1. The Luxembourg European Council has taken the decisions necessary to launch the overall enlargement process.

2. The task in the years ahead will be to prepare the applicant States for accession to the Union and to see that the Union is properly prepared for enlargement. This enlargement is a comprehensive, inclusive and ongoing process, which will take place in stages; each of the applicant States will proceed at its own rate, depending on its degree of preparedness.

3. As a prerequisite for enlargement of the Union, the operation of the institutions must be strengthened and improved in keeping with the institutional provisions of the Amsterdam Treaty.

The European Conference

4. The European Council decided to set up a European Conference which will bring together the Member States of the European Union and the European States aspiring to accede to it and sharing its values and internal and external objectives.

5. The members of the Conference must share a common commitment to peace, security and good neighbourliness, respect for other countries' sovereignty, the principles upon which the European Union is founded, the integrity and inviolability of external borders and the principles of international law and a commitment to the settlement of territorial disputes by peaceful means, in particular through the jurisdiction of the International Court of Justice in the Hague. Countries which endorse these principles and respect the right of any European country fulfilling the required criteria to accede

to the European Union and sharing the Union's commitment to building a Europe free of the divisions and difficulties of the past will be invited to take part in the Conference.

6. The States which accept these criteria and subscribe to the above principles will be invited to take part in the Conference. Initially, the EU offer will be addressed to Cyprus, the applicant States of Central and Eastern Europe and Turkey.

7. The European Conference will be a multilateral forum for political consultation, intended to address questions of general concern to the participants and to broaden and deepen their cooperation on foreign and security policy, justice and home affairs, and other areas of common concern, particularly economic matters and regional cooperation.

8. The Conference will be chaired by the State holding the Presidency of the Council of the European Union. At the Presidency's invitation, Heads of State and Government and the President of the Commission will meet at the Conference once a year, as will the Ministers for Foreign Affairs.

9. The first meeting of the Conference will be in London in March 1998.

The process of accession and negotiation

10. The European Council has considered the current situation in each of the eleven applicant States on the basis of the Commission's opinions and the Presidency's report to the Council. In the light of its discussions, it has decided to launch an accession process comprising the ten Central and East European applicant States and Cyprus. This accession process will form part of the implementation of Article 0 of the Treaty on European Union. The European Council points out that all these States are destined to join the European Union on the basis of the same criteria and that they are participating in the accession process on an equal footing. This process, which will be evolutive and inclusive, will comprise the following elements.

11. The accession process will be launched on 30 March 1998 by a meeting of the Ministers for Foreign Affairs of the fifteen Member States of the European Union, the ten Central and East European applicant States and Cyprus. A single framework for these applicant countries will be established.

12. The Ministers for Foreign Affairs of the fifteen members of the European Union will meet their opposite numbers from the ten Central and East European applicant States and Cyprus as the need arises. Technical ministerial meetings could also be envisaged, bearing in mind experience with the structured dialogue.

13. The enhanced pre-accession strategy is intended to enable all the applicant States of Central and Eastern Europe eventually to become members of the European Union and, to that end, to align themselves as far as possible on the Union acquis prior to accession. With the Europe Agreements, which remain the basis of the Union's relations with these States, the strategy centres on accession partnerships and increased pre-accession aid. It will be accompanied by an analytical study of the Union acquis for each applicant State taken individually.

(i) Accession partnerships

14. Accession partnership is a new instrument, the key feature of the enhanced pre-accession strategy; it will mobilize all forms of assistance to the applicant countries of Central and Eastern Europe within a single framework.

15. This single framework will cover in detail for each applicant the priorities to be observed in adopting the Union acquis and also the financial resources available for that purpose, in particular the PHARE programme. In that context financial assistance would be linked to the applicants' progress and, more specifically, to compliance with the programme for adoption of the acquis.

16. The Council will decide unanimously on the establishment of the partnerships as the key element in the pre-accession strategy. On that basis it will then decide, by a qualified majority and by 15 March 1998 at the latest, on the principles, priorities, intermediate objectives, significant adjustments and conditions applicable to each individual partnership. When an element essential to the continuation of pre-accession assistance is missing in an applicant State, the Council will take appropriate measures by the same procedure.

