Speech by Prime Minister Anders Fogh Rasmussen at a meeting with the diplomatic corps in Copenhagen on May 19, 2006

Ambassadors, Your Excellencies,

Thank you for accepting the invitation to this meeting dealing with current issues in Denmark and Danish foreign policy. I would like to thank the outgoing Chilean ambassador and Dean, Jaime Lagos, for his initiative. It provides us with an excellent opportunity to debate matters of interest to both me, as Prime Minister, and you, as informed observers of Danish society and politics.

I would like to take advantage of this opportunity by focusing on the need for change and innovation – in Denmark, in Europe and, of course, globally. Globalisation offers new opportunities but, at the same time, it confronts us with new challenges and, sometimes, new threats. Most of these challenges call for changes and innovation in each individual country. We have felt this in Denmark and have initiated processes to ensure that we rise to meet them.

At a European level the European Union also needs to tackle globalisation while ensuring public support for its policies in furthering European integration. This might seem to be a contradiction in terms. But I don ́t think so. I would argue that if the EU delivers the solutions to the globalisation challenge, public support will follow. So my strategy for European integration is a Europe of Results.

At the global level we must work for political reforms and economic development – ensuring that all countries reap the benefits of globalisation. If we fail, we may end up being faced with threats and challenges that are far greater than those we already know today.

I’m a liberal politician and believe in political and economic freedom, both as an end in itself and as a means to ensure prosperity and progress. I believe in gradual change in our societies allowing us to prepare today for the challenges of tomorrow – not revolution and drastic change. My aim is for Globalisation with a Human Face. This is the aim in the Danish reform process and our approach to Europe - and to the world.

Globalisation is not merely an economic issue. Increasingly, the focus is on cultural issues. So how well is Denmark, and the Danes, prepared to enter the Global village?

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For a start, the Danish economy is in excellent health. And future prospects are good.

Economic growth was more than 3 per cent last year – well above the European average.

Employment trends are positive.

We actually have a steadily decreasing unemployment rate - at the moment 4.3 per cent [EU-definition]. In fact, unemployment is at a 30 year low.

At the same time, public finances show solid surpluses. Public debt is one of the lowest in Europe – and is falling rapidly.

We have a substantial trade and current account surplus. And, I am happy to say, the Danish foreign debt is no longer an issue.

Indeed, a number of international surveys have labelled Denmark one of the most competitive countries in the world. And, according to a recent business environment ranking, Denmark retains its last years’ leading position as the best place in the world in which to conduct business over the next five years.

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One of the main factors contributing to Denmark ́s solid position is a Danish speciality – we call it flexicurity. Basically, flexicurity consists of three elements:

• A flexible labour market with easy access to both hiring and firing.
• A high level of social security.
• And an active labour market policy.

In many ways the Danish model of flexibility and security is unique. It is the subject of both international curiosity and admiration. And for good reasons.

The results speak for themselves: We have relatively generous social benefits but, at the same time, labour market participation is among the highest in Europe. The economy is flexible and the skills of the workforce are continuously updated.

Generally, people are not afraid to change jobs and the qualifications of the work force generally meet the demands of employers. In fact, collectively, Danish employees change jobs more than 800.000 times a year. This means that in one year one third of the labour force starts a new job.

And employers are not afraid to take on more people when necessary – because it is easy and cheap to release them again should the situation change.

* * *

Today, the Danish economy is reaping the benefits of 25 years’ well-managed economic reform. So Denmark has a good starting point. But we cannot rest on our laurels.

In the coming years we will be facing two major challenges.

Firstly, an economic challenge stemming from an ageing population. As many other countries, Denmark will soon have more pensioners and fewer people of working age as the post-war “baby boomers” reach retirement age and leave the workforce. This puts a pressure on public finances.

Secondly, globalisation places intense pressure on Danish competitiveness and challenges the Danish position as one of the richest countries in the world.

Globalisation, in particular, puts pressure on employees with lower education. Unskilled workers will become “too expensive” and uncompetitive in global terms. This, in turn, challenges Denmark as a cohesive society with a high level of social and economic equality.

In April, the government presented an integrated answer to both these challenges in the form of a major plan for welfare reforms to prepare Denmark for the future. This plan is now being negotiated between the political parties in the Folketing.

