---

Thank you very much. I am grateful to Ambassador Ischinger for inviting me to be here with you, and to Horst Teltschik for help to make my visit possible.I had hoped to be present last year for Dr. Teltschik’s farewell as conference chairman, so I am doubly happy to see him here this year.

With the financial crisis that began a year ago, but which really began to hit every country – rich and poor, east and west, north and south – only this past autumn, the history which Francis Fukuyama thought had ended 20 years ago returned with a vengeance. Whatever the new world order that emerged after 1991 has been, it is it, and not history, that has now ended. Indeed, historians are likely to deem the post-Cold War “New World Order” the shortest historical epoch ever recorded.
But will the shattering of our assumptions about how global markets behave be as transforming as the collapse of all our Cold War assumptions was 20 years ago? Will we need to tackle the problems of security in new ways because of the changes to the global economy that the crisis is bringing about? Will new international rules and norms for security need to arise at the same time that we seek to rebuild the international economic order?
Because so much of today’s history seems somewhat familiar, if not in scale than in the nature of the threats that are visible, many governments appear to be relatively complacent about the impact – if any -- of the financial crisis on their strategic and security doctrines. If today still looks enough like the past, the old tools must still be applicable.
Yet time after time nowadays, events seem to take governments by surprise.  But the test of any strategic doctrine is whether it establishes a pattern of response –a routine—to meet the likely challenges a society and its government are going to face. For unexpected situations force governments into what they do worst -- improvisation, which strips away the key advantage that we as leaders possess: sober calculation. Certainly, many of the early improvised responses to the financial crisis have, to say the least, left much to be desired. Indeed, resort to constant improvisation can lead to a combination of panic and paralysis, which is the inability to make any response to a challenge except to flee from it.
Such flight, of course, is not really an option. But given today’s diffusion of power, and the rise and movement of both political and financial power, we must act with a recognition that the rules of its exercise have changed. Although I do not have some new general theory of strategy to offer, I would like to propose what I believe must be a key element in any effective strategic doctrine for today’s world – far greater transparency – transparency and openness in our domestic policy, in our diplomatic language, in our dialogue with civil society, in the use of our economic resources, and yes, also in our strategic doctrines.
It is obvious, for example, to almost everyone that a lack of transparency contributed mightily to the violent market turmoil that the world has endured since last autumn.  Because no one can now properly value many of the new financial instruments that have been invented and traded over the past 20 years, no one can know how much any bank or business partner is in the red. So credit has dried up in many places. Indeed, the holders of these instruments themselves don’t really know the value of what they are holding.The world economy, it seems, is held hostage to this lack of transparency.
Lack of financial transparency has been a particular nightmare for my country, where a shadowy intermediary company called RosUkrEnergo mysteriously gained monopolistic control of gas supplies to Ukraine. For years, no one really knew who owned this company; no one knew who benefited from its revenues; indeed, no one knew what its revenues were and what they were used for.  Ukraine was kept in the dark by this, and the result was that many Europeans rightly feared that they would literally be left in the dark due to a cut off in gas supplies.
For Ukraine, this lack of transparency was intolerable and my government, frankly, refused to tolerate it.   In our negotiations with Russia that were completed a few weeks ago, we proposed with all of our strength the creation of a transparent system of energy supply for my country – a system that European energy consumers can understand and rely upon.  What we sought, and eventually secured, was a direct gas supply agreement between Russia’s Gazprom and Ukraine's state energy group, Naftogaz.  Those responsible for supplies will now be known to all, and held to account by my government – and by Europe -- for their actions. Insofar as I can help it, the days when Ukraine, and as a result, Europe is held hostage over energy are ended. Greater transparency will play a key part in guaranteeing this.
Energy security in Europe will also need to recognize that, due to the linked natures of our energy supply and transmission systems, the EU and its immediate neighbours must depend on each other. This is undeniably true, and yet there are some in Europe that seek to deny this transparent truth.  But if we are to achieve true energy security, a strengthened solidarity is necessary, with every country in Europe helping -- via binding and transparent “solidarity clauses” -- to guarantee the energy supplies of others in an emergency, whether that emergency is deliberate or accidental. The European Energy Charter, which emphasizes market access and does increase transparency, though laudable, is insufficient in moments of crisis when markets are at their worst. So we need an energy solidarity that everyone in Europe can plainly see and rely upon.
Better integration of Europe’s electricity grid must also be part of this continent-wide energy transparency, because this will allow individual countries to trade freely and openly with each other, which will help mightily when some have surpluses and others face shortfalls. Such a system will benefit Russia’s long term security, because as its domestic energy needs grow, it will need to better plan for its own domestic energy consumption at the same time as it is meeting its contractual commitments to provide energy to Europe.
Of course, greater transparency was a watchword in Europe for many decades. The single market provides transparent rules for competition, and government aid to industry.  But there is now a fear that we seem to be drifting away these benchmarks in international clarity, and this needs to be resisted.
