The European Research Institute is a tribute to you, Vice Chancellor, to Professor Michael Clarke, to Dr Anand Menon, its first Director, and to all here in Birmingham who had the imagination and confidence to take this important step. And of course I should have known that any enterprise with which David Hannay was involved would also reflect the enterprise, ingenuity and determination that he brings to public life.
The Institute is a tribute to lateral thinking. It reaches out across different disciplines and beyond the academic study of European Union institutions.
That kind of thinking is vital for Britain and for Europe in the twenty first century. The instability of the world today makes a successful Europe more necessary than ever. The aftermath of 11 September demonstrates the power and importance of nations working together not in isolation.
In politics, it is usually easy to see what worked well in the past. It is often easy to see what is working well here and now. But it is much harder to create something that will meet future needs.
Meeting future needs by definition demands a leap of imagination. It calls for hard-headed realism in assessing challenges that are 10 or 20 or 50 years down the line - and the courage to imagine the institutions that will meet them. For as Jean Monnet once said, "Nothing can be achieved without people, nothing endures without institutions."
The benefits delivered by the European Union and its forerunners have been enormous. The network of interdependence has helped countries across the continent develop stable and prosperous democracies. It makes it much harder than ever before in European history for any one country to become a rogue state. There has been lasting reconciliation between the bitterest of enemies, and two generations of peace.
Europe has enlarged to include new democracies and now is opening to the former Communist bloc. We have a common foreign and security policy which offers hope to troubled regions like the Balkans and Afghanistan.
We have enjoyed rising prosperity based on open markets and fair competition. Many poorer regions have grown and recovered through unprecedented levels of aid. Europe is in the forefront of world trade liberalisation and better help for developing countries. And now most of this market of 380 million people has a common currency.
Yet Europe now faces huge challenges as it integrates and expands: how to make the single currency work well; economic reform; development of a common defence policy; and fundamental reform of its institutions. Europe has strengths in abundance; but it also has weaknesses that should not be ignored.
The purpose of this speech is to argue: that Britain's future is inextricably linked with Europe; that to get the best out of it, we must make the most of our strength and influence within it; and that to do so, we must be whole-hearted, not half-hearted, partners in Europe. We have a vision for Europe - as a union of nations working more closely together, not a federal superstate submerging national identity. It is the right vision for Europe. Let us have the confidence to go out and win support for it.
It is a truism that today's European Union is the measure of the imagination and vision of founding fathers like Jean Monnet and Robert Schuman in the 1940s and 50s. Yet many British politicians surveying Europe then, in those almost unrecognisable days of powdered egg and Empire, failed the test.
They failed in part because Government, bogged down with events and the machinery of state, can perversely be a tough arena in which to act with vision. Compromises are usually easier than bold gestures. And yet without imagining the future and preparing for it, today's leaders quickly become yesterday's men, clutching at irrelevant assumptions and forgotten shibboleths.
The tragedy for British politics - for Britain - has been that politicians of both parties have consistently failed, not just in the 1950s but on up to the present day, to appreciate the emerging reality of European integration. And in doing so, they have failed Britain's interests.
Reversing that failure of imagination, mapping out a new vision for Europe - and Britain in Europe - is the challenge for this Institute. And it is the task of this Government.
Euroscepticism has what should, in light of events, be an embarrassingly long history. For some reason, no amount of getting it wrong will persuade the sceptics that they are wrong. But we should be clear sighted and honest with ourselves.
In 1950 we jibbed at the supra-national nature of the proposed Coal and Steel Community, the first institution of European unity. Herbert Morrison complained that "the Durham miners will never wear it" - although staying out didn't save their jobs in the 1960s and 70s.
So we said that it wouldn't happen. Then we said it wouldn't work. Then we said we didn't need it. But it did happen. And Britain was left behind.
In 1955, the founding six nations of the Common Market met in Sicily at Messina to discuss further integration. RA Butler, Britain's Chancellor of the Exchequer, dismissed the negotiations as "archaeological excavations". When it became clear that a free trade area was taking shape, Britain toyed with feeble alternative plans. Then in May 1956, the Venice conference took one and half hours to decide to form the Common Market - without us. We were invited but didn't bother to show up.
We said that it wouldn't happen. Then we said it wouldn't work. Then we said we didn't need it. But it did happen. And Britain was left behind.
We were left behind because it succeeded. The six founder members had created something which worked.
It worked in making friends out of old enemies - precisely the goal set out in the Schuman declaration, to make war "not merely unthinkable but materially impossible".
It worked by making them richer.
It worked by making them a force to be reckoned with in the world.
We thus had to recognise, even in the early 1960s, that the Common Market had worked. And that "a thousand years of history" were not enough. Because yesterday's heritage did not guarantee today's influence or tomorrow's prosperity.
So, several years too late, we applied to join. It was a pretty half-hearted affair, and General de Gaulle vetoed our membership. A lot of British politicians were very relieved.
