This year's NATO Workshop is the first at which I am able to speak in my role as Secretary General, although the dynamism and creativity of the Workshops are well known. While it is rare that politicians, officials, and business people come together informally to discuss and exchange views on the topics we are considering, when they do the results are always valuable. Therefore, I am grateful for the opportunity to address such a wide and influential group as the Workshop, and I hope my remarks are able to spark its discussions.

I believe that NATO is entering one of the most crucial periods of its history. I say this in a positive sense. Four years ago, we agreed on a new Strategic Concept for our forces and set out a policy of cooperation and partnership with our new friends in Central and Eastern Europe. We can see now how far-sighted and far-reaching these decisions were. Today, we are reaping what we sowed then. It is a fine harvest.

I would like to direct my remarks to three key issues: NATO's relations with Partnership for Peace (PFP) Partners; the European security and defense identity; and the current situation in the former Yugoslavia. These topics will define, I believe, the character of the European security environment into the next century.

When I assumed office last year, I said that NATO's first task should be to extend stability eastward. Our main instrument for doing this is our practical cooperation programs with our Partners. In the past four years, we have seen a growing intensification of NATO's outreach. We started with dialogue, moved into cooperation through the North Atlantic Cooperation Council and Partnership for Peace, and are now heading for enlargement.

Partnership for Peace in particular has given new dynamism and direction to our cooperation. The program, which includes 26 Partners of widely varying security backgrounds and aims, has already become a milestone in the realization of our ambition of a stable and cooperative Europe. As such, it is truly a strategic initiative.

As we move toward enlarging the Alliance, the importance of PFP will increase, not decrease, because the program is both a means to prepare countries to join NATO and a strong link to the Alliance for those countries not likely to join NATO soon. The fact that Russia has agreed to go forward with its Individual Partnership Program confirms the long-term importance of PFP for the development of NATO's relations with Russia as well.

We want Russia to develop in a positive, democratic way, even though this may take a long time and involve great difficulties. A democratic Russia with a developed free market economy will be a significant plus for European security. As part of the legacy of the Cold War, there is still some distrust in Russia of the West, distrust that could be exploited by factions that wish to recreate Russia's authoritarian and assertive past. We believe that the closer our consultation and cooperation with Russia become--and I am convinced they will become closer--the less room there will be for mistrust and misunderstanding.

When we agreed with Russia recently to move ahead with PFP, we also agreed to implement an ambitious program beyond PFP. In addition, NATO Foreign Ministers offered to initiate a dialogue on the future direction that our relationship should take. We hope to achieve by the end of this year a political framework for NATO-Russia relations, elaborating basic principles for security cooperation as well as for the development of mutual political consultations.

We are also moving steadily towards another phase in NATO's relationship with Partners: the admission of new members. Last December we began a study to determine how NATO will enlarge and to explain why it should enlarge. This study will be completed as scheduled this autumn. Partners will be briefed on the conclusions and respond before NATO Foreign Ministers meet in Brussels in December.

Our objective is to enhance security for all countries in Europe, without creating new dividing lines. As a result, admission of new members will come at the end of an open, gradual, and transparent process. No new members have yet been designated: much work, both by Allies and Partners, must be done before we get to that stage. When it does happen, NATO's enlargement will not represent an isolated development, but be part of a wider context in which Partnership for Peace is a permanent fixture in European security cooperation, and in which NATO itself continues to change and adapt.

NATO's enlargement will also complement the enlargement of the European Union (EU). These parallel enlargement processes will contribute significantly to extending security and stability to the new democracies in Central and Eastern Europe. For the first time in their history, these countries can look forward to being part of functioning, successful political, economic, and security systems. This participation will give them the confidence and incentive needed to complete their transition to modern, economically and politically dynamic societies under the rule of law.

NATO has already played an indispensable role in the European integration process. For over four decades, the organization has provided a protective umbrella for a Western Europe striving towards economic and, eventually, political union.

Today, the European Union is a reality, and now is in the process of developing a distinct common foreign and security policy. Our goal is to continue to foster Europe's integration, not by protecting, as we did, the EU's early growth, but by furthering its development so there is an efficient use of resources and preservation of the transatlantic link. That is why the NATO Summit leaders in January 1994 supported the emergence of a European security and defense identity.

NATO is more than an interested spectator in this process. A strong European defense pillar allows for a more appropriate sharing of burdens across the Atlantic. We are in the process of examining how our structures should be changed to reflect the reality of a more ambitious Europe concerning its security. At the NATO Summit, our leaders offered to make NATO assets available through the Western European Union (WEU). And, together with the WEU, we are working on the concept of Combined Joint Task Forces that could be used for crisis response by NATO or the WEU. Of course, any European decision to act drawing on Alliance assets would be subject to decisions within the Alliance. In this way, we would retain the effective transatlantic framework that has secured our interests so successfully and strengthen the European pillar of the Alliance.

I believe that today we are entering a new phase in the conflict in this area. I hesitate to use the phrase "turning point" because, as yet, we cannot see any indication that those fighting on the ground, particularly the Bosnian Serbs, see any point in making peace. Peace will come only when the prospective gains from a peace settlement and the horrendous costs of continued fighting convince the conflicting parties that war is not a viable option. I do not think we have reached that point yet. Nevertheless, with the large-scale taking of hostages and the U.N. Rapid Reaction Force, the nature of the U.N. presence in the area is changing. Faced with a choice of withdrawal or continuation, countries that have contributed troops have decided to stay and to reinforce U.N. Protection Forces (UNPROFOR), always under the U.N. mandate. Once U.N. peace forces are capable of defending themselves and demonstrate that they cannot be manipulated or intimidated, the Bosnian Serbs will realize, we hope, the hopelessness and futility of their position. Then they will, as the Americans say, stop calling the shots.

When the Bosnian Serbs took U.N. hostages and shot at NATO aircraft, they grossly miscalculated. I hope that they are beginning to realize this and to get a glimpse of their own weakness. By persisting in their mission, the U.N. will provide a powerful signal to the Bosnian Serbs and the other warring parties that they have no option except to resume peace negotiations on the basis of the Contact Group plan. Recognition of Bosnia-Herzegovina by Serbia will further isolate the Bosnian Serbs. In our policy towards Bosnia, all arguments point to persistence, rather than withdrawal.

While we are now reaping the harvest we sowed a few years ago, we are not forgetting to plant seeds for a future harvest. We have just opened a dialogue with several Mediterranean countries to exchange ideas and perspectives. This is likely to grow in significance. We are also stepping up our work on nonproliferation, both in the political and defense spheres. The Alliance will remain one that can defend its members against threats to their security. Careful preparation now will save us from intimidation later.

None of this would be possible, of course, without a strong transatlantic link. It is clear that North American commitment to Europe is as necessary today as ever before. In economic and cultural terms, the U.S. and Canada are inextricably linked with Europe. Under NATO's umbrella, Western Europe and North America have developed a level of interdependence and mutual support that is unparalleled elsewhere in the world. With the opening up of Central and Eastern Europe, U.S. involvement in Europe continues to grow.

Whatever may develop in the years to come, there is one certainty: NATO will remain the main institutional anchor for a United States presence in and a commitment to Europe. The Alliance is an irreplaceable forum for transatlantic consultations; its unique combination of political and military experience and expertise means that it will remain the prime security forum of the Allies. What counts in the final analysis is that North Americans and Europeans continue to need each other and see immense benefit in their strong transatlantic link, which is embodied in the Alliance.

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