The main elements in the plan are: o Major investments in the future – in education, research, innovation and entrepreneurship. o Increased labour market participation through later retirement and earlier completion of education. o And better integration and higher employment among immigrants.

By increasing employment in both the short and the long term we will be in a position to finance future welfare and provide space for investments in future wealth.

Globalisation demands that we invest in people at all levels. Investing in people will equip both our businesses and our workforce with the necessary knowledge, creativity and ability to change and adapt and learn new skills. Prime requirements if we are to reap the benefits of globalisation.

The Government has also put together an ambitious strategy containing 350 initiatives to make Denmark a leader in the global economy. This strategy includes four ambitious goals:

• Denmark as a leading knowledge society.
• World-class education. · Denmark as a leading entrepreneurial society.
• And Denmark as an innovative society.

I think I can feel confident in saying that the present solid Danish economy, the government’s welfare reform initiatives and its strategy for Denmark in the global economy place Denmark firmly in a position to meet future global challenges.

* * *

But Denmark is not an island – though we have many of them. We are part of the European Union, which plays a crucial role in dealing with the challenges of globalisation. No matter how many reforms we carry out at a national level, the full benefits will only be realised if Europe also deals with the same challenges.

As I see it, these challenges are twofold - how should Europe tackle globalisation in the broadest sense and how can we ensure that the people of Europe support the development of European cooperation and feel that the EU is of benefit to them as individuals? The two challenges are inextricably bound together. An EU that deals successfully with the challenges presented to us by globalisation, thus securing jobs and businesses, is more likely to have the support of its citizens.

One way to tackle the challenge could be through enlargement. Throughout the history of the EU, enlargement has been the key instrument in spreading freedom, security and prosperity in Europe. I believe this policy to be a resounding success. This was clearly demonstrated in the Commission Communication “Enlargement – two years after” published last week. Not only is the enlargement with the 10 new Member States a huge political achievement – it is also an economic success. A result confirmed by a recent study carried out by Dansk Industri.

EU membership has brought about vigorous economic growth in the 10 new Member States. But the 15 “old” Member States have also won as a result of an increase of EU’s internal market by 75 million citizens as well as new trading and investment opportunities. Enlargement has also been an important engine for modernisation in the EU. And fears of massive migration and loss of jobs in the “old” Member States have been put to shame.

For me, this demonstrates that the enlargement strategy has been the right one. And enlargement will continue to be an important policy instrument and objective of the Union. I do not believe in new artificial borders in Europe. The door to the EU must remain open. But at the same time we have to take seriously the ability of an enlarged Union to function effectively and we must continue to ensure public support.

We will therefore have to make a much greater effort to develop an attractive neighbourhood policy. A policy that offers instruments for reform to countries. An instrument for those countries that may not have a membership perspective in the short run.

I envisage that we, over time, will be moving towards an actual pan-European economic area. An area of free trade and economic cooperation between the EU and the EU’s neighbouring countries. A pan-European economic area would also imply strengthening of the neighbourhood policy. We must ensure that the neighbouring countries:

· may, to some extent, gain access to the Internal Market. · may participate in a number of EU programmes, for example exchange programmes for students, research programmes. · may receive considerable economic support for reforms – for example for the fight against corruption, border controls and reforms of their legal systems.

First and foremost, the Union must supply answers to the issues of prime concern to its citizens. Terrorism, cross border environmental problems, research, development and education. This is what it is all about -delivering results that benefit European citizens.

In my recent speech at the University of Copenhagen I proposed a programme for a “Europe of Results”. A result-oriented programme containing more than 30 specific proposals for concrete action at EU-level.

As I see it, we are entering a new phase in the development of the EU. After 20 years with large, significant projects such as the Internal Market, the common currency and the Enlargement, we should now make a targeted effort to address specific political tasks. A series of projects which, when taken together, constitute a massive effort to achieve specific results benefiting all the peoples of Europe.

Compared with the last 20 years’ development this is a new approach to European cooperation. In future, instead of a few mega-projects, it will be the volume and total of the many small and concrete projects which will ensure the success of the Union. A new strategy for “Achieving Europe”.

My ambition is that Denmark should play an active role in setting the agenda. Together with our partners in the EU we should aim for progress and practical cooperation, demonstrating to all Europeans that the EU can meet head on the challenges of tomorrow – and win.

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Ambassadors, Globalisation is a fact. By its very nature we are all affected. Free cross- border trade, the Internet and migration are all here to stay. The question is not if we want it – it ́s already here - but how we prosper from it.

