The full text of Jack Straw's speech to the Brookings Institution in Washington.

"Ladies and gentlemen,

It is a great honour for me to speak to you today here at the Brookings Institution and, as always, it is a tremendous pleasure to visit the capital of my country's closest and most enduring ally.

For the UK, relations with the US are not just a matter of foreign policy.

Over a million jobs in each of our countries depend on investment from the other. We remain the biggest external investors in each other's economies.

From fashion to food to finance to film, people in both countries are affected daily by what happens on the other side of the Atlantic. But I know that my Foreign Minister colleagues from France, Germany, Italy or Spain can speak of similarly close ties between their peoples and this great and dynamic country.

As Europeans, we watch, wear, eat, drink or otherwise consume American culture every day. We on the eastern side of the Atlantic have instinctively shared in the feelings of pain and trauma of the violent events of September 11.

Today I want to set out my thinking on the consequences of that evil act, and explore with you the ways in which I believe we must adapt to a world changed forever by that assault on everything we believe in.

There are five points I want to make about the principles on which I believe transatlantic foreign and security policies have to be based in this changing world.

The first and most fundamental of them is that the great alliance between the democracies of America and Europe is more vital than ever. We have friends and allies all around the world, but for more than half a century Europe and America have stood together as a rock of stability, order and freedom. We must never forget that together we defeated fascism, and then communism.

These were very dangerous but also rather straightforward threats to our freedom. The threat we now face is more insidious. The enemy is not so visible.

Our enemy now is not a commander marshalling tanks and plane and ships, but a terrorist slipping unnoticed on to a passenger aircraft. Our defence against this enemy requires eternal vigilance over the values we share. These values are easy to take for granted. We travel where we wish, we trade where we want. We go about our lives securely, as we please.

But these great freedoms did not just happen. They exist because we have put in place the physical security and the system of values which make a free world possible. The transatlantic alliance is an essential relationship on which our freedoms are built.

We may differ from time to time about our priorities, but we do not differ on the values we share and the freedom we defend together. We may differ on specifics, but we do so as friends.

I believe it is important, now, to recognise this. We should not set ourselves a standard by which we agree on everything. As free-thinking democracies, we obviously cannot, and should not. But we agree on what really matters. And we should be more relaxed about those issues on which we differ.

Of course there are important differences. Some are obvious and specific - I will come on to them in a moment. But I would suggest that overlaying all this is a fundamental difference in the mutual perception of each other. For example, when some in Europe complain about American "isolationism", "exceptionalism" or whatever, they tend to assume that the US is easily comparable to a European nation state. But it is not.

You know, but we sometimes forget, that the US is half a continent: its population is about equal to that of the five largest EU member states; its GDP greater still. Americans, correctly and rightly, consider that it is they as Americans who created the modern world's greatest democracy. But Europeans tend to see the US through a different prism.

They see a US born out of Europe; born from those with the courage, imagination, iconoclasm to break away from the straightjacket not just of poverty but of institutional and political constraints in Europe to form what has long represented, in an almost idealised form, the best of European values and institutions.

For all these reasons, of size, power, origin, but above all a "what might have been" and "what could be" example to those in Europe, the US is a source of more absorbing fascination to Europeans than ever an individual European country could be to the US.

I'd like to think that we in the UK are more relaxed about this lack of symmetry in the perceived relationship than are some elsewhere in Europe. But even for us it seems that we get more twitchy about specific differences of opinion and policy than we do with our European allies.

There are in fact plenty of differences with our European partners in the EU - over beef and asylum seekers and energy liberalisation with France, over a properly functioning free market in financial services with Germany, over the siting of European agencies with Italy.

So what? The idea that we will always agree on everything with our European allies is ludicrous. Yet when differences arise between Europe and the US - as there are on matters like climate change, steel and the scope of international controls through the Biological Weapons Convention or the International Criminal Court - we seem much more worried about the effect on the fundamentals of the relationship. We should not be.

In truth, relations between European countries and the US, as within Europe, have long been replete with differences. What should define a successful relationship is not, in my view, the synthetic insinuation that there are no differences but the way in which these differences are resolved.

We are mature enough to cope with dissent and debate. We both recognise the fundamental commonality of our roots and values. America came to Europe's aid twice in twenty-five years; and then stood by Europe for another forty-five years as it struggled with Soviet totalitarianism. Equally, the immediate reaction to the attacks on your country on September 11 was the same as if our own territories had been attacked.

