Mr President, the war with Iraq inevitably overshadowed the Council's important economic reform agenda. It is only natural that, at such a time, economic issues should take second place to matters of life and death. However, given the negative economic impact that the conflict could have on the Union's economy, we must not take our eyes off the ball and let the economic reforms that are needed to revitalise our economy fall further behind. So before turning to the conflict with Iraq, I will say a few words about economic reform. The truth is that the process of economic reform is running into the sand; with the European Union set to enlarge to 25 countries, we will have to run just to stand still. I should like to cite just three examples. First, at 1.9% of GDP, our investment in research and development is well below levels in the USA and Japan, and with only two of the accession countries spending more than 1% of GDP on research and development, we will be hard pressed to reach the 3% Lisbon target by 2010. My second example is taken from the Barcelona Council, where Europe's leaders committed themselves to cutting the percentage of single market laws not yet implemented to less than 1.5% – instead, the proportion rose last year to over 2%. As the incoming Member States will naturally face some teething problems in implementing law in the early years, this implementation deficit is in danger of growing further if we do not redouble our efforts. Progress will certainly not be achieved if others emulate the tactics used by Mr Berlusconi in his shameful attempt to defend illegal milk subsidies at the expense of a deal on the taxation of savings. That hardly augurs well for the Italian presidency. And third: raising levels of employment. It is impressive that we managed to create half a million jobs last year despite the economic slowdown. But the scale of the task ahead becomes clear when we note that unemployment in the EU as a whole rose last year to nearly 8%. On the issue of jobs, the Council appears to have followed the age-old practice: ‘If in doubt, create a task force’. I wish Wim Kok well in his work, but it is hard to see what answers he can come up with which are better than the tried and trusted recipe of reducing the burden of taxes on labour and increasing market flexibility. On Iraq, I welcome the forward-looking nature of the European Council conclusions, brokered by the President-in-Office, and their focus on humanitarian assistance, on rebuilding Iraq and the central role to be played in this by the United Nations. Humanitarian aid must get through. We see from the situation in Basra just how important that is. The horror transmitted through our television screens shows us just how necessary it is to get our relief agencies in and working. I welcome Mr Prodi's proposal for EUR 3 million of immediate humanitarian aid through the Red Cross. Liberal Democrats will support the rapid approval by our House of your request for the release of a further EUR 70 million from the emergency budget reserve. The EU has been damaged by the divisions of recent weeks. This could presage a new effort to heal the political wounds, but it is hard not to agree with the Luxembourg Prime Minister when he says that problems cannot be resolved unless they are discussed. I agree with the Council that we need to strengthen transatlantic relations. Our dialogue must be extended to cover reform of the United Nations and the role of international law, but the United States must accept that nothing durable can be established without institutions and rules. My group also welcomes Belgium's proposal for a ministerial meeting on North Korea. If the situation in Iraq had been discussed at the Seville Summit – as Mr Verhofstadt proposed – we might not be at sixes and sevens today. We must wait and see whether 2003 is an annus mirabilis or an annus horribilis for the European Union, but since we are now in the Year of the Goat, I would congratulate the Greek Presidency on its tenacity, persistence and determination in pushing through its agenda. (Applause)

Political group: ELDR