Dear Ambassadors, Heads of Delegation, Colleagues,

I very much welcome the opportunity to address you here today.

It is over 600 years since the Italian statesman Francesco Guicciardini, first stated that: "Diplomats are the eyes and ears of the state."

This is still true. But the days are long gone when an ambassador could consider himself well equipped if he was a good host and a ready listener.

Today, you are much more than that, particularly as Ambassadors of an organisation and a project as sui generis and as inspiring as the European Union.

It cannot be overstated that you are pioneers in a new and unprecedented project in mankind’s history, that of representing not a nation and not an empire but a group of free willing nations that have decided that by pooling their sovereignty and acting together they would be more effective in defending their interests and promoting their values.

I wished to recall this at the start of my intervention, because it is important to always keep in mind our starting point, which models and shapes all our actions, including diplomatic action. This is also something that is important to recall, at a point where Europe is faced with very important challenges and very important choices that have a clear impact on our external action and on our capacity to shape the XXI’s century world.

The financial and economic crisis which struck the EU as well know was ignited by excessive debt, by the irresponsible behaviour by some in the financial sector and also by the failure in national supervision systems. However its root causes are the tectonic changes that have been taking place in the world and the deep seated imbalances that have been building particularly over recent decades.

History is accelerating and we cannot afford to become bystanders. Some figures illustrate these changes: in the 20th century we witnessed a 4 fold growth in global population and a 40 fold increase in economic output. It took thousands of years - from prehistory to 1960 - for mankind to reach 3 billion people. But then it took only 39 years - until 1999 - to add the next 3 billion. And now it has taken just 12 more years to move from 6 to 7 billion. It took 155 years for Britain to double its GDP per capita, 50 years to the US and only 15 years for China.

These are the real developments that have shaken the structures of our societies and that force us to rethink whether the way we operate is fit for the purpose of promoting our interests and our values. It is fair to conclude that our model has revealed inefficiencies that need to be corrected. However, it is important not to draw the wrong conclusions.

Some pretend that the crisis has proven that the EU is no longer necessary, that supranational cooperation does not work and that the nation states are the only entity that can address the challenges with which our societies are confronted. This is wrong. It suffices to say that if current trends were kept no European country would feature in the world’s top ten economies after 2050. In a world where production chains are global, where capital knows no borders, where ideas and communication flow at the speed of a mouse click, to pretend that self-sufficiency is the solution is indeed self-defeating. We need the scale of Europe.

We need the continental scale of the EU also for our member states to count in the world. Not against our member states, this is extremely important to understand. It will certainly be a mistake particularly in times of anxiety like the ones we are living, in these times of turbulence, to try to build the EU against the nation states. The nation is seen by many of our citizens as the refuge, especially in times of uncertainty. So it would be a mistake for the pro-Europeans to give that argument for the ultra-nationalists or the populists. But at the same time we have to make it clear that for our nations to count in the world, and for Europe as such to count in the world, we need this scale of shared sovereignty.

That is why the European Commission and if I may say also I personally have been pushing for action, for collective action. This is the only way to overcome the current problems: determined action by individual countries but also by the Union as a whole, including in the field of foreign policy and external relations that you represent.

Dear Ambassadors, dear friends,

There is no magic wand, no silver bullet that will in an instant lead the European economy to recovery. For Europe to regain its economic strength we have at least four challenges to address, excessive sovereign debt, the indebtedness of the private sector - both companies and individuals - a lack of international competitiveness of some of our Member States and also a transformation of our governance system namely in the Euro area.

We are doing this. We have taken our economic and political future in hand, we are delivering and we will continue to deliver. But this takes time. At the same time it needs determination.

The June European Council was a decisive meeting; a meeting which has opened up the prospect of a more united, more integrated, European Union and Euro area. But our work is not complete and, until it is, our system will lack stability. We have a monetary union, but the crisis has demonstrated that there is a cumulative logic to the integration process: monetary union cannot function without a banking union, and without further fiscal and economic union.

The last European Council broadly endorsed a paper prepared by the President of the European Council, by myself, the President of the European Central Bank and the President of the Euro group, examining how best to move along this path. And that is exactly what we are doing and preparing now for the next steps.

