 The last time I came, I think, was about two years ago, I spoke about the Euro-crisis and its impact on European foreign policy. And today it's the neighborhood policy, basically about another crisis at the moment. I remember in 2004 I was invited to a lunch with George Soros, the eminent finance speculator. He wanted to be informed about the European neighborhood policy, and that was just when it was fresh and new, and we talked with him for about two hours, and Soros was so enthusiastic and happy and excited about these things. He said, we, the Americans, we bomb countries into democracy. The Iraq war had just happened, but you do it differently, and he got really, really excited. What I remember from this lunch, more than anything else, is a sense of embarrassment on my behalf, because knowing the European Union quite well, I sort of knew, it's not going to be so wonderful, and probably we will not be able to fulfill George's or anybody else's expectations. But I think in some respect, George Soros was right, because it was a very innovative and very ambitious policy. It was sort of the Europe's answer to geopolitics. We would not deal with our neighbors on the basis of events and short-term interests. We would actually engage with them in a much more profound way. We would support structural transformations of these countries. We would support their democratization, their commitment to the rule of law. We would turn them into successful market economy by also letting them participate in European integration. And we would also provide stability in our neighborhood. And we would do this by offering them greater possibilities to mobility, to engaging them on trade, and by financial assistance. The basic model, the fundamental model, was of course the European Union itself, and the methodology was drawn from the enlargement process, which had a proven good track record in supporting economic transition. Of course, as you pointed out, it was enlargement light. It was the small detail of actually the promise of a future membership in the European Union was missing. But otherwise, lots of the elements of enlargement, the enlargement process, were there. There were action plans. There were annual reports on how well the countries were doing, the number of programs on assisting them on the path towards a closer association with the European Union. And of course, there were big claims for this new policy. Solana said we want a ring of well-governed states. Romano Brodi at the time, president of the commission, said we would be ready to share everything with them, except for institutions. So not membership, but in terms of participation in the internal market, et cetera, we would be quite open and generous. And of course, the treaty itself, Article 8, makes big claims too. It talks about an area of stability and cooperation based on the values of the European Union. And that's interesting, based on the values of the European Union. Not shared values, not common values, but values of the European Union. Quite ambitious, I would say. Now, 10 years later, if we look back, there is hardly any area of European foreign policy where you can speak of such a comprehensive failure, basically. Pretty much the opposite of what we aimed for actually happened. There is a great deal of political turmoil and instability in almost the entire neighborhood. Economic transition is stuck in most places. We had hoped with a spring of democracy, with a single exception of Tunisia, this dream has not come true. There is authoritarianism basically on the rise across the region. And of course, the influence of the European Union has gone down, not up. And many of these countries are further away from us than they used to be in the year 2004. Now, what has gone wrong? This is basically what my paper is about, and it goes into some detail, but I will not bore with you. I just point out some of the key, key elements that went wrong, basically. The first one is, I think our approach, our instruments were made for a stable environment, long-term engagement with instruments that take a number of years to bring things to fruition, and history just didn't wait for us. Geopolitics came back with the vengeance, as you pointed out. The countries in the neighborhood went through wars, civil wars, military dictatorships, coup d'etats, some of them became failed states, some were exposed to the bullying behavior of neighbors. There was quite a lot of terrorism all around, so basically what happened in the region didn't match up the kind of instruments that we had at our disposal. Of course, within the limited capacity of the EU, the EU tried to address this issue. One notable success was the mediation effort of the French presidency in the Georgian War in 2008. Also, Cathy Aschen tried valiantly after the coup of last summer in Egypt to bring about some kind of reconciliation. There were a number of efforts to restart the Middle East peace process, but all together I think the EU's capacity couldn't really make a difference to mitigate the political turmoil, and the neighborhood policy instruments became more and more irrelevant due to the level of instability. And I would say this doesn't mean that these aims for structural change were wrong. I think they are the correct aims, and we should not put them into question, but it means that maybe the EU should first try to have the capacity to contribute to stability, to create a situation, an environment in which this long-term engagement really pays off. The second point is a very important one, and I think this stays very key basically to the understanding. The whole neighborhood policy was based in a way on a Eurocentric illusion. The EU saw itself at the center of the