It is a pleasure to be here today at the Centre for European Policy Studies and present my vision of the Swedish Presidency, which started on 1 July. For some reason it seems as if nobody envies us this task. And it is true that our Presidency will take place under very special circumstances. A new European Parliament taking office, a new European Commission about to be appointed and uncertainty about the future of the Lisbon Treaty.

We face ever more alarming reports about climate change. And on top of that, we are in the midst of the worst financial and economic crisis since the 1930s, which may soon become an employment crisis. I recently read that we are about to face a water crisis too and I thought, why not - let’s add that one to the list as well.

So Europe is facing some difficult challenges. Today, I want to talk to you about these challenges and how to address them, firm in the belief that every challenge is an opportunity. And that is what the Swedish Presidency is about - taking on the challenge.

Banking Crisis

We need to restore functioning financial markets and confidence in them. Families and companies must once again be able to borrow money on reasonable terms. I believe that we need to strengthen the supervisory system for the financial markets to make sure that a similar crisis does not happen in the future. To be frank, our citizens simply won’t accept huge bonuses being handed out to corporate managers when results are negative, while they are left on their own at the end of the day when it’s time to pay the bill.

The incentive systems must not reward irresponsible behaviour. In this respect the de Larosière report and subsequent Commission proposal are a good basis for our work. And in the autumn we expect to be dealing with legislative proposals and to reach a political agreement.

The current downturn has put significant pressure on national budgets, creating increasing deficits and growing debts. To achieve sustainable growth we need to agree a common exit strategy to return to the rules of the Stability and Growth Pact.

For example, the problem with the car industry lies in the overproduction of cars that nobody wants to buy. Well, I must tell you: when a ship is sinking my main aim is to save the sailors - not the ship.

Copenhagen Summit

This brings me to our next important priority - combating climate change and reaching an international climate agreement in Copenhagen to achieve this. As I stand here today, the Greenland and West Antarctic ice sheets continue to melt and sea levels continue to rise. We are experiencing more extreme weather conditions, with severe storms and droughts. And while this is happening, emission levels have not even started to decline.

On the contrary according to the IPCC, between 1970 and 2004, greenhouse gas emissions increased by 70 percent. There is no more time to lose, if we do not want our children to suffer even more dramatic consequences of climate change.

Over the last year I have often been told that, in the middle of deep economic crisis, countries cannot afford to spend money on “green dreams”. I would argue the contrary. They cannot afford to keep their current costly energy sources.

Studies by McKinsey show the same thing. Global greenhouse gas emissions could be cut by about 40 percent by 2030 at a cost of less than half a percent of global GDP. I will say it again: the cost of inaction is far higher than the cost of action.

I say this knowing that, at the same time, many developing countries will have difficulties making the initial investments. The EU has therefore stated its readiness to take on its fair share in the framework of an agreement in Copenhagen. The Swedish Presidency - and I personally - will do our utmost to continue to work out the details of such financing arrangements as well as ways of transferring technology, to enable an agreement on global emissions reductions in Copenhagen.

We know that substantial mitigation efforts are needed in all countries if we are to keep the increase in global average temperature below two degrees compared to pre-industrial levels. Developed countries must take the lead in reducing emissions and reach a mid-term target of cutting emissions by 25 to 40 percent.

EU Efforts

And the EU has done its homework. We have promised to cut emissions by 30 percent by 2020 in the framework of an international agreement. The energy and climate package agreed last December is the most ambitious mitigation policy the world has ever seen.We now need to initiate discussions on how economic instruments can best be utilised in climate policy. I believe tools such as a carbon tax and emissions trading, if designed well, can play a key role in addressing climate problems.

But other developed countries must now follow. If they don’t we can hardly expect the developing countries to contribute according to their own responsibilities and capabilities. I’m pleased to say that we are receiving encouraging signals from President Obama and his administration, who have profoundly improved the discussions on this issue.

Lisbon Treaty

Let me mention something that I know is of great interest to us all - the Lisbon Treaty. To be honest, when I travel around Sweden or meet citizens of other European countries, interest in this area is not overwhelming. People simply expect the Brussels bureaucracy to function well, and it’s our job to make it happen.

That said, I do believe that it is very important for the Lisbon Treaty to enter into force as soon as possible, so that a Union of 27, and soon more, can function in an effective and smooth fashion. The Swedish Presidency is ready to handle all the preparatory work needed to make this possible, but of course this is subject to the Treaty being ratified by all Member States.

Let me finish with one important observation. This year is also a year of celebration and remembrance of European cooperation, integration, democracy and freedom.

In 1949 the Council of Europe was founded: a first step towards deepened European cooperation. In 1979 the first direct elections to the European Parliament were held. And in 1989 we saw the fall of the Berlin Wall and the birth of a new and free Europe.

In every respect this shows us a Europe that never stands still. Over almost 70 years this part of the world has sought ways of establishing institutions of cooperation and integration. It has torn down the obstacles and symbols that have denied people democracy and freedom. Always moving forward and Taking on the challenges.

The citizens of Europe want us to take notice of them and listen to their needs. They want us to take on the challenges of today and at the same time keep our eyes on the future.

But we need to improve on involving them in the democratic processes on the European level, a lesson learned from the results in the European elections last Sunday. If we listen to them and act swiftly on their needs, we cannot go wrong.”