Nearly eight months later, France and Germany as well as the UK have forces on active service alongside US troops in Afghanistan. There are over 6,000 European troops there, compared with 7,000 US troops. There is also an unprecedented level of co-operation between law enforcement agencies on both sides of the Atlantic helping to track down terrorist suspects and their finances.

This is a good example of how the US and Europe can and should tackle international security issues together. Recent developments in the Middle East reinforce that point.

Joint efforts by American and British diplomats produced the deal last week which allowed Yasser Arafat to emerge from his headquarters at Ramallah, while six Palestinians wanted for terrorism and other offences are being detained under the oversight of supervisory wardens from our countries. This US-UK initiative has helped to resolve a dangerous situation.

It is vital that President Arafat uses the space created by this diplomacy to rein in extremists and re-commit the Palestinian Authority unreservedly to a resumed peace process. In turn, Israel needs to fulfil its obligations under UN Security Council Resolutions to withdraw fully from the Occupied Territories.

Having suffered from terrorist attacks for 30 years, we in the UK know how difficult it is to sustain a peace process while violence continues.

But equally, we know two truths from our experience of Irish terrorism. First, there can be no purely military solution to a dispute of this kind; second, outside mediation has been an essential precondition of the even partial success of the Good Friday agreement and what has followed.

In the Middle East, such outside mediation and involvement is essential if there is ever to be a political resolution to the conflict.

And I particularly welcome in this context the announcement by Secretary Powell last Thursday of the Administration's commitment to a regional conference in the Middle East.

This follows the discussions with the EU, and the UN and Russian Federation and, I might underline the patient and professional involvement of EU High Representative Javier Solana, who has done more than anyone to bring coherence to our EU foreign policy. The commonality of approach represented by this latest development is essential.

Of course, there are differences of geography, history and economic ties between the US, EU and Russia when it comes to the Middle East. And because of these differences, it is all too easy for us to be divided by the clamour of partisans to act as cheerleaders for one side or another. But the conflict is too serious for that.

Because of its potential impact in the Middle East and elsewhere, the transatlantic alliance between the great democracies of Europe and America is, as I have already indicated, more important than ever.

But we also need to recognise that the lack of symmetry in the relationship extends to security.

Jim Hoagland put it well in a typically cogent article in the Washington Post last month when he said: "Europeans are accustomed to the insecurity of their geography and history. A decade after the Cold War ended, they feel more secure from the direct threat of war and annihilation than they have in centuries. At the same moment, Americans have had the security blanket of oceans and distance yanked away in particularly brutal fashion".

The second point I wish to make is this: that engaging with the world to drive back chaos must be a key line of defence for Europeans as well as Americans.

For more than half a century, since Winston Churchill and Franklin Roosevelt signed the Atlantic Charter in 1941, our interests and values have been intimately aligned.

Today, these values are more powerful than ever. The last decade has seen an historic decline of authoritarianism. The shift from Brezhnev's Soviet Union to Putin's Russia has been quite remarkable. In country after country, in Asia, Africa and Latin America, democracy, human rights and the rule of law have taken the place of tyranny, oppression and the rule of fear.

Yet the greatest concentration of democratic countries is still to be found in Europe and America: and with the financial resources, the political will and the global reach to uphold these values in the rest of the world.

During the Cold War, this meant standing up to countries where the state had too much power over the individual. That is still necessary today - as the example of overwhelmingly undemocratic states like Iraq and the DPRK illustrate all too well. But September 11 also showed that now it is also countries where the state has too little power, or has collapsed altogether, which increasingly give rise to concern.

Promoting human rights, fighting poverty, exclusion and injustice, and preventing and resolving conflicts are not merely right and just: they can act as a first line of defence against future crises. By engaging with the world, and driving back the boundaries of chaos, we are helping to prevent instability and insecurity, in order to stop conflict, tyranny and terrorism. This is what we have achieved in Afghanistan. No-one can doubt that it is of direct benefit to our own security. This has strengthened Europe's security as well as America's.

This brings me to my third point: far from being a weakness, the different assets and perspectives which Europe and America bring to the world's problems are a source of strength.

A glance at some raw figures shows up some startling contrasts. The US outspends the EU on defence. The EU outspends the US on aid. So we each have our particular strengths: and when we put them together in a common cause, the results can be dramatic.