Of course the logic of integration cannot be purely economic. Banking union requires a single European supervisor, further economic union too requires supervision of the member states economic policies, joint supervision. Not supervision made by them in Brussels over our economies but our joint supervision over our economies because it is clear that in a currency, in a monetary union one country should not have the right to do harm to others as it is happening today.

It is therefore logical, but also right and just, that there is further political or institutional integration as well. This is needed to ensure democratic oversight of the process and to reassure the citizens of Europe that they are a part of the process. More integration, more democracy, more accountability. We should not be afraid of the words. We should move forward in our project to consolidate a truly political union.

The European Commission will shortly, in fact it will be on the 12th of this month, table proposals to create a European banking union, namely a single supervisor for our banks, but we must be under no illusions that deepening economic integration and especially political integration are long term projects. Yes, they provide a vision which is needed to generate confidence in the long term future of Europe, but Europe also needs action now.

So the key here is to combine ambition with a proper sequencing. It would be a complete mistake to suggest that to get out of this crisis Europe can do it only by Treaty change. We know that Treaty change takes time so we need to have short term responses to financial instability we are now feeling in the Euro area. But short term is not enough because the so called markets know very well that in the longer term the stability of the currency depends also on the political construct and on the solidity of the institutions that are behind it. That is why as the same time we are giving short term answers to the instability we need to have a horizon for the medium and long term. So these issues – short, medium and longer term – should not be seen as incompatible and we have to act on the several areas.

That is why Europe to overcome its present crisis needs further fiscal consolidation, deep structural reform and smart targeted investment so that we can return to long term growth and create the jobs our citizens need. The last European Council committed to work in all these areas and the European Commission is leading or co-leading this work.

I know that you are increasingly asked by our partners to explain all these steps and the latest measures taken by the European Union, so I will make sure that the EEAS and our delegations get more regular economic briefings, in particular after important decisions are taken. And this is important because I would like you to be equipped with all the elements, the objective elements to make the case for Europe.

There are some things you can say even without further documents that sometimes our partners underestimate. The point is the following: if you look since the crisis there was no move until now to get back, to undo the economic integration. If you see the debate now in Europe is how far and how fast are we going for the next steps but no one really at least in the governments that are on Europe is proposing to undo the European integration. And if you look at the decisions, the decisions have all been for reinforcement of the economic and monetary union and further integration of the institutional apparatus and even more supranational powers. Ok we can always say that probably it is not fast enough or we can say in some cases it was the intergovernmental route not the community method route but it was always for more and not less integration.

Another point some of pour partners underestimate is level of integration among Europe. They have the typical let's say state centred approach what in the Europe we sometimes call the souverenist approach and so they see and believe they are intelligent because they see it in realistic terms, sometimes expressing lots of cynicism about the capacity of the Europeans to go forward. I think this is the result of lack of understanding of the way Europe integrates.

I want to give you my personal testimony after eight years in this position, and the last three years in the crisis mode day and night with this Euro crisis, that I am fully confident about the willingness of our member states and their leadership to integrate further. It is a negotiation, extremely complex, where you of course there are different teachers and different perceptions and different cultures, but at the end I have no doubts about the interest of all member states to go forward in terms of sharing more sovereignty for the economic and monetary union, at least for the countries of the EMU and with the support of those who are not yet, or they do not intend to be in the Euro.

Another issue is the lack of understanding of the role of the institutions, namely of the European Central Bank. Of course the ECB will do whatever is necessary to sustain the Euro. By definition. The first mandate of the ECB is the very existence of Euro, it is not only price stability. So when there are threats to the integrity of the monetary union the ECB has of course the right to intervene and reintervene. But of course rightly the ECB does not want to give the message that the member states can go on with, let's put it frankly, irresponsible fiscal policies, unsustainable levels of debt and lack of supervision as we have seen recently when we have discovered that the reality of the financial sectors was not exactly the one that they were pretending to be.

