Let me start by thanking the Sydney Institute, and in particular Gerard and Anne Henderson, for the kind invitation to speak to you this evening. I am very pleased to be here on my first trip as European Commissioner for External Relations. Earlier I had the pleasure of a trip around Sydney Harbour, such an impressively beautiful setting. It showcases some of what makes Australia so special: the combination of modernity, culture, immense natural beauty, and a very special quality of life. No wonder so many Europeans fall in love with your country when they visit. Of course Austrians like me who have served abroad have a special affinity with Australia – having been delivered to the Australian Embassy rather than the Austrian Embassy many a time!

The purpose of my visit is to demonstrate the strength of Europe's commitment to its relations with Australia, and to broaden and deepen our partnership.

In my meetings with Prime Minister Howard and Minister Downer yesterday we agreed we need an upgrade of our relationship, which we would like to see take effect by next year.

We are keenly aware of the importance of this partnership. In this globalised world the challenges and opportunities we face are increasingly difficult to deal with on a national or even regional level. That is why the EU wants to consolidate its relationships with those, like Australia, with whom it shares values and interests. What we need is a partnership for security – in the Asia-Pacific region; in the wider world; in the economy – where we need a clear international framework enabling all to focus on jobs and growth; and in the environment – where energy and climate security are twin challenges we face.

Some might question whether the EU is the right partner for Australia in tackling these issue. It's true that in the past our political weight on the international stage did not match our economic clout.

But that has changed . And that's why there's a clear answer to the question in tonight's debate “EU foreign policy: myth or reality?”.

Ladies and Gentlemen,

You could of course be forgiven for the myth analogy, after all, our very name is rooted in mythology – Europa being a beautiful maiden carried off by the God Zeus in the guise of a bull. But today's Europe, beautiful though she may be, is no longer that kind of girl.

Following our most recent enlargement at the beginning of this year our population has grown to 495 million and 27 Member States. This bigger market means we have a quarter of the world's spending power and one-third of the world's GDP. The euro is strong and economic growth has resumed.

We are now the world's largest importer of agricultural products and our trade-distorting support has been significantly reduced. We are undertaking successive waves of reform to the CAP, including during the Doha World Trade Organisation negotiations.

That brings me to another element of the myth-making - the view that we are a protectionist power , obsessed with bureaucracy and reluctant to engage with the world beyond our immediate borders.

That's a perception which, if it ever was true, is certainly outdated today. The European Union today is acutely conscious that our future lies in being an open power – open to one another internally, AND open to the rest of the world.

But the EU is not just an economic power . We are increasingly a political player on the world stage . Last weekend our heads of state showed that Europe is united not only on some of the more introspective questions that have taxed us recently, but crucially we are united on the kind of role we want to develop with our partners around the globe.

For friends like Australia, the key decisions this weekend were the ones which strengthened our foreign policy . This is an area where we are progressively maturing in our ability to act as one, and the steps approved at the European Council will allow us to further raise our game as a Union.

The changes will include appointing a new High Representative for Foreign Affairs and Security Policy, which will make it easier to operate more effectively at the international level.

Let me debunk one of the least convincing myths about the EU – namely that we are unable to make a difference where it counts in the world.

In recent years we have been making major progress in developing our crisis management and peace keeping operations - 60,000 European peacekeepers are serving across the globe.

It's a little known fact that we are also the world's largest donor – we give over half the development and humanitarian assistance in the world. We promote human rights and good governance in every corner of the globe, including through our Election Observation Missions.

Another myth about the EU is that our foreign policy ambitions only extend to our immediate neighbourhood. That is simply not true – our interests are global.

Naturally we take a particularly close interest in our neighbours. Successive enlargements as well as our policies towards the Western Balkans have demonstrated the EU's ability to promote stability and prosperity in its own region . The benefits of membership – economic prosperity, democracy, freedom of movement, the protection of human rights and the rule of law - have proven a powerful force for change. More recently we have launched a major new initiative to extend this area of security and prosperity to a wider circle of states close to the EU - the European Neighbourhood Policy.

We are making a unique contribution in the Middle Eas, as a member of the Quartet, and as a major donor. The Temporary International Mechanism that the European commission set up has given a lifeline to the most vulnerable Palestinians over the last year and will continue. Now the EU is offering President Abbas full support for his new emergency government. I discussed yesterday with Foreign Minister Downer our shared hope that Israel and the Palestinians can move towards a resolution of their conflict, and I look forward to hearing news of his visit to the region.

