My colleague, Mr Jean Mischo, spoke some very kind words about the diplomatic cooperation between our two countries. I should like to thank him for what he said. We have always regarded it as an honour and a privilege to be able to assist Luxembourg in the diplomatic field ­ and we will continue to regard it as such. This unique form of diplomatic cooperation reflects the close ties and complete trust between our two countries. As your Foreign Minister, Mr Jacques Poos, recently said this cooperation could serve as an example for other EU Member States that feel the need to pool diplomatic resources. Indeed, we face an increasingly complex world composed of an increasing number of countries. No doubt, most EU countries are experiencing the strain this imposes on their scarce diplomatic resources.

There is one area where the cooperation between our two countries could be enhanced even further. As Mr Mischo mentioned, we provide some practical assistance during the Luxembourg Presidency of the EU. The Presidencies of Luxembourg and The Netherlands always follow each other. And this is not only the case in the uropean Union, but also in the Western European Union. Would it not be logical to try to dovetail our Presidencies more closely? Continuity from one Presidency to the other is very important. Building on our tradition of diplomatic cooperation, we could thus provide greater continuity, to the benefit of the Union as a whole.

As regards the substance of foreign policy, much of what Mr Mischo said corresponds to the views of The Netherlands. This cannot come as a surprise. For instance, one of the points Mr Mischo made was that small countries have a special interest in promoting the rule of law at international level. This is indeed a fundamental point of Dutch foreign policy as well. Large countries have other ways of protecting their interests which the smaller ones do not have. Your Prime Minister, Mr Jacques Santer, once described The Netherlands as the biggest and Luxembourg as the smallest of the small countries. So essentially, in this respect, we are in the same boat.

Clearly, world-wide rule of law is not something we will bring about tomorrow or the day after tomorrow. But for small countries a well-regulated and well-structured international environment is indeed of vital importance. This applies at global level and even more so at regional level. Multilateral institutions such as the EU, NATO and the Council of Europe are basic elements of the well-structured and stable environment we seek. As founding members of these institutions, our two countries have a role to play in maintaining and enhancing their solidity and cohesion. Not only for our own sake, but also because these institutions are essential instruments to help stabilize the situation in Central and Eastern Europe. And I think I can say that our two countries are in full agreement on the vital importance of this stabilizing task with regard to the Eastern part of our continent.

I stress the element of solidity' in relation to our multilateral institutions, because the shock-waves which went through Europe in 1989 have affected many existing political constructions, not only in the East but also in the West. We can no longer presume that Western cohesion is as automatic as before.

The confrontation between the two blocs promoted the emergence of integrating structures on the Western side ­ across the Atlantic Ocean and within Western Europe. We all knew that, without a common enemy', life would be more difficult for NATO. But I believe that most of us underestimated the extent to which the European integration process was also fostered by the division of our continent.

One of the main consequences of the 1989 events is that the world is no longer predominantly a geo-strategic affair. We are moving to a world increasingly determined by geo-economics. The change towards economics as a determinant factor in international relations implies that the allies of the cold-war period are not automatically allies in this new international context.

Moreover, with the ideological confrontation behind us, nationalism is reappearing ­ in benign and sometimes not so benign forms. The EU is not immune to these developments. There is a growing tendency to view things in national rather than European terms. The way important new treaties were put in jeopardy over a mere 550 tons of meat or 8000 tons of fish illustrates this trend.

We must also be aware of the fact that behind the facade of our multilateral forums, a maze of bilateral threads are being spun. These can sometimes be of decisive influence on the multilateral decision-making. The Franco-German cooperation is of course by now a familiar feature of the European landscape. And it can be argued that it has helped move Europe forward, even if, at times, this has meant that surprises have been sprung on the rest of the EC countries. The tendency towards bilateralism is on the rise throughout Europe. I continue to believe that institutionalized multilateral procedures offer the best guarantee that the views of small countries will be taken into account. But we cannot afford to put all our eggs in the multilateral basket. So we have to become increasingly active in the bilateral field as well.

At the same time we must avoid the agenda of theEuropean Union becoming too much of an instrument in the bilateral relations between the larger Member States.

Whither European Integration?

