We are very pleased to have Peter Ludlow with us again, for the third time in as many years. I look forward to his insightful analysis of last week’s European Council and its implications for the future direction of the EU.

We will follow the same procedure as we have done at previous EU summit mini-seminars. Before turning the floor over to Mr. Ludlow, I will make a few observations from the Norwegian perspective. After the two presentations, there will be time for questions and comments.

The crowning achievement of last week’s meeting clearly was the adoption of the “Treaty Establishing a Constitution for Europe”, to quote in full the slightly cumbersome title of the document.

Perhaps unavoidably, the media fairly consistently refer to the document adopted in Brussels four days ago as the EU Constitution, an emotive term if there ever was one, in many EU member states as well as in this country.

But in this case the term “constitution” is misleading. EU heads of state and government did not adopt a constitution, they adopted a constitutional treaty. This is an important distinction, legally and politically .

Whereas the former is a contract between a state and its citizens, the latter is an agreement between sovereign states. As such, it will have to be ratified over the next couple of years by all the 25 member states, about ten of which seem likely to hold referenda prior to formal ratification. As pointed out by many observers, selling the constitutional treaty to European electorates may turn out to be even more difficult than negotiating it.

No doubt, the notion of a “European superstate” will figure prominently in discussions leading up to national referenda, as it is also doing in the debate here in Norway. Here the issue has been how much power the Union could have before we would have to change the Norwegian constitution if we were to contemplate membership once again.

There is no official government position on this, of course. It would seem to me, however, that this is more of a political than a legal issue. If the membership issue were to be reopened, as it surely will, it would be up to parliament to determine whether accession could take place without changes to the constitution.

In any case, it seems to me the notion of a super-state is fundamentally a misleading one.

Admittedly, some new powers are conferred upon Brussels, notably in the areas of justice and interior affairs and defence. Furthermore, the EU will have a legal personality and a bill of rights; there will be an EU foreign minister and a permanent president of the European Council; the role of the European Parliament will be beefed up; and there will be a significant expansion of the EU’s power to make decisions by majority vote.

But on the other hand the treaty sets out areas that will remain firmly controlled by national governments, including tax, defence, and foreign policy; the EU foreign minister will have no power to make policy over the heads of national governments; and the role of the president of the European Council will be carefully circumscribed.

It is worth mentioning, furthermore, that national parliaments will be given a role in overseeing proposals for new EU legislation. In other words, national parliaments will become the guardians of the subsidiarity principle, which stipulates that decisions will not be taken at EU level unless strictly necessary in view of the nature of the issue at hand.

Moreover the new treaty more clearly than any treaty before it is saying that the powers of the EU derive from the member states. It is entirely consistent with this, incidentally, that the treaty codifies the right of member states to withdraw from the Union.

Hence, it seems to me, claims that the constitutional treaty is turning the EU into a federal superstate are extremely inaccurate. While the Union has undeniable supranational characteristics, it also has equally undeniable intergovernmental characteristics. In this sense, the Union is and will remain a unique hybrid, a mixed system. The new treaty will not change that.

It would also seem to me that the balance between large and small member states has essentially been preserved. Successive enlargements of the Union has increased the influence of the smaller member states, and weakened that of the larger, most populous ones. Germany in particular has been underrepresented, in the Council as well as in the European Parliament.

The introduction of the double majority voting principle in the new treaty goes some way towards correcting the situation. But the smaller member states retain significantly greater influence than their population sizes warrant. If Norway had been a member, we would have had approximately the same voting weight in the Council as under the Nice Treaty.

The requirement that a qualified majority must include at least 55%, or at least 15, of the member states means that, even in the unlikely event that the six big member states were to gang up on a particular issue, they would need the support of nine small ones in order to prevail.

Of course, in real life it practically never happens that the smaller member states stand as a group against the larger member states. Alliances between member states in the EU are continuously shifting. The important thing is not the size of countries, but whether they see eye to eye on the issue under consideration.

It is equally hard to see that the compromise reached on the composition of the European Commission will have a significant impact on the balance between small and big member states. After 2014 there will probably be eighteen members, but they will be selected on the basis of a system of equal rotation between the member states. In other words, Germany and Luxembourg will have equal representation.

