The text is attached of a significant speech given by Herr Gerhard Schröder, Chancellor of the Federal Republic of Germany at The Hague on 19 January 1999.

His theme was that national sovereignty was no longer a valid conception and there was an urgent need to press on with further integration of EU policies in a number of key areas.

Among the points he made were:

* 'The introduction of the euro is probably the most important integrating step since the beginning of the unification process. It will have consequences which nobody can fully assess at present. It is certain that the times of individual national efforts regarding employment policies, social and tax policies are definitely over. The internal market and the common currency demand joint co-ordinating action. This will require to bury finally some erroneous ideas of national sovereignty.'

* 'But the European Union is insufficiently prepared for its international role in a foreign and security political sense. I only expect limited improvements from the changes to the Amsterdam Treaty.

Our standing in the world regarding foreign trade and international finance policies will sooner or later force a Common Foreign and Security Policy worthy of its name. National sovereignty in foreign and security policy will soon prove itself to be a product of the imagination.'

* 'I want enlargement. Just as Wim Kok does. But it is a condition on the part of the EU to conclude successfully the 'Agenda 2000' packet including a reform of the agricultural and structural policies, the creation of a fair division of the financial burden and the solving of the institutional questions left open in Amsterdam.'

* 'A clearer understanding of the distribution of tasks between European and national level is of prime importance in order to protect the identity of member states in an ever closer growing Europe.'

* 'We need more 'political accountability' in Europe. The citizen has to recognise clearly who is responsible for what within the Union and, if necessary, who can be held responsible. The irregularities in the Commission show that there is room for improvement.'

BMDF Comments:

Chancellor Schrvder's remarks on the need to press on with greater integration are in full accord with the conclusions at the 72nd Franco-German Summit held at Potsdam just before the Vienna European Council.

The Common Foreign and Security Policy as interpreted by Germany could clearly deny Britain freedom of action in matters where there is an important difference in national interests. It is to hoped that we will not allow our freedom of action in foreign policy matters to be so restricted and to be constrained by any extension to Qualified Majority Voting.

In his comments on 'Agenda 2000' Chancellor Schröder underlined Germany's strong wish for a 'fairer division of the financial burden' - inferring inter alia a revision of UK's current rebate.

I was very pleased, although a little nervous, to accept your invitation to speak at your 10th annual dinner. It is expected of an After-Dinner Speech that it is light hearted and humorous. By inviting a German speaker you have increased this expectation even more as we have the reputation to deal in a particularly humorous way with even the most difficult of subjects.

But the choice of title was rather difficult. In order not to offend our Dutch cousins titles like "The Influence of Delft Fayences on North-German Tables at the end of the 18th Century" were thought of. But you were lucky, after careful consideration this idea has been rejected.

And the international power of sport is an own goal especially when speaking abroad. Despite or perhaps especially because of the three goals which Germans and Dutch scored together in the final of the Football World Championship of 1974, this subject did not appear to me to be suitable either for this evening.

The taking over by Germany of the EU Presidency and the introduction of the euro on 1 January finally decided me to place Europe at the centre of my deliberations. Humour will be in short supply for since the story of 'the Bull and the Beautiful Maiden Europa' nobody was able to think of something amusing on this subject. We are still laughing about each other but rarely with each other:

The British laugh about the Irish, the Dutch about the Germans, the French about the Belgians, but least of all everyone about themselves. With regard to humour and Europe: nothing, although some of what is being done most seriously in Brussels or Strasbourg can only be suffered with humour and offers sufficient material for satire. But we should not give up hope that one fine day Europe will be discovered by the humorists.

Ladies and gentlemen, some of you will perhaps be expecting now a detailed presentation of the German programme for its presidency during the coming six months with explanations about the employment pact under consideration, about the chances for the solution of Agenda 2000 and about our ideas for a swift continuation of admission negotiations. I will disappoint you. These subjects will surely dominate the Euro-political debate over the coming months.

But it seems to me however that the forthcoming fundamental changes in our Euro-political understanding are of much greater and more far-reaching importance. I am convinced that we are in the midst of a European political phase of change and require new models for the future.

It is a fact: the European political language of the founding years is no longer understood by many. The aim to secure lasting peace between member states by economic integration has been achieved and has become for all of us a matter of course.

In view of the high degree of common economic bonds, the growing common cultural understanding and trust and the close political co-operation, just the thought of a return to nationalism and rivalry seems to be absurd. This is probably the greatest merit of the European political post-war history. We have to safeguard and this heritage and safeguard it for the future.

In many European countries a new generation of politicians have taken on the affairs over the past few years. My generation faces other challenges and problems. The old models no longer quite fit into the new times, we urgently need new ones for European politics.

The introduction of the euro is probably the most important integrating step since the beginning of the unification process. It will have consequences which nobody can fully assess at present. It is certain that the times of individual national efforts regarding employment policies, social and tax policies are definitely over. The internal market and the common currency demand joint co-ordinated action in order to fully open up the economic growth potential. This will require to finally bury some erroneous ideas of national sovereignty.

