On 1 May 2004, ten new countries joined the European Union as fully-fledged members. From the Baltic to the Mediterranean, the eight Central European countries (Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary and Slovenia) and two Mediterranean island states (Cyprus and Malta) have increased the EU's population by more than 80 million from 370 million to over 450 million, expanded its territory to one –and a half million square miles and nearly doubled the number of official languages from 11 to 20.

The fact that the new members represent some 20 per cent of the existing EU population but only 5 per cent of the actual GDP of the EU15, also indicates the magnitude and challenging nature of this undertaking. With enlargement, the gap in income distribution within the EU25 has risen by about 20 per cent - twice as much as the increase when the EU admitted Greece, Spain and Portugal in the eighties. Much work has been done to prepare the new members for accession--the EU has already spent the current dollar value equivalent of two Marshall Plans on the accession process, with more "structural" funding planned to assist new members to improve their infrastructure and administrative capacities. Beyond the enlargement of 1 May 2004 to 25 members, negotiations have been concluded with Bulgaria and are continuing with Romania with a view to these countries joining in 2007. Accession negotiations with Croatia will start in 2005. On 6 October, the Commission also made a recommendation to the European Council on Turkey, coming to the conclusion that the progress made in its reform process will allow accession negotiations to start sometime next year. Now it is up to the EU Heads of State and Government, who will decide in December 2004 whether to start the negotiation process with Turkey next year.

These prospective further enlargements would entail many additional challenges. Let me highlight those in the agricultural sector. The ten new members which joined on 1 May have four million farms, as compared to nearly seven million in the old EU15, which means there is a total of eleven million farms in the EU25 . An EU27 including Romania and Bulgaria will add another five million, making a total of about sixteen million farms.

Similarly, the number of people working in the agricultural sector has grown considerably, from 4 per cent of the total working population in the EU15, to 5.5 per cent in the EU25, and is set to rise to 7.5 per cent in the EU27.

In tackling these challenges, financial support within the Common Agricultural Policy in the EU25 will remain at about the level it was for the EU15, while structural funding will be devoted to creating employment and sustainable economic development in rural areas.

The door to eventual membership is also open to the Balkan countries. For Croatia, the process has already started, and if Zaghreb manages to fully meet the political criteria, negotiations on accession will start in 2005. Macedonia could follow suit.

What will this enlargement mean for the future of Europe?

In a political context, EU enlargement is a historic step towards the long cherished goal of a Europe "whole, free, at peace and growing in prosperity". After generations in which internal conflict in Europe posed one of the most serious security threats to world peace, European integration by consent is a major strategic prize for Europe and the world. EU enlargement ensures that the democratic transition in Central and Eastern Europe is irreversible. Projecting security and political stability east and south, the EU serves not only its own security and geopolitical interests.

The accession of Cyprus to the EU and eventually Turkey is also contributing significantly to the easing and possible resolution of disputes in the Eastern Mediterranean, a long-standing security concern for Europe. We have seen some progress in Cyprus, bringing the possibility of a negotiated solution to a situation that since 1974 has often seemed intractable despite the many setbacks we have witnessed in the past.

As more and more countries seek closer and deeper relations with the EU, and the question is raised as to how far Europe's frontiers extend, full membership cannot be the only response on the menu. That is why we have developed a "European Neighbourhood" policy aimed at creating an area of stability and prosperity--a ring of friendly countries bordering the EU in the east and south --stretching from Morocco all the way along the Southern and Eastern Mediterranean up to Russia. With these countries we intend to share many things bar participation in our institutions , basing our relations on a community of values and interests. The ultimate, long-term aim is to extend to these countries the four freedoms on which the Union is based--free movement of goods, services, labour and capital--in giving tangible form to our commitment not to erect new barriers across Europe . In May, the Commission presented a set of practical proposals to further develop the substance of the European Neighbourhood Policy, also building on long-standing policies to consolidate what is nowadays referred to as the "Greater" or "Wider" Middle East.

At this stage, it is still too early to assess the outcome of enlargement and the future relationship between the EU and other powers and regions. Three scenarios concerning the future of the EU's external relations are currently being discussed in Europe. One scenario is that the enlarged EU will become, once again, more introvert, focusing mainly on the integration of new member states. This is based on the assumption that the integration of the ten new members will be a long and difficult process which will require our full attention. Another theory is that the EU, successfully enlarged and reformed, will concentrate its external efforts primarily on neighbourhood policies at its new borders and engage in another round of enlargement. A third scenario - the optimistic one - is that the future EU's economic and political weight will be such that it must become a global actor in all spheres.

Parallel to the enlargement process, the EU started a process aimed at addressing the logical concerns that the political institutions of an EU extended to 25 members would come to a grinding halt, and aimed at keeping the process of European integration resolutely on the path towards a "sui generis" federation of nation-states.

This long and sometimes controversial process came to a successful conclusion on 18 June 2004. On 29 October, the Heads of State and Government signed the Constitutional Treaty in Rome, the city where the European Union was founded in 1957.

In 2005, the Treaty's crucial ratification process is on the agenda in the individual member states. Some countries will hold referenda. There is hope but by no means a guaranty that they will all have a successful outcome.

After the European Parliament elections last June, it was planned to have a new European Commission in place by the beginning of November. Pressured by the EU Parliament, the future President of the Commission, José Manuel Barroso, was forced to make a few changes to his future Commission . Besides the continuing enlargement process and the ratification of the Constitutional Treaty, the new Commission will have to deal with major challenges in the security field (e.g. the handover of the NATO peacekeeping operation in Bosnia and Herzegovina to the EU) and the challenge of making Europe fit for globalization (e.g., by implementing the Lisbon Agenda).

Despite all the internal and external challenges and despite setbacks, Europe has always risen to the occasion in the past. I am convinced that the new Commission and Europe as a whole will do so again in 2005 and in the years to follow.