(ii) Increased pre-accession aid

17. Pre-accession aid will be increased substantially; alongside the PHARE programme, which will already have been refocused on accession priorities, it will, as from the year 2000, comprise aid for agriculture and a structural instrument which will give priority to measures similar to those of the Cohesion Fund.

Financial support to the countries involved in the enlargement process will be based on the principle of equal treatment, independently of time of accession, with particular attention being paid to countries with the greatest need. The European Council welcomes in this connection the catch-up facility envisaged by the Commission.

18. Without prejudice to decisions on the financial perspective for 2000-2006, the PHARE programme will focus on accession by setting two priority aims: the reinforcement of administrative and judicial capacity (about 30% of the overall amount) and investments related to the adoption and application of the acquis (about 70%).

19. Some Community programmes (e.g. education, training and research) will be open to applicant States and this will enable them to familiarize themselves with the Union's policies and working methods. Such participation will have to be determined case-by-case, with each applicant State making a steadily increasing financial contribution of its own. PHARE will, if necessary, be able to continue part-financing the applicant States' national contributions. Such financing should remain at around 10% of the PHARE appropriation, not including participation in the research and development framework programme.

20. The applicant States should be allowed to take part, as observers and for the points which concern them, in the management committees responsible for monitoring the programmes to which they contribute financially, under specific arrangements adapted to the case in question.

21. The Community agencies in which applicant countries will be able to participate will be determined on a case-by-case basis.

22. A specific pre-accession strategy for Cyprus will be based on:

23. The Commission's opinions on the applicant States constitute a sound overall analysis of each applicant State's situation in the light of the membership criteria set by the Copenhagen European Council. The prospect of membership is a unique incentive to the applicants to speed up the implementation of policies which comply with the Union acquis. Incorporation of the acquis into legislation is necessary, but is not in itself sufficient; it will also be necessary to ensure that it is actually applied.

24. The European Council noted the link between the applicant States' ongoing efforts in that direction in sectoral policies, in particular the internal market and related policies, and the harmonious operation of Community policies after accession.

25. Compliance with the Copenhagen political criteria is a prerequisite for the opening of any accession negotiations. Economic criteria and the ability to fulfil the obligations arising from membership have been and must be assessed in a forward-looking, dynamic way.

26. The decision to enter into negotiations does not imply that they will be successfully concluded at the same time. Their conclusion and the subsequent accession of the different applicant States will depend on the extent to which each complies with the Copenhagen criteria and on the Union's ability to assimilate new members.

27. The European Council has decided to convene bilateral intergovernmental conferences in the spring of 1998 to begin negotiations with Cyprus, Hungary, Poland, Estonia, the Czech Republic and Slovenia on the conditions for their entry into the Union and the ensuing Treaty adjustments. These negotiations will be based on the general negotiating framework acknowledged by the Council on 8 December 1997.

At the same time as the above, the preparation of negotiations with Romania, Slovakia, Latvia, Lithuania and Bulgaria will be speeded up in particular through an analytical examination of the Union acquis. This preparation may also be discussed at ministerial-level bilateral meetings with the Member States of the Union.

28. The accession of Cyprus should benefit all communities and help to bring about civil peace and reconciliation. The accession negotiations will contribute positively to the search for a political solution to the Cyprus problem through the talks under the aegis of the United Nations which must continue with a view to creating a bi-community, bi-zonal federation. In this context, the European Council requests that the willingness of the Government of Cyprus to include representatives of the Turkish Cypriot community in the accession negotiating delegation be acted upon. In order for this request to be acted upon, the necessary contacts will be undertaken by the Presidency and the Commission.

