Ladies and gentlemen, Chancellor Schroeder, Lord Mayor Linden, President Rau, President Havel, His Majesty Juan Carlos, President Halonen, previous laureates, members of the Charlemagne Foundation, leaders of the clergy and cathedral, and members of the German and American governments. Let me begin by thanking the Lord Mayor for his welcome and his wise words, and my good friend, Chancellor Schroeder for his kind comments and his visionary statement.

The rare distinction you have bestowed upon me I am well aware is in large measure a tribute to the role the American people have played in promoting peace, freedom and security in Europe for the last 50 years. I feel the honor is greater still because of the remarkable contributions made by previous recipients of this prize toward our common dream of European union.

Of course, as has already been said, that dream has its roots here in Aachen, an ancient shrine that remains at the center of what it means to be European -- the seat of an empire, a place of healing waters, peace treaties, furious fighting. With its liberation at the end of World War II, Aachen became perhaps the first German city to join the postwar democratic order.

Today, as I have seen, Aachen is both a sanctuary for sacred relics, dating back to the dawn of Christianity, and a crucible of Europe's new information economy. Here, Charlemagne's name summons something glimpsed for the first time during his life -- a sense that the disparate people of this Earth's smallest continent could actually live together as participants in a single civilization.

In its quest for unity, even at the point of a sword, and in its devotion to the new idea that there was actually something called Europe, the Carolingian idea surpassed what had come before, and to an extent, it guides us still.

Twelve centuries ago, out of the long, dark night of endless tribal wars, there emerged a light that somehow has survived all the ravages of time, always burning brighter, always illuminating Europe's way to the future. Today, that shining light of European Union is a matter of the utmost importance, not just to Europeans, but to everyone on this planet.

For Europe has shown the world humanity at its best and at its worse. Europe's most violent history was caused by men claiming the mantle of Charlemagne, men who sought to impose European union for their own ends without the consent of the people. History teaches, therefore, that European union, not to mention transatlantic unity, must come from the considered judgment of free people and must be for worthy purposes that when threatened must be defended.

The creators of this prize and its first winners clearly understood that. We often say that theirs was the generation that rebuilt Europe after World War II. But actually, they did far more. They built the foundation of something entirely new -- a Europe united in common commitment to democracy, free markets and the rule of law. That achievement endured for half a century, but only for half a continent.

Then, 11 years ago, the Berlin Wall fell, the Iron Curtain parted, and at last the prospect of a Europe whole and free opened before you. All of us will remember 1989 for the Wall crumbling to the powerful strains of Schiller's "Ode to Joy." It was a moment of great liberation, like 1789 or 1848 -- a particular triumph for the German people, whose own unification defied great adversity and set the stage for the larger unification of Europe.

Too often we forget that 1989 was also a time of grave uncertainty about the future. There were doubts about NATO's future, reinforced later by its slowness to confront evil in Bosnia and Croatia. There were fears that the EU's efforts to come closer together would either fail or, succeeding, would fatally divide Europe and the United States. The countries of Central and Eastern Europe feared becoming a gray zone of poverty and insecurity. Many wondered if Russia was headed for a communist backlash or a nationalist coup.

In January of 1994, I came to Europe for the first time as President, both to celebrate Europe's new birth of freedom and to build upon it. Then, I spoke of a new conception of European security, based not on divided defense blocs, but instead on political, military and cultural integration. This new security idea required, as has already been said, the transatlantic alliance to do for Europe's East what we did for Europe's West after World War II.

Together, we set about doing that. We lowered trade barriers, supported young democracies, adapted NATO to new challenges and expanded our alliance across Europe's old divide. We made clear, and I repeat today, that NATO's door remains open to new members. The EU took in three new members that opened negotiations with a dozen others, created a single market with one currency.

We've stood by Russia, struggling to build their own democracy and opened the way to a partnership between Russia and NATO and between Ukraine and NATO. We defended the values at the heart of our vision of an undivided Europe, acting to stop the ethnic cleansing in Bosnia and forging what I believe will be an enduring peace there.