Like Australia, the EU has an indispensable partnership with the United States. Like you, we share with the US a common basis of interests and values, which will always win out over passing disagreements.

In Afghanistan the EU works closely with the US and Australia to tackle the enormous challenges of this deeply troubled country. We have just launched new missions to rebuild the Afghan police and justice sectors. We are playing our part in the fight against narcotics, and the spread of basic services like education and health. EU and Australian troops are making a major contribution to the NATO-led International Security Assistance Force.

The EU has also been at the forefront of international efforts to resolve the stand-off with Iran over its nuclear plans. My colleague, Javier Solana met again with the Iranian negotiator Ali Larijani last weekend and plans to do so again in a few weeks' time.

It is not always appreciated that we are also active in securing a stable Asia-Pacific region. The EU has been heavily involved in Indonesia where we have played an important role in establishing, and now maintaining peace in Aceh. We continue our support to East Timor, and an EU election observation mission is currently on the ground in anticipation of Saturday's parliamentary elections.

We have been closely involved in seeking a peaceful end to the crisis in Fiji , and are hopeful the interim government will live up to the commitments it undertook with us in April this year. We welcome the lifting of the state of emergency as a positive step on the road back to democracy, and will continue to support this process. The interim government should be under no illusion: the international community is united in its approach.

Around the globe the EU is working actively with its partners to tackle global challenges : terrorism, the proliferation of weapons of mass destruction, and pandemics such as AIDS.

There are also the challenges of energy security and climate change as well as international migration.

My discussions here over the past couple of days have revealed how much immigration is a common concern for both Australia and the EU.

We in Europe have absorbed a sizeable new population as we enlarged our membership. Now we face a challenge that Australia knows well - one of absorbing migrants from beyond our borders.

Our aim is to work towards a common migration and asylum policy for the EU. For now these are still matters for individual Member States to decide. As we develop as a Union in this field, we have much to learn from Australia's experience and expertise in managing migration and working for harmonious integration of diverse cultures.

The other global challenge I would like to focus on is climate change and energy security. Europe has put these at the top of our political agenda, and we have set ourselves some ambitious targets.

In March we committed ourselves to reducing our own greenhouse gas emissions by 20% by 2020. We signalled that we will go even further – cutting our emissions by 30% - if other industrialised countries join in. Our ultimate objective is to cut global greenhouse gas emissions by at least 50% by 2050.

We believe that coordinated international action is needed . We welcome the increased recognition on the part of the Australian government of the need for action to tackle climate change, and hope that we will be able to work together in the run-up to the UN meeting in Bali later this year. As countless reports have shown, taking action will not be cost-free, but it will certainly be considerably cheaper than doing nothing.

Clearly we can only succeed if we also bring China, India and other developing countries on board, and we need to work with them to help them adopt the policies and the technology which can reduce emissions without stifling growth. For example, the EU is promoting near zero emissions coal technology in China, and we hope that this kind of initiative can bring significant results.

We welcome the Australian government's recent announcement on developing a cap and trade emissions trading scheme . Market based mechanisms can make an important contribution to reducing harmful emissions. We look forward to cooperating with your government to develop a global carbon market.

Given Australia's importance as an energy supplier there is scope for deepening our dialogue on issues such as energy efficiency, energy security, research and development and so on and yesterday Foreign Minister Downer and I agreed that we will make this a regular theme in EU-Australia relations.

Ladies and Gentlemen,

As you can see, the EU is engaged in a huge range of issues across the globe. We are an effective global player, not just economically but also politically. As we look back in this, the EU's 50 th birthday year, we can be proud of how far we have come and how much we are now able to achieve.

And I hope we are laying to rest the myths about the EU's foreign policy once and for all. With apologies to any journalists in the audience, it is well known that they never like to let facts get in the way of a good story. But we shouldn't let myths get in the way of a good working partnership. So to that end I am looking forward to putting into practical effect the very positive discussions I had yesterday with Prime Minister Howard and Minister Downer on building an increasingly close and fruitful relationship.

Thank you for your attention.

Commissioner Ferrero-Waldner's CV available at: ec.europa.eu/commission_barroso/ferrero-waldner/profile/index_en.htm