29. From the end of 1998, the Commission will make regular reports to the Council, together with any necessary recommendations for opening bilateral intergovernmental conferences, reviewing the progress of each Central and East European applicant State towards accession in the light of the Copenhagen criteria, in particular the rate at which it is adopting the Union acquis. Prior to those reports, implementation of the accession partnerships and progress in adopting the acquis will be examined with each applicant State in the Europe Agreement bodies. The Commission's reports will serve as a basis for taking, in the Council context, the necessary decisions on the conduct of the accession negotiations or their extension to other applicants. In that context, the Commission will continue to follow the method adopted by Agenda 2000 in evaluating

applicant States' ability to meet the economic criteria and fulfil the obligations deriving from accession.

30. A dynamic approach should be maintained in assessing the progress made by applicant States in the regular reports which the Commission will submit to the Council.

31. The Council confirms Turkey92s eligibility for accession to the European Union. Turkey will be judged on the basis of the same criteria as the other applicant States. While the political and economic conditions allowing accession negotiations to be envisaged are not satisfied, the European Council considers that it is nevertheless important for a strategy to be drawn up to prepare Turkey for accession by bringing it closer to the European Union in every field.

32. This strategy should consist in:

33. The strategy will be reviewed by the Association Council in particular on the basis of Article 28 of the Association Agreement in the light of the Copenhagen criteria and the Council's position of 29 April 1997.

34. In addition, participation in the European Conference will enable the Member States of the European Union and Turkey to step up their dialogue and cooperation in areas of common interest.

35. The European Council recalls that strengthening Turkey's links with the European Union also depends on that country's pursuit of the political and economic reforms on which it has embarked, including the alignment of human rights standards and practices on those in force in the European Union; respect for and protection of minorities; the establishment of satisfactory and stable relations between Greece and Turkey; the settlement of disputes, in particular by legal process, including the International Court of Justice; and support for negotiations under the aegis of the UN on a political settlement in Cyprus on the basis of the relevant UN Security Council Resolutions.

36. The European Council endorses the guidelines that emerged from the General Affairs Council of 24 November 1997 on future relations between the Union and Turkey and asks the Commission to submit suitable proposals.

37. The European Council welcomed the Commission communication on Agenda 2000 concerning the development of the Union's policies and the future financial framework. It confirmed the need to ensure in advance of enlargement that the Union is in a position to cope with it under the best conditions by making the adjustments deemed necessary to its policies and their financing, bearing in mind that it is essential to set a financial framework for the Union's policies. The imperative of budgetary discipline and efficient expenditure must prevail at Union level just as it prevails at Union level just as it prevails at the level of the Member States.

38. The European Council considers that the Commission proposals contained in Agenda 2000 are an appropriate working basis for further negotiations for an agreement on the Union's policies and the financial framework. It invites the Commission to submit its proposals on all of these questions as soon as possible in the light of the initial discussions and these guidelines. The European Council takes note of the Commission's intention to submit its report on the functioning of the system of own resources by autumn 1998 at the latest.

39. It is important for reasons of transparency to make a clear distinction in the presentation and implementation of the future financial framework between expenditure relating to the Union as currently constituted and that reserved for the future acceding countries as pre-accession or accession aid.

40. The European Council took note of the outcome of proceedings of the Agriculture Council. The Union is determined to continue developing the present European model of agriculture while seeking greater internal and external competitiveness. European agriculture must, as an economic sector, be versatile, sustainable, competitive and spread throughout European territory, including regions with specific problems. The process of reform begun in 1992 should be continued, deepened, adapted and completed, extending it to Mediterranean production. The reform should lead to economically sound, viable solutions which are socially acceptable and make it possible to ensure fair income, to strike a fair balance between production sectors, producers and regions and to avoid distortion of competition. The financial resources needed to implement the common agricultural policy will be determined on the basis of the agricultural guideline.

41. The European Council notes with satisfaction that the major part of the arrangements necessary for the transition to the single currency is now in place thanks to the contributions of the Council, the Commission, the European Parliament and the European Monetary Institute:

42. The European Council requests that at all levels the final practical preparations for implementing the third phase of EMU, which should be completed by May 1998, be speeded up.

43. The European Council notes the Council's report on preparations for the third stage of Economic and Monetary Union. The report sets out the principles and arrangements for strengthened economic coordination among States which will be sharing a single currency and between those States and States which will not yet be in a position to participate in the euro.

