It gives me great pleasure to speak to this distinguished audience. Accurate and innovative analyses of international relations are needed today as the world faces new security challenges. We have to get rid of old threat perceptions and build a new Europe for new generations. The Institute of European Affairs has made an excellent contribution in this field. I wish you every success in your work.

The theme of my speech is: the small states of the European union: challenges and opportunities. I want to emphasise that under the provisions of the Treaty of European Union small members of the Union are on an equal footing with the larger members. Yet Finland and Ireland share common interests which call for close cooperation.

Let me start by expressing the gratitude of Finland to the Government and people of Ireland for the support we have received both during the accession negotiations and in our first sixteen months as a member of the Union.

Throughout history, small states have been regarded as doomed from the moment of their birth. In 1940, Soviet foreign minister Molotov told his Lithuanian counterpart: "You have to be a realist and grasp that the time for small states is over." The Soviet Union no longer exists, whereas Lithuania has regained its independence. Here history is vindicating justice, not brutal power.

Today, geoeconomics is growing in importance relative to geopolitics and cooperation is superseding power politics.

Common values, like social responsibility, the rule of law and the market economy are unifying states. This provides a more just and peaceful international environment in particular for small states.

The end of the Cold War strengthened security in Europe. Prospects for cooperation are increasing, although we have experienced painful military conflicts in the former Yugoslavia and in the Caucasus.

We have to cooperate in addressing new kind of security threats ranging from drug trafficking to environmental hazards. Cooperation within the Union is not enough, we have to work with countries all over the world. I commend the Irish Government for giving such a high priority to the drug problem in its programme for the Union Presidency.

It may sound ironic that while Europe after the era of division is not facing the threat of a major war, it is under a growing risk of a radioactive fallout. Possible sources of this are dangerous nuclear reactors in the former Soviet Union. Some of them are in Finland's vicinity. The international community and in particular the European Union, face enormous economic challenges if we are to be spared new nuclear catastrophes like Chernobyl. Deepening cooperation especially with Russia and Ukraine, is indispensable.

Economic and political integration in Europe was created as a tool to eradicate the root causes of war on our conflict-ridden continent. This cause has not lost its importance. Far from it! The basis for a stable peace results from economic prosperity and justice under democracy and the rule of the law. Further enlargement of the EU would project stability and security throughout the continent.

Contrary to what is often argued, I believe that the price of enlargement will not be unbearable for the Union and its members.

Finland has been part of a cultural and political Europe throughout its history. Unfortunately we have also suffered heavily from power politics which dominated relations between states for centuries. Great powers dictated the rules, small states had to adapt, either by joining one of the powers or by choosing isolation. During the Cold War era Finland adapted by joining Western Europe economically, politically and culturally, whilst taking into account the security interests of her Eastern neighbour. Neutrality and economic integration safeguarded our international position.

In the new Europe membership of the European Union was a natural choice for us.

With 16 months of membership behind us, our international position is more stable than ever. My country is adapting itself to Union membership, which has made it easier to promote structural changes in our economy. Agriculture is undergoing a difficult progress of structural adjustment. For consumers, membership has already paid off well: food prices have fallen by about 10 per cent. Finland aims to meet the criteria for European Economic and Monetary Union.

In the field of foreign and security policy the changes in Europe have made it relatively easy for us to adjust to Union membership. There is no need for Cold War neutrality any more. Instead Finland pursues a foreign and security policy based on independent defence, military non-alignment and working actively for cooperative security arrangements. Our Union membership is an increasingly important instrument of this policy.

Every member state of the Union is not only European, but also has its own historical and geographical context. Consequently, stability in Northern Europe and the Baltic Sea region is vital for Finland's security.

The Baltic States, Estonia, Latvia and Lithuania are establishing normal neighbourly relations with Russia. That is not easy, because history casts its dark shadow over these relations. It is of great importance that the European Union has introduced strategies and initiatives intended to support transition and build stability both in the Baltic Sea region and with Russia. The northern dimension of the European Union that is emerging should prove equal to the Mediterranean dimension.

The intergovernmental conference (IGC) has the task of reviewing the basic treaties. Institutional reforms are justified if they improve the efficiency of the Union and retain equality between the member states.

The basic problem of the EU is not the existence of self-confident small states but rather that too many of its members, and I refer in particular to larger ones, do not consider the Union sufficiently capable of protecting and advancing their interests.

We have to develop the Union's common foreign and security policy in a dynamic and comprehensive manner. The Union must be strong in preventing conflicts, in managing crises and in restoring peace.

We have, together with Sweden, presented a concrete proposal in this area for the consideration of our Union partners at the IGC.

According to our proposal the Union must be in a position to condact humanitarian and rescue operations and to perform peacekeeping and crisis-management tasks. These activities should be based on a mandate from either the United Nations or the Organization for Security and Cooperation in Europe. For the Union to be able to use military means of crisis management there must be a closer linkage with the Western European Union. All Union members should have the opportunity to participate, on a basis of equality, in decision-making on and implementation of operations conducted by the WEU on the EU's behalf.

We could also strengthen the Union's external role in a pragmatic manner. The Presidency and the troika should be able to exploit the political assets and specific regional expertise of other partners as well. We have already seen some fruitful examples of this, and we are ready to contribute ourselves.

We see NATO adapting to the changing conditions in Europe. From Finland's point of view, NATO's role in the field of conflict management and peacekeeping is important. Regarding NATO enlargement, it is of crucial importance that if this is done it must take place in a way that increases security in Europe.

As an integral part of NATO's changing role, the Partnership for Peace Programme has emerged as a workable innovation. It also made the NATO-led IFOR operation possible in the former Yugoslavia. Cold War adversaries are now cooperating in the field of military security, with great success. I believe that PFP and IFOR constitute, if further developed and commonly accepted, a most promising model for common security tasks in Europe.

Europe needs ideals. Our continent should be based on civic societies transcending national borders and reaching beyond the boundaries of the European Union.

This will eliminate the difference between small and larger states. Even when that happens, however, the distinctive national features that enrich our lives will remain.

In the 19th century, when Finland was a Grand Duchy within the Russian Empire, the Finnish statesman Johan Wilhelm Snellman, outlined, in the spirit of Kant and Hegel, a vision of a world community where also the voice of small states would be heard. Snellman argued that "Nations do not exist just for themselves, but for humankind as a whole". His vision has come closer to realisation as a result of the emergence of both a unified Europe and a cooperative world system. This is a world which is better place to live for countries like Finland and Ireland.