Finally in 1971 we agreed to join, becoming members at the start of 1973. Already, politicians across both major parties wanted to pull out. They still said that it wouldn't work, and that we didn't need it. We held a referendum. The British people overwhelmingly voted to stay in.
So eventually, in the mid-1970s, we were definitively members of a club whose rules had already been set some 20 years earlier. Some of the rules we got changed as we negotiated to join. Some we got changed later, like the British budget rebate. Some we are seeking to change further and faster, like the Common Agricultural Policy.
Once in, we wanted the Single Market so that we could sell our goods and services freely across Europe. But we jibbed at changing the voting rules to make it happen. Lady Thatcher now claims she was sold a pup by clever officials, like David Hannay, your Pro- Chancellor. In fact, however reluctantly, she took the right decision. Without more voting in the Council, without more single European rules in place of conflicting national ones, there would have been no Single Market.
In 1989 we joined the Exchange Rate Mechanism too late and for the wrong reasons, the timing political rather than based on assessing the economics coolly and rationally.
Then in 1991 Britain signed up to the Maastricht Treaty, leading to the formation of the European Union. All our energy was devoted to securing the opt-outs on the single currency and the Social Chapter.
Yet in fact our social chapter opt-out simply meant we had no say in the balance between protecting employees and ensuring that companies maintained the flexibility to grow and create jobs.
Sweden has no opt-out for the Euro but is still in precisely the same position as Britain today. We vacated a decisive role in shaping the single currency, its timing, the Maastricht convergence criteria and the European Central Bank.
Even after Maastricht, people constantly insisted the Euro would never happen. But it has and the notes and coins will be the actual physical currency of 12 out of the 15 EU nations in six weeks' time.
What does this history mean? Not that we go along meekly with whatever the rest of Europe decides. On the contrary, it shows we must get in on the ground floor of decision-making so that the decisions are ones we are happy with. That is why when I saw the debate over Europe's common defence policy developing, I decided Britain should not hang back but step up front and shape it, in partnership with France. The result will be a policy fully consistent with NATO, with the right process of taking decisions and hopefully with a significant increase in European defence capabilities which is urgently needed.
We will not have influence if we only ever see Europe as in opposition to Britain and become back-markers for further co-operation, always arguing thus far but no further. In truth in some areas Europe should do more - in the single market, in tackling organised crime and abuses of immigration, in foreign and security policy - whereas in other areas it could do less, like the CAP; and regulation.
The history of our engagement with Europe is one of opportunities missed in the name of illusions - and Britain suffering as a result.
The greatest disservice any British leader could do to the British people today is to seek to perpetuate those illusions. There are those who would do so. But who can credit the international vision of those who offer the alternative of what they still call, bizarrely, the "New" Commonwealth? Who on earth can really believe fantasies about Britain becoming a "nuclear Switzerland" or the "Hong Kong of the Channel"?
If this dismal history teaches us one clear lesson, it is this: the EU has succeeded and will succeed.
Does this mean that we walk untroubled and uncritical into whatever Europe offers? Of course not: it is precisely because we both need Europe, and Europe needs reform and change, that Britain's participation in Europe is so essential. To proclaim Europe's success and advocate our part in it, is not to deny Europe's requirement for change, but to give ourselves the opportunity to help shape it.
The argument is simple. We are part of Europe. It affects us directly and deeply. Therefore we should exercise leadership in order to change Europe in the direction we want.
The reform agenda in Europe is clear and urgent. It is about making Europe more effective. It is about enabling Europe to achieve its full potential - which is in Britain's overwhelming national interest.
Europe is in Britain's economic interest. Nearly sixty per cent of British trade is with the rest of Europe. Our membership of the EU is crucial to attracting foreign direct investment to the UK - most of the companies investing need a viable EU export market.
And any country which stays outside the EU but wants access to its markets, such as Norway, still has to accept all the single market legislation, the decisions of the European Commission and the rulings of the European Court of Justice. Britain has no economic future outside Europe.
As for the Euro, the conclusion of this argument is not that we go in regardless of the economic conditions. It is that if the economic tests are met, political or constitutional barriers should not prevent us joining. And of course the final decision rests with the people in a referendum.
Inside Europe, we must push for economic reform and modernisation to achieve the goal we have set ourselves of full employment in Europe by 2010. Europe is still not driving forward this reform process. So we need to ensure that the EU recommits to the path of economic reform at the summit in Barcelona next March - to strengthen transport networks, liberalise electricity and gas markets, unify financial markets, develop more flexible labour markets, and improve training and education. This is critical for Europe's future success.
Europe is in Britain's environmental interest. We need common environmental standards, not just to guarantee cleaner air and water for all, but to ensure that all countries honour their responsibilities equally.