44. By virtue of the Treaty, the ECOFIN Council is the centre for the coordination of the Member States' economic policies and is empowered to act in the relevant areas. In particular, the ECOFIN Council is the only body empowered to formulate and adopt the broad economic policy guidelines which constitute the main instrument of economic coordination.

The defining position of the ECOFIN Council at the centre of the economic coordination and decision-making process affirms the unity and cohesion of the Community.

The Ministers of the States participating in the euro area may meet informally among themselves to discuss issues connected with their shared specific responsibilities for the single currency. The Commission, and the European Central Bank when appropriate, will be invited to take part in the meetings.

Whenever matters of common interest are concerned they will be discussed by Ministers of all Member States.

Decisions will in all cases be taken by the ECOFIN Council in accordance with the procedures laid down in the Treaty.

45. As regards the implementation of the provisions on exchange policy, it is understood that general exchange policy guidelines vis-E0-vis one or more non-Community currencies will be formulated only in exceptional circumstances in the light of the principles and policies defined in the Treaty.

46. The Council and the European Central Bank will fulfil their tasks in representing the Community at international level in an efficient manner and in compliance with the distribution of powers laid down in the Treaty. The Commission will be associated with external representation insofar as necessary to enable it to fulfil the role assigned to it by the Treaty.

47. The organization of an ongoing and fruitful dialogue between the Council and the European Central Bank, respecting the independence of the Bank, is an important factor in the proper functioning of Economic and Monetary Union.

48. The European Council adopted a Resolution incorporating the main principles of the aforesaid report (see Annex 1).

49. Following the decision taken by the Extraordinary European Council on Employment in Luxembourg on 20 and 21 November 1997 which, in practice, allows early implementation in 1998 of the provisions of the future Article 128 of the Treaty on coordination of Member States' employment policies, the European Council notes with satisfaction that the arrangements for Union action to promote employment are now in place and that the Council (Labour and Social Affairs) will adopt the guidelines for 1998 on 15 December 1997.

50. The European Council welcomes the progress made in implementing the Action Plan on the Internal Market since the Amsterdam European Council and reaffirms that completion and stabilization of the Internal Market is a major contribution to strengthening competitiveness and economic growth and creating jobs in the European Union.

51. In the context of the joint work programme of the Luxembourg, United Kingdom and Austrian Presidencies, particular attention is being devoted to implementing and following up Internal Market legislation 96 for which the Commission has submitted its first "scoreboard". Political agreements have recently been reached on a number of priority issues (legal protection of bio-technological inventions, transparency mechanism for information society services, liberalization of the gas market). Other issues have yet to be brought to completion (European company, designs, etc.). The important conclusions recently reached by the Council on taxation policy will also contribute to reducing the distortions which still exist within the single market. The European Council asks the Council to pursue actively its efforts to implement, within the deadlines laid down, the guidelines of the Action Plan in order to strengthen the legislative framework of the Internal Market and its effective translation into economic reality.

52. The European Council welcomes the fact that the Commission has taken action on the request of the Amsterdam European Council to examine ways of effectively guaranteeing free movement of goods and it asks the Council and the European Parliament to examine this proposal promptly.

53. The European Council welcomes the successful conclusion of WTO negotiations on financial services in Geneva, replacing the 1995 interim agreement by a substantive and permanent agreement. The European Council considers it important for the Union to develop further the multilateral liberalization movement resulting from the positive conclusion of these negotiations in order to continue to take steps to open the market as the new millenium approaches, especially within the context of preparations for the WTO Ministerial Meeting in May 1998.

54. The European Council welcomes the Commissions intention to submit a communication on the problems arising from the year 2000 Computer Problem and calls on the incoming Presidency to accord top priority to the action to be taken.

55. The European Council noted the agreement which had just been reached at Kyoto on a Protocol to the United Nations Framework Convention on Climate Change, containing significant undertakings by all industrialized countries which will lead to reductions in greenhouse gas emissions of more than 5%. It considers that this outcome represents an initial step which should be followed by further progress in the future.