We acted in Kosovo in one of our alliance's finest moments. A year go in Germany, we launched a Stability Pact for Southeastern Europe. We stand still with crusaders for tolerance and freedom from Croatia to Slovakia to Serbia, and we do encourage reconciliation between Turkey and Greece.

Over the last 11 years, of course, there have been some setbacks. But unquestionably, Europe today is more united, more democratic, more peaceful than ever, and both Europeans and Americans should be proud of that.

Think how much has changed. Borders built to stop tanks now manage invasions of tourists and trucks. Europe's fastest-growing economies are now on the other side of the old Iron Curtain. At NATO Headquarters the flags of 19 allies and 27 partners fly. In Central Europe and Eastern Europe, the realistic dream of membership in the EU and NATO has sparked the resolution of almost every old ethnic and border dispute. And, finally -- finally -- our friend, Vaclav Havel, has spent more years being President than he spent in prison. (Applause.)

In Southeastern Europe, the Bosnians are still fighting, but now at the ballot box. Croatia is a democracy. Soldiers from almost every European country, including bitter former adversaries, are keeping the peace together in Kosovo.

Last year, as German troops marched through the Balkan countryside, they were hailed as liberators. What a way to end the 20th century. (Applause.)

In the meantime, Russia has stayed on the path of democracy, though its people have suffered bitter economic hardships, political and criminal violence, and the tragedy of the war in Chechnya, which yet may prove to be self-defeating because of the civilian casualties. Still, it has withdrawn its troops from the Baltic states, accepted the independence of its neighbors, and completed the first democratic transition in its thousand-year history.

European unity really is producing something new under the sun -- common institutions that are bigger than the nation-state, and at the same time, a devolution of democratic authority downward. Scotland and Wales have their own parliaments. This week, Northern Ireland, where my family has its roots, restored its new government. Europe is alive with the sound of ancient place names being spoken again -- Catalonia, Piedmont, Lombardy, Silesia, Transylvania, Uthenia -- not in the name of separatism, but in the spirit of healthy pride and heritage.

National sovereignty is being enriched by lively local voices making Europe safer for diversity, reaffirming our common humanity, reducing the chance that European disunity will embroil Europe and America in another large conflict.

One thing, thankfully, has not changed. Europe's security remains tied to America's security. When it is threatened, as it was in Bosnia and Kosovo, we, too, will respond. When it is being built, we, too, will always take part.

Europe's peace sets a powerful example to other parts of the world that remain divided along ethnic, religious and national lines. Even today Europe has internal disputes over fundamental questions of sovereignty, political power, and economic policy -- disputes no less consequential than those over which people still fight and die in other parts of the world. However, instead of fighting and dying over them now, Europeans argue about them in Brussels, in a spirit of cooperation and mutual respect.

The whole world should take notice of this. If Western Europe could come together after the carnage of World War II, if Central Europe could do it following 50 years of communism, it can be done everywhere on this Earth. (Applause.)

Of course, for all of the positive developments and our good feelings today, the job of building a united Europe is certainly not finished, and it is important not to take all this self-congratulation too far. Instead, we should focus today on two big pieces of unfinished business and one enduring challenge. The first piece of unfinished business is to make Southeast Europe fully, finally and forever a part of the rest of Europe. That is the only way to make peace last in that bitterly divided region.

It cannot be done by forcing people to live together; there is no bringing back the old Yugoslavia. It cannot be done by giving every community its own country, army, and flag; shifting so many borders in the Balkans will only shake the peace further.

Our goal must be to de-Balkanize the Balkans. (Applause.) We must help them to create a magnet that will bring people together, a magnet more powerful than the polarizing pull of their old hatreds. That's what the Stability Pact that Germany helped to establish is designed to do, challenging the nations of Southeast Europe to reform their economies and strengthen their democracies, and pledging more than $6 billion from the rest of us to support their efforts. Now we must turn quickly those pledges into positive changes in the lives of ordinary people, and steadily bring those nations into Western institutions.