And the best way to do this is by finding new areas of agreement between the nations of Europe. My country, for example, is now negotiating a deep and comprehensive free trade agreement with the European Union. It will become an integral part of our new Association Agreement. It will clarify many levels of interdependence and trade that now exist between Ukraine and the Union in a way that will bring hope to the citizens of my country, and a proper recognition of how interconnected we are with Europe to everyone else.
For one of the distressing elements of the current financial crisis has been the Union’s failure to fully appreciate how deeply intertwined Europe’s east has become with Europe’s west. When the financial crisis erupted, the old nationalistic sins were not revisited in Europe because the euro and the single European market provided both practical support in the form of financial credits from the European Central Bank and transparent rules for the behaviour of individual governments. Eurozone members were thus spared confronting a currency crisis and competitive devaluations as they worked to resolve the banking crisis.
But those transparent rules ended where the EU ended, and so a financial fault line appeared due to the public guarantees that EU governments gave to their financial sectors. While EU banks were stabilized by those guarantees, their subsidiaries in Ukraine and elsewhere were left out on a limb due to the fact that some governments declared that their taxpayer money could not be used abroad. The result of this was a “flight to safety” by investors and bankers, who feared that their stakes in the region were on the wrong side of a financial Iron Curtain.
But the nations of Eastern Europe are now the eurozone’s most important export markets. Moreover, the vast investments by EU companies in the region are nowadays essential to European industry. If the crises in Ukraine, Hungary, the Baltic states and elsewhere in Eastern Europe is allowed to linger, production processes across Europe will be disrupted. There is thus a risk of the contagion causing lasting damage to the EU’s real economy.  
Of course, the EU is not standing still. With its loans to Hungary and Latvia, the EU Commission revived a credit facility which has lain dormant since the EMS-crisis in 1992. In the interest of stability, which is after all the first element of security, those credits should be opened to countries such as my own. There is certainly money for this, because the Ecofin-Council increased the ceiling for possible balance-of-payment-loans to non-EMU countries to €25 billion last November.
In addition, the currency swap arrangements that the European Central Bank has been extending to EU but non-eurozone members should also be extended eastward.   If our financial systems are to be revived, and with them our markets, West European banks must be allowed to use their recapitalizations to help their subsidiaries across Eastern Europe.
Such actions should be part of recognition by the EU that its Neighbourhood policy (ENP), never very robust, must be deepened within the framework of the Eastern Partnership and their benefits made more transparent to our citizens, many of whom are losing hope that they can ever achieve the freedoms and security that Europe offers.
My government wants to use most effectively all instruments of the Eastern Partnership for the Europeanization and modernization of Ukraine. And we positively consider the Black Sea Synergy as an important regional cooperation initiative able to complement and strengthen the Eastern Partnership.
Ukraine believes in a great future of the European security and defence policy. We are ready to participate in constructive discussions on the ways and means of strengthening European security taking into account thoughts of all sides. I would like to support responsible approach to the common security problems, based on common values and broadening networks of partnerships, suggested by Angela Merkel and Nicolas Sarkozy in their recent article.
Ukraine is ready to a deepened cooperation in this direction with the EU and with institutions and organizations that contribute to this process, including the OSCE and NATO. And I believe that important role in this process belongs to Russia.
I know that governments are under vast pressures to respond to voters who are angry, frightened, and demanding protection. But the history of Europe since 1945 tells us that the best way to respond to those pressures is not to drift toward protectionism, but to deepen Europe’s unity. Now is not a moment for equivocation.  For doing so only breeds protectionism, xenophobia, and insecurity.
The last twenty years in Europe were not years that the locusts ate. To see them as such is to fall into a trap of accepting that a wider and more open Europe is somehow less secure and in conflict with the prosperity of individual nations. Many millions of people in Eastern Europe gained our chance at liberty and prosperity over these two decades. I for one do not intend to see us march backwards.
Beyond Europe, greater transparency is desperately needed in the traditional areas of diplomacy.  Of course, this is not to say that ambiguity no longer has its uses. We have embassy staffs around the world who would not know what to do, after all, if we told them to keep ambiguity out of their diplomatic notes. Yet ambiguity has its limits.
Let me suggest just one of them. We have been discussing security in Europe, but have often neglected to remember that there is an eastern dimension to these questions, not only to energy issues, but ultimately to the entire post-Cold War settlement in Europe.  But part of transparency is to be clear not only about what one’s own national interests are, it also requires clarity in recognizing the supreme national interests of other nations.  
China, for example, which is sadly not represented here, has an enormous strategic stake in the issues that we are discussing. Because China imports more that 60% of its energy, price competition and the international energy pipeline network that is being planned to deliver Caspian and Central Asian gas to Europe in the future are of paramount strategic importance to it because of the tremendous impact they will have on global supplies and prices.  Like Europe, China is keen to insure that international markets for gas remain just that – international and competitive, not subject to any cartel-like or monopolist control.  We need to be clear about the stake that all of the world’s powers have as we plan for Europe’s energy security.