universe, and these 16 countries were somehow planet circling around us, and we ignored the fact that there were some other players out there with their own gravity fields, and some of them had a very different agenda from the European Union. And of course, the most relevant case is Russia. It was interesting if you look back to 2004, Russia barely reacted to the launching of the neighborhood policy. They were not very interested, they communicated very politely, they were not interested in participating in it, because they were a strategic partner playing on a different level, but they didn't excite them very much. This changed in 2009 when the Eastern Partnership was launched. There, from the beginning, you had a fairly hostile attitude by Russia. And in particular, Vladimir Putin kept looking at this from the point of view of a sort of zero-sum game. Any step these countries would take towards the European Union would be a loss for Russia. And I think the EU did not give up and kept trying to persuade Russia to have stable and prosperous countries between itself and the European Union would help either side. Moscow was not convinced by this logic at all. And we were not really well placed to counter this Russian attitude because the EU was divided on the neighborhood itself. There were a number of countries who wanted to give these countries, like the Balkan countries, an accession perspective. There were a considerable number of other countries who opposed this vehemently because they didn't want to open another wave of enlargement. There are some countries in the EU who have long-standing, very positive relations with Russia based on trust and cooperation for a long time. There are others who have certain historical experiences and look at Russia with a lot of mistrust and hostility. So whereas Putin knew exactly what he wanted, we didn't really know what we wanted. And then the absence of a coherent strategy on the EU side, sort of the technocratic logic of the Commission came into play. The Commission sort of went ahead and negotiated this DCFTA with a number of countries of the Eastern partnership. And when these agreements were finally finalized, the last question came up, is that compatible with the membership in the Eurasian Customs Union, Putin's counterproject to European integration, the Commission said, no, you have to choose one or the other. And by the way, please choose before the 28th of November because we have the summit at this point. So I think in terms of trade law, this was the correct answer. This was right. You cannot be part of the Customs Union and have a DCFTA. In terms of geopolitics, it was very foolish because obviously it contradicted our constant argument that this was not something to the detriment of Russia, but it was meant also to be an inclusive process. So I say this very clearly in my paper, and I've been sort of criticized later on because I was put in the camp of the Putin for Steyer because there is this notion of that we ourselves brought this crisis upon us, and Putin was responding more or less to an aggressive attitude from the European Union. I think this is totally wrong. I wouldn't see this like this whatsoever. But I do believe that our policies were not very wise. And I think the lack of wisdom is related to the internal divisions. I think the responsibility for what happened later, this bullying behavior towards Ukraine, pushing them first to commit not to sign, then you had this massive response from the streets, and then the Crimea crisis that ensued from that, that's Mr. Putin's responsibility for the most part. But I do believe that EU policy left something to be desired, frankly. The third element of what went wrong with the European neighborhood policy were that the member states didn't really engage in it. It was, again, on this point similar to the enlargement process where the commission is in the lead. On the neighborhood policies, the commission together with the external action service. On enlargement, it doesn't affect the functioning of the enlargement process because the commission has a very strong political mandate, and the accession countries know the commission is its most important interlocutor and take the commission extremely seriously. And the neighborhood policy, it's a different game altogether. The incentives were not as important. And for the prime minister of Tunisia or Morocco, Mr. Fühler is not a very interesting interlocutor. They are confused by our messier institutional setup, and they are sort of conditioned to take member states a great deal more seriously. And the member states stayed in the background, only the institutions really engaged the states in negotiating the action plans, in writing the reports, et cetera. And the member states were not really involved in framing the policy and in the implementation of it. They basically carried on their own bilateral policies following their own interests, leaving the neighborhood policy sometimes became sort of a smoke screen behind which member states did their own stuff. And that was, of course, a huge, hugely negative aspect of the whole story. Further big deficit were the rather insufficient incentives. One frequently speaks about the three M's, markets, mobility, and money, basically. And all three elements of the EU seem to offer much more than it actually offered. In terms of money in the last seven-year program, there were 12 billion Euro. This is serious money devoted to this. But in a given year, Qatar, with its two million people, spends more than the EU on the neighborhood policy. So this shows somehow the disfunction there was. And after the Arab Spring, the EU added another billion and got the EBRD and the EIB to engage more. But