We must also remain unrelenting in our support for a democratic transition in Serbia. For if there is to be a future for democracy and tolerance in this region, there must be no future for Mr. Milosevic and his policy of ethnic hatred and ethnic cleansing. (Applause.)

If Southeastern Europe is to be fully integrated into the continent, Turkey also must be included. I applaud the EU's decision to treat Turkey as a real candidate for membership. I hope both Turkey and the EU will take the next steps. It will be good for Turkey, good for Southeast Europe; good for more rapid reconciliation between Greece and Turkey and the resolution of Cyprus, and good for the entire world, which is still too divided over religious differences. (Applause.)

Our second piece of unfinished business concerns Russia. We must work to build a partnership with Russia that encourages stability, democracy and cooperative engagement with the West -- and full integration with global institutions.

Only time will tell what Russia's ultimate role in Europe will be. We do not yet know if Russia's hard-won democratic freedoms will endure. We don't know yet whether it will define its greatness in yesterday's terms, or tomorrow's. The Russian people will make those decisions.

Though Russia's transformation is incomplete, there clearly is reason for hope in Russia's remarkable journey over these last few years -- from dictatorship to democracy; from communism to the market; from empire to nation state; from adversary to partner in reducing the threat of mass destruction. Because the stakes are so high, we must do everything we can to encourage a Russia that is fully democratic and united in its diversity; a Russia that defines its greatness not by dominance of its neighbors, but by the dominant achievements of its people and its partnership; a Russia that should be, indeed, must be, fully part of Europe.

That means no doors can be sealed shut to Russia -- not NATO's, not the EU's. The alternative would be a future of harmful competition between Russia and the rest, and the end of our vision of an undivided continent.

As Winston Churchill said when he received the Charlemagne Prize in the far darker days of 1956, "in a true unity of Europe, Russia must have her part." Of course, Russia may very well decide it has no interest in formally joining European or transatlantic institutions. If that happens, we must make sure that, as the EU and NATO expand, their eastern borders become gateways to Russia, not barriers to trade, travel and security cooperation. We must build real institutional links with Russia, as NATO has begun to do. Of course, it won't be easy, and there is still mistrust to be overcome on both sides, but it is possible and absolutely necessary. (Applause.)

The steps necessary to bring Southeast Europe and Russia into the embrace of European unity illustrate the continued importance of the transatlantic alliance to both Europe and America. The enduring challenge we face, therefore, is to preserve and strengthen our alliance as Europe continues its coming together.

We have agreed on the principles; we have laid the foundations. But the future we're building will look very different from anything we have ever known. In a generation, I expect the EU will have as many as 30 members, from the Baltics to the Balkans to Turkey; a community of unprecedented cultural, political and economic diversity and vitality. It will be a bigger Europe than Charlemagne ever dared dream, a reflection of our recognition that ultimately, Europe is a unifying idea as much as a particular place. An expansive continent of different peoples who embrace a common destiny, play by the same rules, and affirm the same truths -- that ethnic and religious hatred are unacceptable; that human rights are inalienable and universal; that our differences are a source of strength, not weakness; that conflicts must be resolved by arguments, not by arms.

I believe America must continue to support Europe's most ambitious unification efforts. And I believe Europe should want to strengthen our alliance even as you grow stronger. The alliance has been the bedrock of our security for half a century. It can be the foundation on which our common future is built.

Oh, it's easy to point to our differences; many do. On my bad days, I do. But let's keep a healthy perspective. Consider these news headlines about U.S.-European dispute: "Allies Complain Of Washington's Heavy Hand," "France To NATO: Non, Merci," "U.S. Declares Economic Warfare On Allies," "Protestors Rally Against American Arms Plan." The first of those headlines is from the Suez crisis in 1956. The second is from 1966, when France left NATO's military command. The third is from 1981, the Siberian Pipeline crisis. The fourth, from 1986 during the debate about deploying intermediate nuclear missiles in Europe.

Yes, we've always had our differences and being human and imperfect, we always will. But the simple fact is, since Europe is an idea as much as a place, America also is a part of Europe, bound by ties of family, history and values. (Applause.)