Meanwhile on crime, especially organised crime, there is simply no way that we can handle the international nature of these challenges in the twenty first century on our own. We can tackle issues such as organised crime and illegal immigration only through policies shared on a Union-wide basis
Those challenges demand reform. We cannot allow 21stcentury criminals the benefit of 19th century national police and justice systems. And the definition of a refugee problem in Adenauer's Germany was quite different to what it is today, with hundreds of thousands of migrants moving across continents. We need policies that recognise the magnitude of that shift. For example, we need common asylum rules that are enforced in an equal and fair way across all EU countries. And our national interest demands an effectively policed common EU border, especially after enlargement shifts Europe's external border eastward.
And Europe is in Britain's international security interest. The events of 11September showed the vulnerability of our democratic way of life. No single country, even one as powerful as the United States, can defend those democratic values alone.
The USA will continue to play a vital role, and the present crisis has proven that our relationship with the Americans is as strong as ever. Indeed the UK has a powerful role to play as a bridge between USA and Europe - we are economically strong and politically influential in both. Britain's friendship with the United States is an asset for our European partners. We want to be fully engaged in a united Europe, working with an internationalist USA.
But make no mistake: a strong, united Europe that can stand on its own two feet is what American statesmen from Dean Acheson to George Bush have also wanted. As US Secretary of State Colin Powell said a couple of months ago, "A strong, united Europe is good, indeed essential for the United States, for Europe and for the world". Therefore a more effective common foreign and security policy, together with making a success of the European defence initiative, is vital.
At the same time we recognise the need for internal reform to tackle the bureaucracy that still snarls up the EU's institutions. We want to see greater transparency and accountability. That is in the interests of all the EU's citizens, not just ours.
Next month the Laeken European Council will launch the debate on the "future of Europe". It is not difficult to identify what is wrong at present. Decision making on key issues is too slow and secretive. Follow-through of European Council decisions can be patchy. In developing a common foreign and security policy, responsibilities are too confused and overlapping. Enlargement will sharpen these problems.
So we need to find new mechanisms that provide for better co-ordination and continuity - at the same time respecting the rights of small as well as big countries. We have to provide proper guarantees against centralisation. That means applying to all European-level actions the test of whether they really "add value". It means putting new mechanisms in place to enforce the principle of subsidiarity, as a bulwark against unnecessary interference in what ought properly to be national, regional or local decisions. That is why I remain attracted to ways of strengthening national Parliamentary control over excess bureaucracy, over-regulation and unnecessarily centralising proposals.
Laeken will finalise the details of the Convention that will take forward the Future of Europe debate over next eighteen months. The Convention is an innovative attempt to involve parliamentarians as well as governments in a wide-ranging debate about Europe's constitutional future. It is a debate from which Britain has nothing to fear.
So Europe is indisputably in Britain's national interest, and reform indisputably in Europe's interests. Yet today we still hear the same misinformed arguments as we heard in 1950, 1957, 1975 and 1991.
Above all, those opposed to Britain's role in Europe argue about sovereignty: that the gains we have made are outweighed by the fact that in many areas national sovereignty is no longer absolute.
My answer is this: I see sovereignty not merely as the ability of a single country to say no, but as the power to maximise our national strength and capacity in business, trade, foreign policy, defence and the fight against crime.
Sovereignty has to be deployed for national advantage. When we isolated ourselves in the past, we squandered our sovereignty - leaving us sole masters of a shrinking sphere of influence.
It is true that British governments have shared sovereignty over some decisions. But we have retained control over our immigration policy and national border controls, our tax, defence and foreign policies - and will continue to do so.
And in other areas where we have agreed to take decisions together, we have gained through European laws that give British businesses as much right to sell our goods and services in France or Italy as French or Italian competitors. That give people the same high standards of environmental protection wherever they live. Britain gains from sharing sovereignty so that Europe has a strong, single voice in trade negotiations such as those just started in Doha.
I have spoken today about the damage done to British interests by our history of missed opportunities in Europe.
Back in 1950, after the Schuman declaration, Jean Monnet discussed British membership of the European Coal and Steel Community with Sir Stafford Cripps, the Chancellor of the Exchequer. Monnet told him: "My dear friend, I hope with all my heart that you will join from the start. But if you don't, then we will go ahead without you; and because you are realists you'll adjust to the facts when you see that we've succeeded."
It is time for us to "adjust to the facts". Britain's future is in Europe.
I want a sovereignty rooted in democratic consent. Rooted in being, in this century, not just a national power in shifting alliances, but a great European power in a lasting Union. A Union of nations, of democracies with shared goals, delivering shared peace, stability and prosperity for our citizens.
Ours will be a sovereignty rooted in being part not of a European superstate, but of a proud nation, proud of its own identity and of its alliance in Europe.
That is the real opportunity for our country. I am delighted that this university will be playing a prominent part in helping to realise it. And I pledge too that I will not rest in my efforts to ensure a stronger Britain is a stronger Europe in the 21st Century.