Recently I have often thought about these principles while reflecting on the challenges facing our Union, both from within and from outside, partly because in the face of such terrible threats we are striving to find points of reference.

The European Council that concluded in Brussels last Saturday followed the same line of thought. As you know, the spring Council is the focal point of the economic governance of the Union. However, recent events basically rewrote our agenda.

First and foremost, of course, the Madrid bombings of 11 March led the Council to adopt a series of measures to safeguard our security against the threat of terrorism.

The attack was against defenceless citizens. Once again, our first thoughts go out to them and the families of the victims.

But the fallout from the bombings affected all Europeans. It touched us all personally and also affected our civil and political institutions.

The threat of terrorism is the most serious challenge to the democratic and civil principles that govern public life and to societies based on respect for human rights, personal freedom and the rights of minorities since the end of the Second World War.

I am delighted to be able to tell you that the Council has decided to respond to this threat with the greatest resolve.

The Declaration approved in Brussels leaves no room for doubt: the Member States of the European Union have moved as one, with the shared objective of wiping out terrorism.

I am extremely pleased about the measures to coordinate and unify intelligence gathering, police and security systems that were adopted last week.

At this stage, we must achieve the best level of coordination of human and technical resources possible. At this point in our history it was not possible to set up a single European security agency.

However, I am convinced that this is but the first step towards ever-deepening integration. Looking ahead, the objection will be to create common operational structures at European level.

But the most important thing is that we Europeans have understood that force alone will not defeat terrorism. We need force but we also need the intelligence to understand and resolve its underlying causes.

Alongside the military and enforcement option we need to pursue a political strategy with equal determination. And both approaches need to be pursued on a multilateral basis: unilateral methods no longer suffice.

Firstly, as is formally stated in the Declaration, this means strengthening the bonds of mutual trust between Europe and the United States, which are already close and heartfelt. Without this strong alliance there is no chance of securing and maintaining peace in the world.

It is also essential that we ensure that the United Nations plays a central role and has the necessary credibility to do so. The UN must be actively involved in interventions on the ground and in the political strategies developed to restore stability to regions in crisis.

For its part, the Union must make use of the experience of pacification and dialogue it has accumulated over almost fifty years. Our contribution must involve and mobilise the resources of all the countries to isolate the terrorist groups within.

The objective is to cut the lifeline of terrorism, which means preventing recruitment and eliminating any form of technical, logistic and financial support.

But terrorism also has an ideological component, however abhorrent, and a political objective. And therefore we must address the conflicts that divide the world and undermine its stability.

Firstly, we need to find a solution to the conflict between Israelis and Palestinians. This is the absolute top priority. The success of our strategy to combat international terrorism depends on peace in the Middle East.

Furthermore, we must seek out new ways to resolve the situation in Iraq. All the initiatives, political and military, must aim to give the United Nations the central role in the complex game that is being played out there.

Clearly, the objective is to return Iraq to the Iraqis as quickly as possible while ensuring security, independence and full democracy.

Ladies and gentlemen,

As I have said, the spring Council is dedicated to the economic governance of the Union, and the session devoted to the economy further strengthened this role.

For some years the European economy has had its problems and this too threatens one of the pillars of our Union, namely our economic and social model.

Four years ago in Lisbon the Union decided that to maintain and develop our way of life we had to embark upon a far-reaching reform of our economic systems.

The conclusions of the last Council show that there is very broad consensus regarding the analysis of what needs to be done that is contained in the report presented by the Commission in January.

We all agree on the need for benchmarking, coordination and the priorities for encouraging growth and competitiveness. We have been saying this for years: we need to invest in research, development and human resources.

However, it is not enough to agree on what has to be done: we also need a deep commitment and the instruments that can make it happen.

I am sorry to say that we have not yet succeeded in making the leap from words to deeds. Most of the decisions we have taken have not been translated into concrete measures at Member-State level and the expected shift of resources towards such investments has failed to materialise.

These uncertainties and the limitations of our financial commitments highlight two basic problems afflicting the European system of economic governance.

The Lisbon process is lacking a strong point of authority at Community level, which is the only way to coordinate measures.

At the same time, we must also take account of the dynamics of modern political organisations.

The investments in human resources and knowledge that we all believe essential yield returns only in the long term.

Political trends, however, increasingly favour measures that have an impact that is visible before the end of an electoral term, a very short time.

To give credit where it is due, it must be said that some Member States have embarked upon major and at times painful reforms, demonstrating responsibility, far-sightedness and political courage.

The Council again stressed the need to continue along this path because everyone understands that it is the future of Europe that is at stake.

I hope that this time the reforms launched will be seen through to the end and extended to cover the fields of knowledge, education and research.

In the immediate term, it seems that the political will has been found to forge ahead with the European Initiative for Growth, which includes a list of quickstart projects for research and development, transport, energy and information technology.

These are clearly defined measures that have already been approved by the European Council and so can be implemented quickly.

We need to make real progress starting this year and by next year we need to have wiped out the backlog regarding the transposal of the Lisbon Directives into national laws.

Ladies and gentlemen,

I shall conclude today with a word about the European Constitution.

We have seen that external challenges such as the threat of terrorism and challenges from within such as the uncertainty regarding the European economy undermine the pillars supporting the house we all live in.

At difficult times like these we must put aside our differences and give the European Union the means it needs to build a more solid framework for cooperation that will enable us to decide together and to pool our resources.

Let us have no illusions, the challenges facing Europe today can be met only if we remain united; no European country, no matter how great and powerful, has the resources needed to go it alone.

On this subject, the spring Council has brought us some good news that I would like to leave you with today, particularly as it justifies my reputation as an incurable optimist.

In Brussels the conditions were reached that will very shortly make it possible to relaunch the negotiations on the Constitutional Treaty and conclude them by the end of the Irish Presidency.

And this is thanks to the extraordinary work and mediation of the Presidency, which I both admire and applaud.

In the last few weeks positive signals have arrived from various Governments saying that they were prepared to compromise. In the Council we had confirmation that things were finally on the right track.

The thorniest problem is still the stumbling block that led to the previous breakdown: the thresholds necessary for taking decisions by qualified majority.

Obviously, this is not just a question of percentages; the future of our integration process hinges on it. The enlarged Union must be in a position to take decisions.

If the threshold needed to take a decision by qualified majority is too high, the Union will no longer be capable of taking decisions on the fight against terrorism, economic governance or any other subject because a small group of countries could block any proposal.

And this is the crux of the matter. So far, the debate has revolved around the size of this blocking minority. But we cannot have a debate about institutions if we are focusing on the instruments available to the Member States to block decisions.

Our discussions should look at the question from the opposite angle: what are the best instruments for taking decisions?

In the wake of the latest developments it seems that a renewed failure will be averted. It really seems that we will soon have the Constitution we so ardently desire.

However, I would stress that we cannot lower our sights if the final compromise is to allow the Union of 25 to function flexibly and effectively.

Thank you.

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