More than ever, we are also actually connected. Underwater cables allow us to send staggering amounts of e-mail and e-commerce to each other instantaneously. One billion dollars in trade and investment goes back and forth every day, employing more than 14 million people on both sides of the Atlantic.

And there is the enduring connection -- the 104,000 Americans who lie in military cemeteries across Europe. Today's Europe would not be possible without them. And whatever work I have done to merit your prize was built on their sacrifice. (Applause.)

So, my friends, we must nourish the ties that bind us as we work to resolve honest disagreements, and to overcome potentially harmful misperceptions, on both sides of the Atlantic. Let me mention just two.

There is a perception right now in America that Europe doesn't always carry its fair share of our mutual responsibilities. Yet Europeans are providing more than 80 percent of both the troops keeping the peace in Kosovo and the funds for economic reconstruction there. And few Americans know that in our own backyard, Europeans paid for more than 60 percent of all aid to Central America when it was ravaged by Hurricane Mitch, and one-third of all support for peace in Guatemala.

At the same time, there is a perception in Europe that America's power -- military, economic, cultural -- is at times too overbearing. Perhaps our role in NATO's air campaign in Kosovo accentuated such fears. But in Kosovo, our power was exercised in alliance with Europe, in pursuit of our shared interest in European peace and stability, in defense of shared values central to the goal of European integration.

If, after Kosovo, European countries strengthen their own ability to act with greater authority and responsibility in times of crisis, while maintaining our transatlantic link, I think that is a very good thing. There is no contradiction between a strong Europe and a strong transatlantic partnership. (Applause.)

I would also like to mention that our partnership, as the Lord Mayor pointed out, and as Chancellor Schroeder said, remains profoundly important, not only to ourselves, but to the rest of the world as well. Together, we account for more than half the world's economy and 90 percent of its humanitarian aid. If we're going to win the fight against terrorism, organized crime, the spread of weapons of mass destruction; if we want to promote ethnic, religious, and racial tolerance; if we want to combat global warming and environmental degradation, fight infectious disease, ease poverty, and close the digital divide -- clearly, we must do these things together.

Europe and America should draw strength from our transatlantic alliance. Europe should not be threatened by it, and America must not listen to those who say we should go it alone. America must remain Europe's good partner and good ally.

Lord Palmerston's rule that countries have no permanent alliances, only permanent interests, simply does not apply to our relationship. For America has a permanent interest in a permanent alliance with Europe. (Applause.) Our shared future is deeply rooted in our shared history. The American Revolution, after all, stemmed in part from the Seven Years War -- which in turn stemmed from a treaty signed here in Aachen in 1748.

Now, a few days ago, I stood at the mouth of the Tagus River in Lisbon. From that spot over five centuries ago, brave Europeans began to explore the far reaches of our planet. They traveled unimaginable distances and conquered indescribable adversity on their way to find Asia, Africa and the Americas. In their wake, the sons and daughters of this continent came across the Atlantic to populate places they called New Spain, New England, New France, New Netherlands, Nova Scotia, New Sweden -- in short, a new Europe. Without the longing for a new Europe, there never would have been an America in the first place.

Now, as the longing for a new Europe takes root on the soil of the old continent, we should never let a sense of history's inevitability cloud our wonder at how astonishingly Europeans changed the rest of the world through enterprise, imagination and their ability to grow -- qualities that always will define Europe's identity far more accurately than any mapmaker ever will.

In the years ahead, as pilgrims of peace come here to Aachen, I hope they will reflect on the similarity of the two monuments enshrined here. First, the magnificent cathedral holding Charlemagne's mortal remains -- begun in his lifetime, added to throughout the Middle Ages, repaired in the 20th century, when our failure to keep the peace required it. And second, the peace and unity that three generations have been building for five decades now in Europe -- a work far from complete, perhaps never to be completed, but completely worthy of our best labors and dreams.

Let us keep building this cathedral -- the cathedral of European unity -- on the foundation of our alliance for freedom. Because I have tried to lay a stone or two in my time, I am honored and humbled to accept this prize.

Thank you very much. (Applause.)