So this is the game. That is why I am confident, not underestimating the difficulties that we know very well where they are, but I am confident and I want to convey to you my perception that we are going to overcome these difficulties. Of course there are risks and serious risks because we have seen in the past and in history that sometimes even when there is not the intention to create a problem it may happen that interrelation of independent consequences can provoke the problem. Yes, this risk exists.

Of course there is a very important problem is that at the time when we are required to take further steps in terms of integration it is exactly the time when there is less support in the public opinion for this integration. This is why we need also to act politically for the member states and the European institutions to act together to keep the population of Europe broadly supporting the European integration which may be at a risk in the current circumstances when we see the economic situation deteriorating and when we see the very high levels of unemployment.

So I am not at all pretending that the result exists, but I want, after careful consideration of the risks, to convene to you my perception that we are going to overcome the current difficulties. But it will take time, there is no magic solution, there is no panacea, it is not this or that solution by miracle to result the problems. It requires constant, persistent, coherent determination along a path of a comprehensive response that has to address different and sometimes complex elements.

I wonder if I could also speak about foreign policy! You probably want me to give you more elements about the current situations so in the period of questions and comments I will be available if you wish to put me any question that I could try to respond, but nevertheless I thought about making one or two points about external relations because the foreign policy and the external dimension is also a very important element of this response. And precisely one of the consequences - one of the negative responses that I am sure you feel every day of the current crisis at the European union since you are in the spotlight because of the Euro crisis - is in some extent be seen losing credibility and authority for the good things we can do and we are doing for the global community.

This is why we have to acknowledge that Europe's role in the world is also a function of its economic success. But this should never mean that we are now turning inwards, on the contrary, foreign policy is part and parcel of the response to the crisis.

We need to keep Europe open and engaged in the world. If our internal market is one driver of growth, then our external market, the rest of the world, should be another. The European Union is indeed the world's largest trader but we can still benefit from access to third country markets and we are working hard to achieve precisely this.

But this is not simply because this openness brings economic benefits which are vital to our future growth. It is also because in the future to defend and promote our common values Europe will have to play an ever more active international role.

In order to be able to shape global decisions we will only count if we act together, the Commission, the External Service, under the leadership of the High Representative/Vice-President, and the Member States; there is just one EU and we will be judged as EU and not as separate institutions. The citizens, not only the citizens of the world, citizens of Europe, will not make a distinction, most of them, between Commission, External Service, Council, European Council – it is the EU. And this is very important to understand. That is why we need to unite the geographical outreach and presence of the European External Action Service to the thematic knowledge and expertise of the Commission.

Let me turn to the importance of this for our two primary foreign policy priorities: our neighbourhood and our relations with strategic partners.

Concerning our Neighbourhood, in response to the events of the Arab Spring we adopted last year a joint communication from the High Representative/Vice President and the Commission. This reaction to the mass movements for democracy in the Mediterranean have demonstrated, one major advantage of the Lisbon Treaty: the strengthened ability to seamlessly combine all of the instruments at the disposal of the European Union to roll out a package of support measures centred on the so-called three Ms; money, market access and mobility.

We know that the end will always be uncertain and that these countries’ journey is just beginning but we need to "make a bet on democracy". But we also need to remain vigilant to make sure that those who oppose democracy do not hijack these transitions.

Next week I intend to receive here the new President of Egypt, in fact he comes to the EU very soon after his election. It is an important occasion to speak with him about what his intentions are regarding what is happening in Egypt and in the wider region.

Free elections were held not only in Egypt but also in Tunisia and Libya and the will of the people needs to be respected. The European Union will deal with any government legitimised by free and fair elections, provided that they remain faithful and loyal to the principles of democracy, human rights and human dignity. I was last year in Tunis and in Cairo, and I will meet in the next weeks as I said Egyptian President but also the Tunisian Prime Minister. I also intend to travel to Jordan and Morocco to explore our support to reforms.

History has shown us that those who make peaceful evolution impossible render violent revolutions inevitable. This is what is happening in Syria. The world cannot turn a blind eye to the carnage in the country. Security Council members need to assume their responsibilities. Inability to act will only discredit the United Nations and make actions outside its framework more likely. We need to put an immediate end to the killings of innocents, the human rights abuses, and to agree on a path towards a political transition.

