PAOLA BUONADONNA:            Europe is facing a huge challenge 
- the EU is accused of being divided and directionless.  In the UK many 
reject further integration.  And in many other countries public support 
for the EU is uncomfortably low.  Resolving this crisis of confidence may 
be impossible.  This man chose to accept the mission.  Romano Prodi is 
the head of the Brussels machine - the President of the European Commission.

ROMANO PRODI:                I am confident that, because 
of this crisis, because the need of Europe that is so important, will become 
more clear to citizens.  Of course to get more confidence we have to deliver.

BUONADONNA:                Romano Prodi has been in his 
job for a year and a half.  He's never had an easy time of it - dogged 
by criticisms of his personal style and his vision right from the start. 
 Now he has to face the fact that while many people in the UK and across 
Europe remain unconvinced about the European project, for the first time 
in recent history European leaders too are deeply divided about the direction 
the EU should take.

Last week On the Record followed Romano Prodi as he delivered his State 
of the Union address to the European Parliament in Strasbourg and travelled 
to London on a charm offensive.  Mr Prodi is ready to take his critics 
on wherever they come from.  Charles Grant, Director of the Centre for 
European Reform, a Europhile close to Tony Blair.  Janet Bush, Director 
of New Europe, campaigns against the Euro, and further integration. They 
both have their criticisms of Romano Prodi.

CHARLES GRANT:                The commission still has 
huge powers on the single market and competition policy.  But I think what 
it's lost is the ability to set the agenda for the EU overall.

JANET BUSH:                You get opinion polls saying 
that opinion about the EU is sliding and Prodi gets in there and says, 
well, I don't care about that, we have a destination, it's my destination 
and it's political union, so he's a brave man, but he's desperately out 
of touch with the way people think. 

BUONADONNA:                The last European summit in 
Nice should have given Europe a fresh start.  The aim was to simplify decision 
making, preparing the way for more countries to join the Union.  The commission 
needed a success to increase its own credibility.  But away from the cameras, 
there were few smiles, as the talks turned into a battle of narrow national 
interests, and the commission found itself sidelined.  

CHARLES GRANT:                Some of the key meetings 
that went on at the summit, President Chirac said he didn't want little 
bureaucrats like Mr Prodi in the room, so Prodi was told to leave once 
or twice.  And I think that is a reflection of the fact that the Commission 
was not playing the major role at a summit which it would have done in 
the days of Jacques Delors.

PRODI:                    Nice showed that you need 
an honest broker, you know, that doesn't want to show power or to oppress 
others but just to put things in harmony and to try to make compatible 
the position of different states, from this point of view, of course, you're 
helped by the agreement of the states, it's clear. You know the commission 
has no interest to divide the states and to make them fighting each other 
you know. 

BUONADONNA:                After the bitter rows of Nice, 
France and Germany had to make a show of reconciliation.  So last month 
the German Chancellor Gerhard Shroeder and the French President Jacques 
Chirac staged a friendly encounter over dinner near Strasbourg.  But they 
can't agree on the recipe for the future of Europe.  The French are keen 
to see Europe shaped by alliances between the leading nation states, the 
so-called inter-governmental method.  The Germans want the European Commission 
and the Parliament to be at the heart of a federal structure.

President Chirac and Chancellor Shroeder reportedly enjoyed their dinner 
here at Chez Philippe - no doubt thanks to the food more than the conversation. 
 This would seem the perfect moment for Tony Blair to try and join the 
European top table, but it's not that simple.  The British Government has 
never found it easy to work with the French.  Nor it is comfortable with 
the German federal vision of Europe, enshrined in a legally binding constitution. 
 But the European commission likes the German model because it reinforces 
its central role as the honest broker and the engine for further integration.

GRANT:                    Well, certainly Prodi shares 
the German view that EU institutions like the Commission should have quite 
a lot of power and that the governments, the so-called inter-governmental 
mechanisms, should not take over the EU.  But if Prodi wants to influence 
this debate on the governance of Europe, with his White Paper, he's got 
to be careful not to just take one particular line.  The commission is 
always most influential when it tries to hold the middle ground and act 
as a balance between the different viewpoints.   

PRODI:                    The Commission is necessary 
in order that the nation states can express themselves in the new globalisation. 
 If they're not helped to co-operate they will never lead again, you know, 
only through co-operation we can go back to European leadership - it doesn't 
mean superstate, it doesn't mean centralising power, I'm against it, I'm 
for decentralising, but there are things that we have to do together. 

BUONADONNA:                Each year Romano Prodi reports 
with the European Parliament in Strasbourg on his plans for Europe.  The 
British government is happy that Mr Prodi shares its economic agenda.  
But it's nervous when he says the EU must be more than a trading bloc and 
develop into a political entity as many voters are suspicious of giving 
up more power to the commission and the MEPs.  In an ICM opinion poll of 
one-thousand British people for BBC News Online, fifty-one per cent said 
they were concerned about closer integration.  But Mr Prodi is undeterred.
 