Let me now discuss the process of European integration in somewhat greater detail. Clearly, we are in a quandary. The prospects for moving forward are not bright. Consolidating what we have achieved so far is quite a task in itself. Maastricht handed us an impressive work programme, and we have only just begun implementing it. We need an Economic and Monetary Union to consolidate the Internal Market and strengthen our home base in the global economic competition. A more vigorous and coherent European foreign policy is highly desirable. And we need to build up the third pillar to tackle jointly the problems of increasing immigration and internationally organized crime. However progress will be slow and difficult. Let us not forget that economic integration means profit-sharing, while an enhanced role on the world stage implies burden-sharing. So there is still a lot of homework before us.

At the same time the Union will have to absorb new members. I hope the accession of the four EFTA countries can now proceed without further hurdles. And, like Luxembourg, we favour the accession, in due course, of the new democracies of Central Europe. But I think it is difficult to deny that enlargement will complicate the functioning of the Union. Clearly remedial measures will be needed to maintain the ability of the Union to take decisions. In my view expanded majority voting will be necessary. This in turn emphasizes the importance of democratic control by means of the European Parliament. I realize, though, that the recent wrangling about the blocking minority does not bode well for the possibilities of progress.

Almost since the inception of the Community, there has been an ongoing debate about the virtues of the intergovernmental model versus the Community model ­ the first pillar' as we would now call it. I am only too aware that some of our partners would like to move the Union in the intergovernmental direction. Yet, I cannot see how we can maintain our effectiveness on that basis when we have 20 members or more. That would mean 20 national vetoes. I am not advocating starry-eyed idealism. With regard to the issue of federalism I favour a realistic and gradual approach.

All these issues will no doubt come up at the Intergovernmental Conference (IGC) in 1996. In many respects, it is true that 1996 may be too early. And I understand the uneasiness of our Luxembourg friends about this IGC. Indeed, to some extent I share this uneasiness. It will undoubtedly be a difficult discussion in 1996.

I would like to regard the IGC as an opportunity to bring about necessary improvements. But I cannot deny that all kinds of unwelcome proposals are also to be expected. In particular, we can expect the larger countries to pressure the smaller countries to relinquish some of their rights. Clearly, we will have to resist such pressures. More power for the large countries is not synonymous with more effectiveness for the Union as a whole. Effectiveness means Community procedures including majority-voting.

Enlargement implies that everybody has to relinquish some relative influence. That does not only apply to the large countries, but to the smaller ones just as well. We too will become smaller in the larger Union. Evidently, some of our friends still have to get used to the idea that enlargement means that everybody will become smaller.

One of the many issues on this score is the size of the European Commission. We too feel it is important to have a fellow countryman in the Commission.

One item which, in our view, deserves a high place on the agenda for 1996 is democracy. As you know we have always been in favour of expanding the powers of the European Parliament. The public debate following Maastricht has further strengthened our conviction in this regard.Indeed, greater involvement of national parliaments in European affairs would certainly be a good thing. But this cannot be a substitute for the role of the European Parliament. As our Foreign Minister, Peter Kooijmans, once said, we need both: more democracy at the European level and more involvement with European matters in national parliaments.

Closing Remarks

Let me try to conclude. The process of European integration is going through a rough patch. The Union has to cope with three things at the same time: sharper differences between its existing members, the need to build up the second and third pillars and, thirdly, the need to absorb new members. In this difficult phase of the integration process, the Benelux countries cannot afford to follow diverging paths, at least not where the fundamentals are concerned. Our three countries have made decisive contributions to the integration process. I believe that, together, we have a special responsibility to see to it that the integration process stays on the right track. So it is indeed important that our three countries keep in close touch. We should certainly continue our habit to caucus informally on important issues. And we should intensify this whenever necessary.

Let me stress the concept of an informal caucus', because a formalized Benelux role could tempt other countries to lump us together in discussing such things as the size of the Commission.

I will not go into the role of the Benelux as an institution now. As you know, our Ministers have decided to set up a committee that will look into the future tasks of the Benelux. The Netherlands has suggested a re-focusing of Benelux activities, now that economic integration in the EU has caught up with the Benelux. That should certainly not spell the end of the Benelux ­ on the contrary. The existence of the Benelux underscores the close family ties between our three countries. That is something we very much want to retain. And, as I have tried to argue, we are likely to need each other in the uncertain phase into which the integration process is now entering.