nothing like the mobilization that happened after 1989 for Eastern Europe, simply the commitment to actually start something serious, was not there to the necessary extent. Now on market access, a similar situation, the DCFTA concept was relevant only for a very few countries that are fairly advanced. In the South, there's hardly any country that could really aim to have this trade agreement. And other trade concessions were very difficult to reach in the time of an economic crisis in the European Union. In terms of military, Iranian agricultural products, there was a lot of resistance by member states, particularly southern member states, to be really generous. And of course, with mobility, it's very similar. You have massive fear of illegal immigration. This is a hot political issue. So in terms of genuine liberalization, you did not go very far. The one single achievement is this visa liberalization with Moldova. Otherwise, the concept was based on mobility partnerships, which offer better access to the European Union for students and programs of a fairly limited scope in exchange for commitments on border security, et cetera, that should actually clamp down on illegal migration. I think about six of these mobility partnerships were concluded. But that went far, far below what these people of the region really, really expected. And so, whereas much of the money of the European Union over the last 10 years, I think, supported worthy causes, it failed on two counts. One is the engagement was not serious and important enough to really support structural transformation. This was just not strong enough. It's not important enough. And the second thing is it was all long-term investment. We lacked the capacity to intervene quickly and to have programs and projects that have a rapid impact. And therefore, since the situation evolved very rapidly, we did not really have the instruments that could make a difference in this context. The last sort of deficit that I would like to mention is the conditionality policy. This is supposed to be really at the heart of the whole game from the beginning of the founding documents. And that's another legacy of enlargement, because the basic notion is that we share the same values, the partner countries and the European Union. And by linking benefits, goodies, carrots with reform efforts and reform steps, we can turn the neighborhood policy into an important motor of reform in this country. I think this did not work out the way it was planned. For one, I think we were terribly inconsistent ourselves, because we preached conditionality, but frequently we didn't practice it. With respect to the Arab countries, after 9-11, the single priority was stability. And even we, let alone our partners, stopped paying even lip service to democratization and reforms and human rights. I think stability is the thing that really dominated all other considerations. And otherwise, I think if you take Belarus, a country with a nasty regime, with a very bad human rights record, got with very few real EU interests at stake, got the full dosage of conditionality, sanctions, exclusion from various positive programs, et cetera. Azerbaijan, which is not much better in terms of its record, but a very important energy partner, was treated much more mildly. And after the spring, of course, the EU revised its neighborhood policy and somehow now they really mean what we say, and conditionality will be at the heart of it, more for more, more goodies for more reform. This will be clearly leading our policy, but once again we did not implement it, because we had to realize that following the spring developments in most countries, the tendency in terms of human rights reforms, et cetera, went down, not up. So if we had taken it seriously, we probably would have frozen our cooperation with most of these countries, with the exception of Tunisia. And of course we couldn't, because many of them are very important partners. So it was, I think we would have needed a much more sophisticated strategy. Promotion of values is a very important ingredient of our foreign policy, but it cannot be sort of a very blunt mechanism that is sort of applied without much consideration. I think it didn't work out. Now these are just a few reasons why we find ourselves in the mess where we currently are. The question is now what needs to be done? And I think that the first, I feel three, three main elements. The first one is we will, first of all, deal with the crisis at hand. And that's the crisis in the East, it's the Ukraine, but it's also Moldova and Georgia, which will be under very, very severe pressure. In my mind, the Ukraine crisis can be a real game changer for European foreign policy. It's unlike any other crisis. You know, crises were always a big factor in the evolution of European foreign policy. The whole concept of foreign policy was somehow an outcome of the Balkan wars, of course. And in 2011, many of us had expected that their spring development could be another powerful impetus to revamp our policy and to become more serious as an international actor. But it turned out that in the midst of the Euro crisis, while we were in a sort of existential struggle with the financial markets, we simply did not have the kind of space and the capacity to really focus on these very important developments. And I think that's one of the reasons why the EU lost so much influence in the South. Now, the Ukraine crisis is different because different from Libya or Syria or Egypt, where you had domestic power struggles that then developed very important international implications, the EU in the Ukraine crisis was there from the very beginning. And the whole thing was triggered by the dispute with Russia