As a country intimately linked to the EU across a broad range of areas of cooperation, Norway will of course be affected by the constitutional treaty and the enlargement to which it is linked. It is too early to tell just how deeply we will be affected, and in exactly what ways. But most of the implications will probably be indirect.

First, to the extent that the constitutional treaty will enable the Union to function effectively with ten new member states, that is in Norway’s interest too. If the EU is to remain a dynamic force for stability and prosperity, in our part of the world and in the broader international arena, it has to be capable of efficient and timely decision-making.

Second, and somewhat more specifically, EEA cooperation does not appear likely to be substantially affected by the new treaty, at least not directly. Our main interlocutor in the EEA context, the European Commission, seems neither to have been significantly weakened nor strengthened. On the one hand it has not been accorded new competences. On the other hand the new rules for qualified majority voting will probably make Council adoption of Commission proposals easier.

Third, with the new constitutional treaty the EEA Agreement will be more out of step with and different from the treaty basis of the EU. In this regard it has to be remembered that even though we have just successfully enlarged both the EU and the EEA, the EEA agreement has remained substantially unchanged since 1992.

Fourth, the new treaty will give new impetus to advancing EU co-operation in areas that are not covered or only partially covered by the EEA agreement and other existing co-operation arrangements. Moreover, our agreements are sectoral and based on the three pillars that will now largely disappear from the organisation of the EU.

Fifth, the constitutional treaty will further accelerate an already noticeable trend in the direction of cross-sectoral EU legislation and political initiatives. The Lisbon Strategy is a case in point. This may lead to increased uncertainty as to whether draft legislation is EEA relevant or not. In some cases this may prevent us from engaging the EU in areas of key concern.

We are likely to be confronted with the same sort of challenges in the field of Schengen co-operation. The new treaty entails the extension of EU activity in the field of justice and home affairs, of which Schengen is only one part.

And finally, the combined effect of enlargement and the adoption of the constitutional treaty is obviously that the Union is at the same time widening and deepening. In Brussels last week Croatia was formally accepted as a candidate country, along with Bulgaria and Romania. Negotiations with Turkey may commence in the aftermath of the December meeting of the European Council.

We have supported enlargement and, through the two new EEA financial instruments, will contribute significantly to its follow-up. And we applaud the commitment of the EU to bring the countries on its new periphery closer to it, on the basis of the European Neighbourhood Policy. New dividing lines must not be allowed to replace those that have been removed through enlargement.

Hence, together with the new member states and the European Commission, we are exploring whether and how the EEA financial mechanisms could be drawn upon to fund cross-border projects in support of and complementary to the EU’s new European Neighbourhood Policy.

Enlargement is good for the world, for Europe, and for Norway as a European country. But it does pose challenges to third countries such as ours. The enlarged Union will be an ever more dominant player on the European as well as the broader world scene. From an overall point of view, that is a good thing.

As a result, however, the impact of EU policies on Norwegian interests will continue to grow. At the same time we must realistically acknowledge that our influence upon EU decision-making, limited as it is, will be further reduced. Obviously, the EU is much more important for us than we are for the EU. And the EEA is much more important for us than it is for the EU.

This, of course, is not a new insight. But the problem is likely to be exacerbated in the next few years. To some extent we will be facing an inward-looking Union, the focus of which will largely be on follow-up to enlargement and ratification of the constitutional treaty. Hence, it will be increasingly difficult to make it pay attention to issues that are of importance to unproblematic third countries such as Norway, Liechtenstein, and Iceland.

What can we do about all this? Unfortunately, there is no magic formula.

As long as EU membership is not on the political agenda, and it won’t be until after next year’s parliamentary election, there is in my opinion no alternative to the Government’s current European policy. For the time being we have no choice but to make optimal use of the EEA treaty, the Schengen agreement and other co-operation arrangements to promote our interests.

This sounds easy, but it is not. We will have to work harder, better, and more. We will have to sharpen our performance when it comes to coordination between various parts of the government. On the diplomatic front the European Commission remains a key interlocutor. In addition we will have to further develop our bilateral contacts in all the 25 capitals, while at the same time working more closely and actively with the European Parliament.

As the Americans put it: We have our work cut out for us.