involve executives, but really more important, they involve workers. So a state that is attracting firms that have--they must have a productive workforce or they won't be a firm for long--a state wants to make itself attractive to the potential workers in the firm.

I saw this very early in my legal career, when I started teaching at the University of Colorado and the wages, the pecuniary wages at the University of Colorado Law School were generally regarded as rather low. I think that was a sound estimate.

[Laughter.]

JUDGE WILLIAMS: But what prevailed in Colorado was what was called the Flat Irons theory of compensation, and the Flat Irons are--I can't call them a mountain range, but it's rockier than a bunch of hills. It's part of the backdrop of Boulder, Colorado, and it is very attractive and it's really a symbol of the environmental amenity of Boulder, Colorado. And the Flat Irons theory of compensation was, well, you may be a few thousand, or possibly a few tens of thousands of dollars below the salaries of people who are teaching in Cambridge or something like that, but we make it up to you in the environment.

It seems to me clear that a state competing to get firms and firms competing to get workers have got to pay a great deal of attention to the environmental amenity in the place where these workers will be.

So let me look at the level playing field argument again and turn momentarily to the theory of comparative advantage, which we owe to Ricardo, and the sort of easy, an easy example of that is the question of growing oranges in Scotland. Yes, you can grow oranges in Scotland, but--and I'm making up the numbers now--suppose that the opportunity cost of growing oranges in Scotland is that five apples could have been grown with the same resources in Scotland, whereas in the Spain, the implicit opportunity cost of growing an orange is just one apple. That seems clear. You want your oranges grown in Spain and not in Scotland.

So applying this to the area of environmental regulation, suppose you have a community that, for example, prides itself as a tourist resort and it finds that tourists will complain at levels of environmental amenity that people are perfectly happy with in their work-a-day lives. It seems clear, I think, that under the theory of comparative advantage, the basic theory underlying international trade, you want that, the place with the tourists and the interests and higher level of pollution control, to be able to go ahead.

The same, I would submit, is true with lower levels. Of course, if some levels are higher, by definition, others are lower. So leaving this matter to the member states will obviously produce variety in regulation.

Now, the danger of the level laying field metaphor is that a federal system, instead of becoming a device for encouraging competition on the merits, becomes instead a device for stamping it out in the name of leveling the playing field.

It might-- [gap in recording] --without your making it to me, and that is, well, you're assuming that in the area of environmental regulation, the state is responsive to the broad interests of its citizenry, and on that theory, the state will make judgments about levels of pollution control that take all those interests into account.

But when you talked about tariffs and discrimination in that area, you assumed that the state government might, in fact--in fact, was very likely to be prey to interest group manipulation, essentially producing rules which, in fact, lower the overall level of productivity, putting it generally, in the state in question.

So can these be reconciled? Can a view that it is appropriate to have the center empowered to stamp out tariffs--not only stamp them out, set a zero