Ladies and Gentlemen,

I am happy to welcome you here today to Brussels.

Our common effort to open energy markets in Europe, and to liberalise a sector which has been State run for a century, have gained momentum over the past three years.

This has been the result of fruitful cooperation between the Member States, the European Commission and the European Parliament, recognising the value to their citizens and to industry of open and liberal markets.

We all realise that this opening and liberalisation is not homogeneous. It cannot be. Even within the European Union, we have different starting points. Our electricity and fuel demands are growing differently. The economic development that drives this demand is evolving differently.

Of course, energy infrastructure crosses borders, just as the natural resources which it is tapping are not governed by political boundaries.

Therefore, in helping the process of infrastructure development under conditions of increasing openness and liberalisation, we will need to look and plan regionally. We did this last year in the Balkans, and, we believe, it worked. But I will return to this experience later.

I would ask you first to look at energy policy and infrastructure development in the Baltic Sea Region at regional level. To understand the common purpose, and hence the common policy elements, and the common projects, which we can put into place for the benefit of all concerned.

The European Union is on the threshold of enlargement. Four countries around the Baltic Sea are members of the European Union, two of these, Sweden and Finland, are quite recent members. And four more countries have applied for membership – Estonia, Latvia, Lithuania and Poland for which the pre-accession process is underway.

We have seen several frameworks for political and economic co-operation in the region, the most recent of which is the Northern Dimension, put forward by the Prime Minister of Finland, Mr. Liiponen. This idea was well-received by the Commission. I was in Finland in January to give my support to this initiative, and at that time I put forward the idea of the Baltic Energy Task Force.

And this, is not to say that our relationship with the other countries in the Baltic Sea Region collaborative framework, Norway, Iceland and Russia, is less intense than with our members or our prospective members. On the contrary. The European Economic Area is in place and provides a framework for coherent relations with Norway and Iceland on many aspects of economic affairs. Also our relations with Russia are developing very positively indeed.

I was in Moscow two months ago for the meeting of G8 Energy Ministers, and could sense the strong will to develop economic relations between Russia and the EU.

Just two weeks ago in Brussels, the Round Table between Russian and EU industry across many commercial sectors led to the opening of doors. The Partnership and Co-operation and Agreement (PCA) promises to provide the political framework for our collaboration to become a broadly-based practical reality.

So, my SECOND invitation is to our partners in the Baltic Region and beyond, to strengthen already developing ties even more.

This is a major opportunity for us to create a strong and economically fruitful partnership of States in the region,. A partnership that will fuel economic growth to the benefit of all parties, by attracting long-term investors with the promise of long-term perspectives.

Our energy policy in the European Union, as in other single market sectors, raises the spirit of openness, and the will to break down barriers to global commerce and economic integration. It also raises the spirit of global environmental responsibility. These principles are an integral part of our energy acquis. In this way, our policy is part of the larger global picture, and is coherent with it.

You cannot open a newspaper today without seeing the word "Globalisation". And if you search the literature carefully, you will find strongly positive as well as strongly negative commentary. Globalisation is portrayed across a broad spectrum, from being the source of our economic strength, to an undesirable phenomeneon that is about to weaken our nation States.

Interaction between States and between peoples is without a doubt increasing across the world. Not only in our political world, but in our social and cultural linkages. Our economies, and our economic infrastructures - finance, utilities, services – are becoming increasingly intertwined.

Trade has been international for millenia. But now, the national encapsulation, which we have imposed on our economies during their rapid growth over the past two centuries, is being removed.

Our ability to technically interlink ourselves plays a crucial role in this process. Telecommunications and computers enable business processes to reach easily across borders, provide information more quickly, in larger volumes.

This can give a quick and quite accurate picture of a market to the trader, increasing his trading volumes. The investor sees financial markets move, sees enterprises weaken or strengthen, and can place new resources very rapidly.

Physical movement of people and goods becomes easier. People can relocate very flexibly, for management and co-ordination tasks, or for provision of services. Goods can be moved more quickly, movements can be organised to precise schedules (Just-In-Time logistics).

And energy and fuels are at the root of our economies. They have been internationally traded since the beginning of our industrial age. They can use these faster and larger volume trading paths, can use new methods of control for delivery and distribution, for flexible adjustment to demand, across borders.

Today, we are only seeing the beginnings of this process. The economic networking of our economies is just in its early stages, and we can expect it to become a major contributor to investment over the coming decades.

Of course, all this will only move as quickly as local economic conditions allow. Economic activity is not abstract, but is a socio-economic reality, rooted in the everyday activities of man.

Local and regional development, the will of the people, legal, fiscal and institutional conditions will be key factors in the speed of progress to globalisation, and will determine who moves first and fastest.

This is the context, and in a sense the mission of EU legislation, and of the Energy Charter. These agreements are made to remove the obstacles to cross-border trading, and to help, to stimulate, investments which interlink our infrastructures.

The agreements must be made with full respect for the interests of States, and at the same time with a will to extract the maximum mutual benefit, to seek and reach compromises.

But the logic of our efforts is not based entirely on market considerations, on the competitiveness of our industry, on open and liberal international markets. We must not forget our environmental responsibilities. This is the third pillar of the European Energy Policy.

We have built our industrial society very quickly over the past century, and we have, frankly, made a mess. These are environmental effects that we ourselves have caused. This is our globe, and we clearly have the responsibility to clean it up. And, we have the responsibility to stop similar pollution happening in the future.

This was the subject of Rio, and more recently of Kyoto. And the impact on the energy sector is, of course; substantial. Our sector is one of the major contributors to this situation, and we have work to do.

Measurement is the beginning. Replacing plant, cleaning up dirty regions, is the next step. Eastern Europe has a bad record in this respect. It is one factor which we will repeatedly stress.

Our environment too, is a global asset, and a global responsibility. Our seas carry oil-slicks, our winds carry nuclear fall-out many thousands of miles. We often do not know exactly where and how these effects will impact. So we must concentrate on prevention, rather than cure. This too, is part of the energy policy-maker's task.

In this spirit of global and of European policy, and of concrete regional needs, last year we created an Energy Task Force to look at the Balkan region. We made a list of desirable and feasible investment projects, and prioritised them. Today, we and our colleagues at the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank are using this prioritised list to justify funding proposals.

Of course, the Baltic region is not the Balkans. The state of the infrastructure is different. Energy policy in the Baltics is today more sophisticated.

Nevertheless, we hope we can use the experience gained in the Balkans to our mutual benefit. Of course, only YOU know what will really benefit your region. So we hope that this meeting will set the scope of subjects to be investigated in the course of the next year.

As always, the Commission will give you all the support you may need in the process of reaching agreement.

I very much hope that we can reach a similar concrete result as that reached for the Balkans. A specific investments list, establishing the main priorities and, if possible, integrate parts of the regional markets. But also further enrich this with the identification of those issues in energy policy where intensified collaboration would be of mutual benefit.

We are not starting from zero. There are many studies, and political processes already in place and working.

It seems logical to use these experiences. To leverage them to contribute to our common purpose. To style the Baltic Energy Task Force as a contributor to the existing political processes to create a mutually acceptable energy strategy for the region. This is the idea. I hope we can make it a reality and a strong contributor to the Baltic Region, in the short-, the mid-, AND the long-term.