In an increasingly interdependent world Denmark cannot be indifferent to how other regions and countries deal with globalisation. We will continue to have a proactive foreign policy – because we must.

Political and economic freedom, democracy and rule of law are fundamental values. They allow each individual to develop and grow as a person. They help society to prosper. In their pursuit of progress different countries have chosen different strategies. But no-one would dispute the strength and importance of these values.

Denmark intends to play its part in assisting and promoting these same values in two key regions: the Middle East and Africa.

The Broader Middle East is still struggling with problems that prevent a number of countries in the region from benefiting from today’s globalised world.

In Iraq, the overriding problem is lack of security. The Iraqis have demonstrated their strong willingness to build a democratic society. The high turnout in the three elections and, in particular, the higher turn out of Sunni votes in the last election in January were positive steps towards establishing an inclusive democracy in Iraq. Such a democracy will serve to marginalize the terrorists, whose greatest fear is a democratic and stable Iraq.

The Danish government has decided to prolong its military contribution to the stabilisation forces in Iraq for another 12 months. We have also committed ourselves to providing air transport for United Nations Mission in Iraq. We intend to work with both the Iraqis and our coalition partners in assisting the Iraqi security forces in taking over the responsibility of protecting the safety of their people and, thereby, Iraqi democracy.

The people of Afghanistan have also demonstrated their commitment to democracy by a high turnout in their elections. Again, Denmark has decided to commit troops to ensure stabilisation in the Southern part of the country in the Helmand Province.

But Denmark’s support for progress and reform is not restricted to areas of strife. In 2003, my government launched the Partnership for Progress and Reform, aimed at deepening the dialogue with various nations in the Middle East and Northen Africa. Both directly and by supporting local forces working towards reforms.

Next week, the government’s review of the Partnership, containing an analysis of the first two years of projects, will be published. The review will also deal with the possible implications of the cartoon crisis.

Based on the overall positive assessment of the projects and the interest of local forces in the region to cooperate with Denmark, the government has decided to continue the Partnership using a more focused approach. Using this analysis, and the findings of the Arab Development Report, the Partnership will focus on three areas: · Rights of freedom and good governance · Education and the development of a knowledge-based society · Strengthening equality and women’s participation.

The projects will continue to be based on a local commitment to reform. We will not impose any model on these countries or societies, but will stand ready to support local groups and organisations working for reforms promoting greater freedom and democracy.

The Partnership for Progress and Reform should be viewed in together with the Danish government’s stance on the Israel-Palestinian conflict. In parallel with the reform process, we will continue our efforts within the European Union to promote a permanent and just settlement of the Arab-Israeli conflict based on the existing Road Map. It is clear that the conflict has a negative impact, not only on the two countries, but on the entire region. The election of a Hamas government has led to further deterioration.

On this point, perhaps, our attitude to this situation needs some clarification. I have learned that some people in Muslim countries accuse the West of double standards when it comes to democracy. That we want to further democracy but, when a party like Hamas is elected through a democratic process, the Western countries do not accept the result.

I have to say that this accusation is false. First of all, Denmark and its European partners have made it clear that we do not wish to punish the Palestinian people. Which is why we have continued our humanitarian aid.

Secondly, we have not questioned the results of the election. It was, after all, considered to be free and fair. But we have a right to choose who to support and who not to support, and we have made our conditions for cooperation with a Hamas government clear: The recognition of Israel’s right to exist, non-violence and acceptance of existing agreements. Democracy is not only a means of appointing a government. It must also be based on freedom, rights, the rule of law and non-violence. This is true for any democracy. It is equally true for Hamas.

In general, peace, stability and progress in the Middle East can only be achieved through increased regional cooperation. When compared with other regions cooperation within the Middle East is weak. We – in Denmark and in Europe – have learned the hard way that, in order to achieve lasting peace, relationships with your neighbours must be based on confidence.

At present, Iran’s nuclear programme poses a threat to the entire region. Europe and the United States have taken the lead in ensuring that Iran lives up to its international commitments - which is in the interest of all countries in the region. I believe that a strengthened cooperation within the region and commitment to confidence-building measures is the only way forward to deal with this, and other, impediments to peace.

