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limits their scope. (Henry Kissinger)1 Summary As the EU and NATO enlarge, prospects for overall economic growth and peace are good, even if tensions both within and without the enlarged circle of EU and NATO member states could cloud the picture, as over Iraq in 2003. Prospects for peace and prosperity improved in South-Eastern Europe under a Stability Pact for the region, involving major international assistance. Continuing EU and NATO enlargement will mean an eastward shift of Europe’s ‘centre of gravity’, with a major role for Germany. That country is, however
, be said to have 8 been covered by the Stability Pact for South-Eastern Europe, while awaiting the day when their economic (and political) maturity might be such as to qualify them for candidate status. Meanwhile, the EU was to reform itself in order to be ready in its turn to receive new members. An Intergovernmental Conference (IGC) would be set up in 2000 and given until 2002 to finish its work (i.e. one or two years before the first expected enlargement). The main task was to make sure that a much larger EU could work efficiently and reach decisions. MUP
, fighting unemployment and stimulating growth. Its freedom of action is correspondingly wider. Prodi said: ‘I know very well that the Stability Pact is stupid, like all decisions that are rigid’. In 2002 real interest rates, i.e. allowing for inflation, were negative in countries like Spain and Portugal, signifying that keeping money in the bank there meant a loss for the depositor. The European Commission in 2002 called on the EMU countries in particular to lower labour costs and integrate their markets for energy, communications and financial services. Tax reforms would