about the signing of the DCFTA. The Maidan movement waived blue flags. The main objective of the new government is promoting the integration into the European Union. And of course Putin's action was a direct response to EU policy. So for the first time, crisis management is not about reducing risk and enhancing stability. It's a fight. We are for the first time in a geopolitical competition with a very savvy and very capable antagonist. It's a different type of thing and should, at least in theory, have a much stronger mobilizing function. And what needs to be done is fairly evident and I think on one count we are so far succeeding reasonably, I would think, on the other count where I think I have doubts whether we are succeeding. And one is the positive side is supporting the Ukraine. And I believe that all together over the last few weeks the kind of commitments from the EU and the level of engagement I think shows that we took it seriously and we responded quite in a credible fashion. The other side is of course the sanctions, how to respond to Russian behavior. And on that I think the jury is out. It is not clear. I think that you know about these three stages. We are now stuck in the second stage which implies putting people on the visa ban list and freezing their assets. But the question of the next stage of significant economic sanctions, again, is something on which EU member states are quite divided. They are very different outlooks. They are exposed in a different way. The kind of economic relationship to Russia is very diverse. And I think the decision making on this issue is quite difficult. There is, of course, I guess the red line is if Putin moves his troops into the Ukraine then there is no question that the serious economic sanctions will be decided. But there is a grey area and I think Putin knows about the red lines and the grey areas and so far he is maneuvering quite skillfully. And it's not evident to me that you will be capable to give a credible answer to what is going on in eastern Ukraine at the present time. I think we should not forget Moldova and Georgia. They are supposed to sign the DCFTA quite soon. It's likely that they will come under quite serious pressure too. And again, the EU really needs to invest to keep these countries on track. So this is the number one priority to respond to this immediate challenge. The second response would be to get the institutional decisions of the year 2014 right. I think now with this kind of wake up call that the Ukraine crisis constitute, I would hope that we will take these two decisions quite seriously. The one is, of course, the election appointment of the new leadership team of the European Union. And the second is the recomposition of the European Commission later on. You know, on the first point you remember that the centerpiece was always the commission president and then the next focus was on the president of the European Council and the appointment of the high representative. The last time round was a balancing operation. You had to tick boxes, male, female, right, left, north, south, new, old, et cetera. So I would fervently hope that this will be different the next time round. I think that history will be very kind to Kathy Aschen. I think she will be remembered for the two big successes that she had under her belt. That was the course of the Serbia agreement, which was her personal achievement. She did a fantastic job. I can trust that better than most other things because I was very much involved in this region. And the other big thing is the agreement, interim agreement on the nuclear program of Iran. And in this case I think this was a strategy, a policy devised in Washington, but she was a very able sort of spokesman, spokesperson and manager of the process. And I think she also deserves, it was an important achievement. Still, this doesn't change the fact that she was not the right person to be the high representative. In terms of her background, the experience, the profile, her network, she was not well positioned to play this role. It's very, very difficult role of a triple-headed representative, right? And I think next time we have to do better. I was reminded of what happened in 1999 when the job of the high representative was created by the Amsterdam Treaty. It was created with very, very limited competences, basically. You had to support the president, support the council. Couldn't do very much. And in the Amsterdam negotiations, we said, well, this shouldn't be a minister, shouldn't be a high-level person, maybe a senior official, senior ambassador. The primacy of the presidency in foreign policy needs to be preserved. But then came the course of a war, and the Europeans felt the American dominance of the crisis management process is quite humiliating. And suddenly, I think it was the European Council in Cologne. But they said, no, we have to be a bit more serious. And then they picked Javier Solana, who was, well, a heavyweight as the Secretary General of NATO in the long-term foreign minister of Spain. So I think we are in a similar kind of situation. I think we need the challenges have grown, and we have to respond to these challenges. And we cannot, again, look at male, female, big, small, right, left. We have to choose a heavyweight person with the right kind of experience. The second institutional decision that is not so much talked about, but is almost more important, is the recomposition of the commission. I do believe that one of the huge weaknesses of the implementation of the Lisbon Treaty so far is that the gap between foreign policy, traditional foreign policy, and the external relations that are led by the commission has not become significantly smaller. There is a huge, huge