Let me turn to another part of the world – Africa. A continent that has so far been unable to reap the benefits and advantages of globalisation. Where Asia has worked, educated and invested its way out of poverty to reach its goals, Africa seems to be stuck on the starting line. Poverty seems to be on the increase, not the decrease. Such a situation requires special attention and, for this reason, last week I hosted a large international conference dealing with the African situation.

We focused on good governance, regional integration and security and women’s involvement in reconstruction and development.

Why these three subjects?

Well, the first issue - good governance - is a fundamental issue. Many African countries have found that democracy and good governance is the only way to transform assistance into economic development.

The second issue – regional integration and security – is a prerequisite for development in a continent stifled by armed conflicts. More than 100 million Africans are presently experiencing, or have recently emerged from, situations involving armed conflict.

The third issue – women’s involvement in reconstruction and development – is vital if we are to ensure progress and change in the African continent. Women’s full potential must be realised in the combat against poverty, ignorance and disease.

The conference was a signal of Denmark’s strong commitment to Africa and the endeavours to ensure that globalisation also provides opportunities for the poorest countries in the world.

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Ambassadors, And now, a final word about the Danes and globalisation. Mutual understanding is essential in today’s globalised world. For centuries, Denmark has been a firm supporter of free trade and international communication as a way of fostering friendship and prosperity between nations.

Increasingly, the media, information technology and – of course –migration stimulate this development. Denmark prides itself in being an open society that welcomes the free exchange of ideas, free movement of workers and the free exchange of goods and services.

We give priority to the integration of new citizens through jobs, education and training. All new citizens are offered three years’ free Danish tuition as well as employment-promoting options such as qualification improvement and work experience. These integration options are tailored to the needs of the individual to ensure that newly-arrived immigrants can make the most of their abilities on an equal footing with other citizens of Denmark.

Furthermore, to ensure a smooth, gradual transition to the free movement of workers within the EU, Denmark has adopted a liberal set of rules regarding workers from the new EU member states.

And as the numbers show, Denmark welcomes new citizens:

Since 2001 the number of work or study permits has almost doubled from about 13.000 in 2001 to nearly 26.000 in 2005.

For me, as Prime Minister, it is important to stress that migrants who wish to contribute to the Danish society are not only welcomed by the Government and by employers. Their new colleagues also welcome them. A recent study from the Danish Confederation of Trade Unions confirmed that Danes are a tolerant and open people: More than 90 pct. of the people interviewed had no difficulties with working side by side with immigrants.

Maybe this openness is rooted in the fact that Danes are generally happy and satisfied with their life. A new study from the European Commission (Eurobarometer) shows that the Danes are one of the happiest peoples in Europe. In fact, 98 pct. of the Danes questioned expressed happiness and satisfaction with their life in Denmark.

In the aftermath of the referendum in other EU Countries on the European Constitution, I’m pleased to say that Danes are not only content with their life in Denmark. They are also content with their life in Europe and within the European Union. More than 60 pct. of Danes, when asked, see the European Union as a good thing. That is 10 percentage points above the average for all member states.

This positive attitude may go a long way to explaining why Danes see globalisation as a positive thing and not a threat. For almost 80 pct. of Danes, globalisation represents a good opportunity, thanks to the opening-up of world markets.

Strategically, we can choose to deal with the challenge of globalisation by going on the offensive or the defensive. I am content to say that Danes see globalisation as an opportunity for everyone – an opportunity which should also include the poorest countries. A study from the American think-tank Center for Global Development has ranked Denmark first among 21 wealthy nations in terms of commitment to advancing development in the Third World.

When faced with these encouraging facts, I think it is fair to conclude that Denmark is an open and tolerant society. A society that has accepted globalisation and demonstrates strong solidarity with the Third World.

One unfortunate aspect of the cartoon crisis was the spreading of misinformation intended to present an opposing, false picture of Danes and Danish society. We tried to counter those allegations, but we found it difficult to compete with the Internet and text messages that enabled false allegations to be disseminated faster than we could refute them.

This has demonstrated the need for our foreign service to be even more active in public diplomacy, including in contacts with non-governmental bodies. But it has also demonstrated the importance of diplomats in Copenhagen being properly informed about developments in Danish politics and Danish society.

And what better opportunity than the one presented to us here today. So, Señor Lagos, may I once again thank you for your excellent initiative and say how pleased I am to have this possibility of meeting you all and hearing your questions.

Thank you for your attention.