56. The European Council stresses its conviction 96 expressed in the future Article 6 of the Treaty 96 that environmental protection requirements must be integrated into the Community's policies and activities, in particular with a view to promoting sustainable development. With this in mind, it asks the Commission to submit a strategy to it, before its June 1998 meeting, for achieving that goal.

57. The safety of foodstuffs is, more than ever, a major concern in citizens' minds and everything must be done to re-establish their confidence, which has been particularly shaken by the BSE crisis. With this concern in view, the European Council approved the declaration in Annex 2.

58. The European Council calls on the Commission to study the procedure for establishing a therapeutic solidarity fund under the aegis of UNAIDS to combat AIDS in the developing countries.

59. The European Council took note of the latest report on activities in the Justice and Home Affairs area and emphasized the progress made during the last six months. It welcomes the signing, in the next few days, of the "Naples II" Convention on mutual assistance and cooperation between customs administrations.

60. The European Council also welcomes the political agreement reached on the basic principles of the draft Convention on jurisdiction, recognition and enforcement of judgments in matrimonial matters (Brussels II Convention); this Convention is likely to play an important part in the lives of the citizens of the Union. It asks that work on this draft should be completed under the United Kingdom Presidency.

61. Among other progress achieved, it notes with satisfaction the adoption of the first concrete measures for putting into effect the action plan to combat organized crime. It asks the Council to pursue actively the implementation of this programme approved by the Amsterdam European Council. In this context, substantial progress has been made on the draft Joint Action making it a criminal offence to participate in a criminal organization in the Member States of the European Union and on the draft Joint Action to create a European Judicial Network; it asks the Council to adopt these two instruments before the end of March 1998.

62. The European Council reaffirms, in this context, Europol's role as a privileged instrument for police cooperation, in particular in combating organized crime. While acknowledging the progress made in setting up Europol, it regrets that the state of ratifications in several Member States has delayed the entry into force of the Convention by several months.

63. The report on the implementation of the plan to combat drugs sets out the progress made in harmonizing legislation and practice, in combating synthetic drugs and in cooperation at international level. In this respect, substantial progress has been made in implementing the EU/Latin America cooperation mechanism, which includes the Caribbean. The Council welcomes the preparatory work undertaken with a view to implementing projects to combat the transit and production of drugs in Central Asia, and to establish a multiannual action programme on cooperation with Russia and the NIS in this area.

64. The situation arising from the massive influx of immigrants from Iraq in particular is disturbing. The Council must prepare and implement rapidly an action plan to respond to this problem.

65. The European Council stresses the importance of the initiatives developed in the context of the Year against Racism and Xenophobia in favour of a more just and tolerant society and welcomes the imminent start of the work of the Monitoring Centre on Racism and Xenophobia.

66. Finally, the European Council asks the Council to continue its efforts on the integration of the Schengen acquis, including determining the legal bases for the acquis, and the negotiation of the agreements to be concluded with Iceland and Norway. It points out that this work must be completed in time so as to permit the actual application of these provisions as from the entry into force of the Amsterdam Treaty.

67. Regional cooperation plays a major role in stability and prosperity in Europe. The European Council notes with satisfaction reports submitted by the Commission in line with its undertaking entered into at the Dublin European Council on regional cooperation in the Black Sea, Central Europe and south eastern Europe in particular. It takes note of positive developments in the Baltic Sea (Council of Baltic Sea States) and in the Bering Sea arctic region. It calls on the Council to examine these reports.

68. The European Council noted the Finnish proposal concerning a northern dimension for the policies of the Union and requests the Commission to submit an interim report on this subject at a forthcoming European Council meeting in 1998.

69. The European Council approved the declaration in Annex 3.

70. The European Council reviewed developments in the Middle East Peace Process in the light of the results of the informal meeting of Foreign Ministers in Mondorf on 25 and 26 October, the visit to the region by the President of the Council of Ministers from 10 to 14 November and a report to the Council by the EU's Special Envoy.