Going beyond energy issues, China also has a strategic interest in maintaining the postwar Cold War settlement across Eurasia.  This is not only related to China’s oft-stated belief that national borders are inviolate, a position China holds as fundamental because of its domestic concerns over Tibet and its fears that Taiwan might one day seek to declare itself formally independent. China’s commitment to the post Cold War settle in Eurasia is also related to the fact that China’s security increased mightily with the geo-strategic changes that took place between 1989-1991.

Instead of the highly militarized western border with the Soviet Union that it used to maintain, and the high cost associated with keeping an army of 2 million plus men on that border, China has been able to dramatically cut the size of the PLA, which has helped its economy and modernization.  So maintaining the post-Cold War status quo is a primary strategic interest of China. So it is important that our security doctrines have the flexibility to factor into their constructs the strategic interests of others.

Such a fundamental re-evaluation of our security thinking comes at an opportune moment because in Barack Obama, there is certainly the possibility of real change not only in the direction of American foreign and economic policy, but in the policies of many other countries as well as they establish their working relations with America’s new president.  There are many bright hopes for all of us in what the U.S. president has been saying about the direction of his policy, but it would be irresponsible for us to sit idle, offering our hands in friendship, but not our backs for the hard work of reviving the world and its economy.

I for one would like to pledge my support for any initiative that can foster, not only greater trans-Atlantic cooperation, but also to reconcile the interests of every region and power on the globe.

This is a moment for grand bargains to enhance all our security, and we can achieve them if we develop doctrines that empower, not paralyze, and devise strategies that allow us to shift the risks of counteraction to those who would threaten peace and stability.  Greater transparency in all of our international undertakings, I believe, will help us define our purposes in a way that all can understand, as well as find the will that we need to enact them.

---

Es gilt das gesprochene Wort!