deficit in bringing the various instruments of the EU together. And these external relations are vastly important and powerful. Just keep in mind that the EU spends about 12 billion every year in the area of external relations, from enlargement, the neighborhood, trade development, most of all, humanitarian assistance, and about 400 million on classical foreign policy. So you see where the real instruments are. And the EU would be vastly strengthened as an international actor if it could manage to turn the higher-representative vice president into a real coordinator of a comprehensive European foreign policy. Kathy Aschens had, as a vice president, was ornamental because I think Barroso never allowed her to really take the lead among the external affairs commissioners and play this role fully. I think if we develop a real cluster of external relations with a strong higher-representative who's really in charge and actually can give instructions to the various other commissioners who could be his or her deputies, then also with a political role, they would have a vastly better outfit, particularly also on policies relating to the neighborhood. Now, this is the second thing, getting the institutional decisions right. And the third one is, of course, I believe we need to reinvent, as I said, reset, but reinvent the European neighborhood policy. We have to recognize that the kind of framework that we have at the moment is not working. We have to redo it, and this should be one of the top priorities of the new leadership team when they take over. So by 2015, I think a new policy needs to be in place. In my paper, I had a number of ideas on how to do it in a better and new way. I just point to very few elements here. One is, I personally feel that the present participation in the neighborhood policy is totally artificial and nonsensical. The 16 countries from Belarus to Morocco have nothing in common. It just doesn't make sense to try to have the policy for this group. I think I would extend the framework. I would try to include all neighboring regions where the EU has important interest at stake. That is Central Asia. This is the Horn of Africa. This is Sahel. This is all of the Middle East, basically. But I would then give up the notion of a single European neighborhood policy with criteria that can be applied throughout the region. I would try to put together a very well-equipped toolbox that supports numerous neighborhood policies. I would use this concept of regional strategies that the EU has developed quite well for the Sahel and for Horn of Africa to somehow put countries together that have actually something in common and then develop not just bilateral relationship but also regional policies that really can make a difference. I think that I would reserve the enlargement methodology to the few countries, and there are very few countries where it really makes sense. It really makes sense only in Georgia and in Moldova and in Tunisia, potentially. All the other countries, the main emphasis of our policy needs to be to promote stability, first of all, the kind of degree of association that the ENB ideally prescribed is out of reach for most of our partners. Then I think it's very important to enhance the political leadership. This is related to what I've said about the commission. The higher percentage should be put in charge of neighborhood policy directly. I think one or two commissioners should be his or her deputies in carrying out this policy. I would make very strong efforts to bring the member states systematically behind this policy. If we decide the program for a certain country, the EU delegation would normally be in the lead, but this should already be done in consultation with the embassies of the member states. I think at each stage of the game the member states need to be involved and engaged, not just in giving comments and advice, but also in terms of promoting the implementation of our policies. Then of course it will be very important to engage other international actors that are present and active in the region. I think in the East we have a big problem, but I think we on the one hand have to resist any notion of spheres of influence, but at the same time we have to keep out communication channels with Moscow Open and we have to keep sort of promoting inclusive arrangements and trade in many other areas that would allow Russia really to work together with us in this region. This is an uphill struggle, but even Vladimir Putin will not be in charge forever and it's clearly, ultimately for the countries of the region they should not decide between the EU and Russia they should have positive relations with either and equally necessary and important is the kind of an inclusive approach with regard to international partners in the South. The EU remains the biggest donor, the biggest trade partner, the biggest source of investment, but it's not the only show in town. Number of countries, Turkey, Qatar, Saudi Arabia, the US is always almost the most influential partner, but also China is becoming more and more active and engaged in this region and we need to have a much more systematic approach in actually engaging with these other international partners in promoting common interests and designing common strategies. So I believe that the EU in some extent to some extent is a global actor that's undeniable, but I do believe that our main instruments and our main interests relate to the neighborhood and I do believe that this remains the top priority of EU foreign policy and I hope this is have a humiliating experience of the last few years and the shock of the Ukraine will finally galvanize us in raising our game and getting our act together. Thank you very much.