71. The European Council remained deeply concerned by the lack of progress in implementing all the commitments under the Israeli/Palestinian Interim Agreements and the Hebron Protocol and by the continuing deadlock on the Syrian and Lebanese tracks.

72. The European Council reaffirmed its "Call for Peace in the Middle East" issued in Amsterdam on 16 and 17 June 1997 and recalled its declaration made in Florence on 21 June 1996. It urged all the parties to honour their commitments under existing agreements and to live up to their responsibilities in order to restore momentum to the peace process and to protect it from further setbacks and to renew negotiations in a spirit of mutual confidence, with a view to reaching a just, lasting and comprehensive peace in the Middle East by the end of the century.

73. It expressed satisfaction at the activities of the Special Envoy and encouraged him to continue his efforts in support of the Middle East Peace Process.

74. It endorsed the following guidelines for an EU policy aimed at facilitating progress and restoring confidence between the parties.

Short-term measures

75. The European Union will continue to use all its political and moral weight to ensure that all the provisions in the agreements already reached are fully implemented on the basis of reciprocity by both the Israeli and the Palestinian sides.

76. The European Council stressed the great urgency for the parties to live up to previous commitments especially as regards credible and significant redeployments. It also stressed the importance of avoiding counterproductive unilateral actions, for instance on settlements and Jerusalem. In this context, it welcomed the work in hand towards the early adoption of the Code of Conduct proposed by the EU.

77. The European Council recalled the EU92s determination to fight terrorism wherever it occurs and for whatever reason. In this context, it also underlines the importance of security cooperation between Israelis and Palestinians. This cooperation should be strengthened and not allowed to break down under any circumstances. It also recalled the EU's proposal for a Permanent Security Committee as a means of institutionalising security cooperation, as well as its counter-terrorism programme of assistance to the Palestinian Authority.

78. These steps will be helpful in restoring the spirit of partnership and mutual trust indispensable to the implementation of the Interim Agreements and the Hebron Protocol, as well as the resumption of Permanent Status talks. They are aimed at preventing a breakdown in negotiations and at shielding the peace process from adverse circumstances.

79. The European Council underlined the importance of concluding negotiations in the nine committees created by the Interim Agreements. The Gaza airport and port as well as safe passage are issues of special relevance and urgency and the object of a substantial financial contribution from the EU.

80. The European Council emphasized that the EU is a major economic partner of both Israel and the Palestinian Authority as well as the largest donor of financial assistance to the Palestinian Authority. Economic development is a prerequisite for political stability. It reiterated its determination to work, including through the joint dialogue with Israel, towards the removal of obstacles to Palestinian economic development and to facilitate the free movement of people and goods. It also stressed the need for the comprehensive implementation of the EC/PLO Interim Agreement. The EU will also enhance its support to Palestinian institutions in East-Jerusalem.

81. The European Council stressed the importance of people-to-people programmes as an essential means of reinforcing dialogue and restoring mutual confidence between the parties at the level of civil society.

82. The EU will also continue to monitor closely developments on the ground through its own human rights, Jerusalem and settlements watch instruments.

Medium term

83. The European Council expressed the EU92s readiness to contribute to Permanent Status negotiations, by offering specific suggestions to the parties on related subjects, including possible Palestinian statehood, borders/security arrangements, settlements, refugees, Jerusalem and water issues.

84. It also called for a review of the EU's financial support, with the aim of ensuring greater effectiveness in achieving the objectives of the Peace Process.

85. It insisted on the revival of regional economic cooperation as a means of promoting social and economic development and creating a sound environment for peaceful relations.

86. The European Council reiterated the importance which the EU attaches to the relaunching of negotiations on the Syrian and Lebanese tracks. The EU seeks the restoration of a comprehensive process on the basis of "Land For Peace" and demands the full implementation of UN Security Council Resolutions 242, 338 and 425.

87. The European Council strongly supports US efforts to revive the peace process and expressed the EU's willingness to work closely with the United States and to maintain close contact with Russia and the regional parties.