This commitment to reform expends across the countries of the neighbourhood policy, not just to the south but to the east as well. Here too, we are supporting those who wish to consolidate democracy and open economies through a joined up approach EEAS/Commission. We have started negotiations on Association Agreements, including Deep and Comprehensive Free Trade Areas, with 4 out of our 6 Eastern partners.

We have concluded negotiations with Ukraine but the signing of the Agreement will depend on Kiev’s commitment to the European values. I hope that by the 3rd Eastern Partnership Summit, which will take place next year, more of these Agreements will be concluded, notably with Moldova.

These countries need an active and influential Europe and the rest of the world also needs an outward looking Europe that is able to play its full role in the neighbourhood and in the global affairs.

As I said, the neighbourhood is one of our priorities; the other is strengthening relations with our strategic partners. Here too, the combination of Commission instruments, EEAS action and Member States cooperation can make a real difference.

With the United States, we are partners in the world's single most important relationship. Last year we have initiated with President Obama a High Level Group to discuss our future Trade ties, with the aim to launch a transatlantic free trade area. This should be a beacon and a catalyser of XXIst century agreements. This would also dovetail with the Comprehensive Economic and Trade Agreement that we hope to conclude soon with Canada.

I am sure that these initiatives will reinforce what is already a powerful bond between the two sides of the Atlantic, a bond underpinned by a community of shared values.

With China, which is already our second economic partner, and growing faster than any other, we are building a solid partnership based not only on this economic interdependence but also on a growing conscience of the need to tackle common challenges together.

An example, just one example is the Urbanisation Partnership that I have launched with Chinese Vice-Premier Li Keqiang, where China, which is experiencing an increasing level of urbanisation, will be able to draw on the experience of the EU and the Member States to master this process.

We should forge with China a long-term vision of our relations based on mutual respect and balanced benefits, enabling us also to settle our differences – and there are differences - in a constructive manner.

But in Asia we have other important and strategic partners that are central to our external relations.

India, an economic giant with great untapped potential with whom we are negotiating a free trade agreement that would be the biggest in the world - benefiting 1.7 billion people – and which could become a driver for the economic reforms the country needs to pursue.

Japan, a longstanding like-minded partner with which the Commission has just tabled negotiating directives for a Framework Agreement and an FTA that I hope the Council can swiftly agree.

Korea, which has been affirming itself as a global player. And Southeast Asian States, whose integration process, through ASEAN, can become a reference for regional cooperation and peaceful settlement of disputes. This will all be part of my message to the next ASEM meeting in Vientiane: the EU is a committed partner of Asia. I will also travel, at least I intend to go, to Myanmar, Thailand and Indonesia to reiterate this message and our engagement in the region. As you know many of our partners in Asia are asking precisely for that, and I remember in our seminar last year precisely some of you mentioned this. In the available time I will do my best to give some contribution.

With Russia we have achieved an important common objective, which was the country’s accession to the WTO. This will allow for Russia’s economic diversification and better integration in the world economy.

We should now make progress on the negotiation of a New Agreement that fully reflects the rich and substantive nature of our relations, from trade to energy, from political cooperation to people to people contacts. We will also continue our Partnership for Modernisation, which involves 25 out of 27 Member States, aiming at modernising both economic and social structures; economic and societal modernisation.

Brazil has managed in the last decade to grow and also to reduce its internal inequalities, which were a brake to the country’s progress. The strategic partnership that we have launched in 2007 has allowed us to make progress on our bilateral relations, but has not yet realised its full potential as regards cooperation on global matters.

We still intend to close an agreement with Mercosur; however, it is fair to recognise that the recent protectionist stance by some of the block’s members does not bode well. The next EU-LAC Summit in Chile in January 2013 should send a strong message against protectionism and also some forms of populism.

With Mexico with whom we also have regular bilateral Summits I have recently proposed to update and upgrade our Economic Partnership, Political Cooperation and Cooperation Agreement.

