New Soft Powers of Europe

Today I'm relocated temporarily to Sandhamn in the outer part of the beutiful Stockholm archipelagoe.

It's the premier sailing center of the Baltic Sea, although the season hasn't really started.

The water is still on the somewhat cold side.

But I'm here for a couple of discussions on trends in the European economy.

The news of the day is the big merger between the network equipment operations of Nokia and Siemens, creating the third biggest company in this sector in the world. The biggest remains Ericsson, with recently merger Lucent/Alcatel coming in second.

The merger is part of the wave of restructuring that we are seeing as the competitive forces are increasing in the European and global economy. The pace of mergers and acquisitions in Europe has picked up very considerably this year.

We see the gradual emergence of a more integrated European economy, utilizing not the least the new possibilities offered by the new member states. And this renewed European economy is likely to be substantially more competitive on the global markets - in spite of the remaining structural rigidities in parts of the European economy.

Increasingly, it is Europe that is setting the regulatory standards for the global economy.

And this is logical taking into account not only the fact that the European Union single market is the world's single largest economy but even more by the fact that as a trading entity on the global markets the EU is larger than the United States and Japan taken together.

The soft powers of Europe will increasingly be demonstrated by the European Union setting the standards for the increasingly integrated global economy.

Brussels increasingly becomes a regulatory hub for the global economy - in interaction with the World Trade Organisation in Geneva and Washington.

You will see this when President Bush comes to Vienna on Wednesday for the summit between the US and the EU. Much will be on the agenda, but among the most important issues is the accelerating regulatory dialogue across the Atlantic.

The new soft powers of Europe - from the perspective of Sandhamn.