The extension of the European Union by more than 10 new member states is a fundamental challenge to the way the European Union sees itself. Europe will not only get bigger but at the same time multi-faceted. You do not have to be a prophet to recognise that the foundations for an extending and therefore increasingly varied Union have to be strengthened.

The extensive realisation of the ideas of the founding fathers, the unforeseeable consequences of the euro and the changes in connection with the EU enlargement can lead to a far reaching loss of direction of European politics if in good time we are unable to set new markers along the way. We need a wide public debate on the future path of European integration. This is the only way in which we can keep the agreement of the people towards Europe. As a pragmatist I would advise not to lose sight of the feasible.

The fight against high unemployment has to be a priority. Our people will not understand if we conclude a stability pact as a safeguard to our new common currency but at the same time omit to make comparable efforts to create more employment. That is why we have suggested an employment pact on European level which we would like to conclude at the European Council in Cologne.

The creation of new and the safeguarding of existing employment will be the gauge for the success of European integration during the coming years. In a common internal market and currency zone only joint efforts regarding economic, social and tax policies will lead to success. Innovation and ecological renewal are measures for a successful future.

The introduction of the euro will have dramatic consequences on Europe's position in the world. As is already the case with regard to foreign trade policy, we Europeans will in future also be seen as a world power as far as international monetary policy is concerned, whether we like it or not. Decisions by the European Central Bank will have a considerable influence on global financial flows.

But the European Union is insufficiently prepared for its international role in a foreign and security political sense. I only expect limited improvements from the changes to the Amsterdam Treaty. I am convinced: our standing in the world regarding foreign trade and international finance policies will sooner or later force a Common Foreign and Security Policy worthy of its name.

National sovereignty in foreign and security policy will soon prove itself to be a product of the imagination as none of the member states of the European Union has the potential or weight for a global role on its own. As we have done with monetary policy so we will have to pool our sovereignties and act jointly as Europeans. We will not be able to postpone this decision for ever because a further European failure as in Bosnia threatens to damage lastingly the reputation of Europe and puts our basic foreign and security political interests at risk.

Our citizens expect that the European Union contributes effectively to the fight of border-crossing organised crimes and finds solutions for the urgent question of immigration. The Netherlands, and I have supported Wim (Kok) whole-heartedly in this, have rightly raised in Brussels the subject of migration and asylum problems. This also includes a fair distribution of the burdens. We want to offer a secure perspective to the foreigners living here legally. That is why my Coalition Government will introduce a change to the German nationality rights. At the same time we have to fight decisively the illegal immigration and abuse of the right to asylum. In an area without borders this can only be achieved jointly. That is why we need more Europe, not less.

Ladies and Gentlemen, the press has occasionally criticised me for having urged more realism regarding the enlargement debate. I find this criticism incomprehensible. I have always preferred to deal honestly with friends and not to give promises which cannot be kept. I want enlargement. Just as Wim Kok does. But it is a condition on the part of the EU to conclude successfully the 'Agenda 2000' packet including a reform of the agricultural and structural policies, the creation of a fair division of the financial burden and the solving of the institutional questions left open in Amsterdam. The candidates who wish to join have on their part to prove their ability to fulfil the rights and duties of EU membership. I see speedy admission negotiations as of the highest priority, but believe it to be rash to promise firm admission dates now. But perhaps we will have reached such a point in a year's time.

For a Union with 20 or more member states a fundamental revision of the European Treaties is unavoidable if we do not wish to put at risk all that has been achieved. This involves more than a limitation of the number of commissioners, a new weighting of votes in the Council of Ministers or the extension of the voting with qualified majority. I am firmly convinced that an enlarged Union without a lasting strengthening of its constitutional foundations cannot work. In the area of constitutional protection I can see already the need for the Union to catch up. We will therefore suggest the working out of a catalogue of basic rights for the European Union.

Furthermore I believe a clearer understanding of the distribution of tasks between European and national level is of prime importance in order to protect the identity of member states in an ever closer growing Europe.

Finally we need more 'political accountability' in Europe. The citizen has to recognise clearly who is responsible for what within the Union and, if necessary, who can be held responsible. The irregularities in the Commission show that there is room for improvement.

The EU Commission has now been asked to combat fraud by all effective means. This is all the more important as we wish to bring subject work into the foreground again. With this example I would like to state that I am for a clear division of power between the bodies of the Union.

Ladies and Gentlemen, successful European politics of today can no longer live off the emotion of the founding years. We have to develop new guide lines along which we can align our actions step by step pragmatically. For that we need a Europe-wide public debate which takes in the primary worries of the people. All member states of the Union, whether large, medium or small, rich or poorer, have to pool their common interests in fair and balanced togetherness and bring them powerfully to success.

Translated from the original German by The British Management Data Foundation; 28 January 1999