Last but not least, Africa, the continent with the fastest growth rate in the world, the youngest population, and the biggest changes. The figures are there to confirm it: over the past decade six of the world's ten fastest-growing countries were African; in eight of the past ten years, Africa has grown faster than Asia.

But it is not just the economy, also the societies are changing. This year, 23 multiparty elections should take place in the continent, not perfect elections, but some form of pluralism is gaining strength in Africa. Democracy is spreading. And we should be proud of our contribution to this progress through our political support to institutions such as the African Union, which has been taking the lead in upholding democracy and rule of law in the continent.

However, poverty is not receding at the pace of economic growth and some countries will not reach their MDGs objectives. This is why we have to keep our leadership of the global community on development assistance and to make efforts to turn it more effective. It is therefore crucial to step up our engagement with Africa, both bilaterally and through the joint partnership EU-Africa. We must remain supportive of democratic change and accountable governments, of development efforts and together seize existing economic opportunities. In this regard it is paramount to conclude the negotiations on the Economic Partnership Agreements.

This year I was already twice in Sub-Saharan Africa, Central and East, and I intend to visit West Africa next October, provided there is no more turbulence in the euro zone.

Dear colleagues,

I have just outlined to you how I see our geographical priorities. The substance that will fill them is provided by our horizontal priorities, the promotion of democracy, rule of law and human rights; a rules based multilateral system; cooperative and interdependent economic systems; free trade and open economies that abide by common rules; free and open societies; and cooperative action on the common goods, from climate protection to natural resources management.

All this can only be effectively pursued through a good articulation between the Commission services and the EEAS, working closely together with our Member States. Political relations without a substantive agenda are empty rhetoric; substantive priorities without a political framework and a diplomatic network are abstractions. It is precisely the combining of these two that gives us our strength and our capacity to act.

The challenges of this century are unprecedented in their scale and scope. We will be able to make progress only through common action both bilaterally and in multilateral fora; first and foremost the United Nations for peace and security issues, but also others such as the G20 and the OECD for economic and financial matters.

But I also sincerely believe that the effectiveness of our foreign policy also depends on a credible defence capability. Our capacity to act as a global security provider cannot become collateral damage of current economic hardship. Our Member States have to embrace more forcefully the pooling and sharing initiative launched by the High Representative/Vice-President. We need to make progress on a common defence policy. Also here the Commission can and is playing a role by deepening the internal market on defence and Europe's industrial base.

Ambassadors, colleagues

Let me conclude with a quote by Jean Monnet, a great inspiration for our work: "People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." This is a very timely quote.

That time is now: the European Union is engaged in a process of profound, necessary change in order to face up to the current crisis and to the challenges of the 21st century.

In order to maintain our European model and to retain our influence in our neighbourhood and at the global level we must increasingly work together and combine all our policies in a comprehensive and coherent manner.

The EEAS is an important element in this approach and is one of the best creations of the Lisbon Treaty. Myself, the European Commission, of which the High Representative is Vice-President, are fully committed to making the Service a success and to ensuring that we develop an external presence which is greater than the sum of its parts, a service which is underpinned by the weight of a unified European Union in so many policy areas. Precisely during those missions I have just mentioned, I was in contact with some of you and I could appreciate the kind of work that you are doing and I really want to congratulate you. I also saw the very good level of cooperation with our Member States and I think this is important and should be recognised. You are the builders or the founders of a new very important construction that is the External Action Service. We cannot expect from the beginning everything to be perfect, because we know that when we change habits it takes some time to see the results, but my personal assessment when I visited some of you in the delegations was that there was in fact very good progress in terms of the capacity of the European Union to be present in those areas.

We are all a part of that process of change and we all also have a role to play in explaining the process to our citizens and to the world at large. This is a joint endeavour.

Our founding fathers did not simply look inwards, they saw a united Europe as a force for good in the world, even in this time of crisis we must not lose sight of this vision.

Let me therefore thank you for your support, your work at the "sharp end", and for your dedication, which is allowing the most inspiring political project of all, the European Union, to increasingly play its role as a pivotal global actor and a force for good.

I thank you for your attention.