PRODI:                    If you don't want, you don't 
integrate.  I don't want to oblige anybody and I only ask in Nice, well, 
if somebody doesn't want to go quick, he may go slow or even stop.  If 
some countries, must be a good number of countries, want to co-operate 
together in order to have more speed, they can do it, and so I think that 
to be outside Europe you will be outside, you know, the driving force of 
history, but it's a choice.

BUSH:                        I don't think that 
he has public opinion in Europe with him.  People are very wedded to their 
own identities, cultural, their own countries, their own democracies actually; 
and it will take some time I think for people to want to be part of a political 
entity called Europe.

BUONADONNA:                The weekly meeting of the European 
commission.  Mr. Prodi and his nineteen colleagues are keen to lead the 
agenda on economic reforms - at a summit next month they want to make it 
easier for people to work wherever they want in the EU.   While all countries 
agree on completing the single market, many including Britain, reject his 
plea that that has to involve some tax harmonisation. 

PRODI:                    The proposals were relating 
double taxation, were relating fraud fighting, were relating modernisation 
of the system of added value taxation because of electronic revolution, 
only that.  And these are things that are necessary for the single market 
and everybody wants that, but I clearly told that if you want to change 
your income tax you can do it, I don't care about it, nobody cares about 
it, but you know if you want to use taxation as an indirect way of making 
competition in the single market I think we have to be worried and please 
let us judge on facts honestly.

BUONADONNA:                The President of the Commission 
has only minutes to spare to catch the Eurostar to London, where he'll 
be quizzed by some of his harshest critics - British journalists.  But 
there is some good news for Mr. Prodi.

MUSIC.
                        The British Government 
has promised to test whether the conditions to join the Euro are right 
within the first two years of re-election. While careful not to be seen 
to interfere with the British debate Mr. Prodi says Britain will lose influence 
if it doesn't come on board the single currency. 

PRODI:                    I don't want to persuade 
the British people to choose to enter into the Euro.  I've only to demonstrate 
that they've more to lose if they're out and this is a challenge, these 
are facts will demonstrate it.  I'm convinced that to be out you're heavily 
influenced by Europe and you have no decision power, so it's a net damage 
to a big country like the UK.

BUSH:                        I don't buy this 
influence thing and I think that you have to look at the Euro for Britain 
on its merits.  In my view it's a big risk economically and it's worth 
giving up some influence over some parts of economic policy.

BUONADONNA:                This week Romano Prodi met 
Tony Blair for breakfast at Number 10 to discuss next month's European 
jobs summit.  Mr. Prodi was the choice of the Prime Minister because of 
his moderate, free market approach.  But there's a feeling in Downing Street 
that Mr. Prodi has become over ambitious in other fields - especially on 
foreign and defence issues.  Europe still speaks with two voices on foreign 
matters - one is Javier Solana, based at the council of ministers, the 
other is the European Commissioner Chris Patten.  Mr. Prodi cannot disguise 
his ambition to see the commission fully in charge of foreign policy.

GRANT:                    One of the problems that 
some of the governments have with Prodi is that they think he's gone beyond 
his remit.  For example he has talked about a European Army, he said that 
Nato should not use depleted uranium shells in the Balkans and he's talked 
about European Foreign Policy which are not really his core competencies.

PRODI:                    Well I never went out of 
my competence so it's simply you know their accusations are not true.  
What I proposed and this proposal, very controversial, but I still stick 
on it, is that you know the man who has the responsibility for defence, 
you know that he's now defence and foreign policy, Mr. PESC he's called 
in the European jargon, that is now outside the Commission, will be part 
of the Commission in order to co-ordinate better the job.  And you know 
foreign policy is done in many pieces, external aid, common projects in 
different countries, is made of pure classic foreign policy matters, diplomatic 
matters and so on, and you can't have a competence in one spot, another 
competence in another spot, all divided, it's a messy situation.  It's 
clear that you have to be unified and I think that this proposal was proper 
that has to be carried on.
 
BUONADONNA:                It's not often you can accuse 
Romano Prodi of being underdressed but today his advisers might have suggested 
a suit of armour. He's on his way to the arena of British Euro-scepticism, 
the Westminster lobby.  Many of the journalists he's about to meet for 
lunch blame him personally for the direction Europe is taking.  So we asked 
Mr. Prodi what he hopes to achieve by talking to them.  

PRODI:                    To demonstrate that Europe 
is at the service of the citizens, that there are results that cannot be 
got without Europe, if I do that, I think their confidence will come back. 
 

BUONADONNA:                In films, the mission is always 
accomplished at the last minute.  In the real world if he wants to be remembered 
for his role, Romano Prodi still has three years to impose his vision of 
a stronger commission at the heart of a political Union.  But to do that 
he'll need to win over the sceptics at Westminster, throughout Britain 
and beyond.