It was only when Europe and America were finally pulling in the same direction in the Balkans, after Srebrenica, that the tide of violence was turned and the scene was set for the Dayton Agreement.

And later, it was with US military engagement through NATO that we together resolved the Kosovo crisis in 1999.

Today, a massive commitment of resources by the EU is gradually rebuilding shattered societies throughout the region and laying firm foundations for stability and democracy. But the division of labour between the US and the EU is not absolute. Americans, too, are working on reconstruction in the Balkans.

And while I recognise that some here in Washington are wary of the term "nation-building", it is worth reminding ourselves that the US experience in this field has been spectacularly successful in the past. Japan as well as Germany, the second and third largest economies in the world today, each owe their prosperity to the vision of US policymakers in the 1940s and 50s.

The US also fostered those post-war institutions which still underpin international stability - the UN, the IMF, the World Bank, NATO.

Despite all this, some in Europe are, I believe, reluctant to give the US credit for what it does. But the recent historic decision by President Bush to increase US foreign aid spending by $5 billion is powerful evidence of the US determination to engage.

Equally, there are some here in Washington who suggest that Europe has nothing to offer on the military side. That is, I am pleased to say, not the case. As well as our contribution to Operation Enduring Freedom and the International Security Assistance Force in Afghanistan, 75% of the deployed troops in the Balkans are European (as well they should be).

Defence reviews across Europe are putting emphasis on more deployable forces. We in the UK spend more on defence than any other EU ally, in absolute terms and as a percentage of GDP. But I certainly accept that spending just 1.5% of GDP on defence, as some other European allies do, is simply not enough to make a proper contribution.

Defence budgets are not, however, about to double in Europe. And structural differences mean that the gap in transatlantic military capabilities is unlikely to diminish. The US has one defence budget. The European Allies have seventeen separate ones. But in Europe we have to make the investment needed for our forces to go on working more effectively to be able to work alongside the US or where the alliance needs to intervene but where there are good reasons for the US not being involved direct on the ground.

It was to deal with these gaps that Tony Blair in October 1998 first proposed a European Security and Defence Policy - built on a new relationship between the EU and NATO, as the twin foundation of European security and prosperity.

It will take on the international police mission in Bosnia from next January. It could have a military role in Macedonia this year if the circumstances are right. But ESDP is emphatically not NATO's replacement. However effective Europe becomes as a regional or global actor, we cannot expect to make a real difference without regular, close and systematic co-operation with the US.

So my fourth point is that NATO must remain a key part of our alliance, and therefore has to evolve to meet the evolving threat.

A decade and more ago, many commentators thought NATO would disappear with the Cold War. Yet our security today still depends on the Atlantic Alliance.

NATO itself is not engaged in Afghanistan. But it still feels like a NATO operation. Because Europeans are used to planning, exercising and developing concepts together with Americans in NATO, our deployment in the Afghan theatre has worked smoothly. NATO is the principal instrument for sustaining the means for European military collaboration with the US.

And NATO has helped transform Europe. Its Partnership for Peace with the post-Communist states has completely reformed their security sectors and helped the make the transition to democracy and free markets.

Already, Hungary, the Czech Republic and Poland have joined. At the forthcoming Prague Summit in November, more European countries will be invited to join.

And, through the NATO-Russia Council, we will now be working together with the Russians - as equal partners pursuing common projects - an unthinkable prospect just a few years ago.

But my fifth and last point is that NATO alone should not be expected to carry the entire weight of the transatlantic relationship: we have to attend to the US-EU relationship more widely.

Disputes like steel attract millions of column inches, but they tend to conceal a deeper reality which is of growth of trade and economic interdependence between the EU and the US. The EU and the US need to work more vigorously to promote international trade. The EU itself has to resolve some of its own blocks on the development of trade with some of the poorest countries in the world, not least through reform of the Common Agricultural Policy.

This is a particularly important message for the political class in Europe, at a time when its energies are absorbed in an internal debate about the institutional shape of the EU. But ultimately what matters is not the process, but its outcome. For fundamentally, the EU is a means to an end. That end consists of security and prosperity.

The EU is on the point of admitting up to ten new members, finally transcending the barriers of the Cold War. Together with NATO, the EU is one of the principal agents for achieving what President Bush has described as "a Europe whole, free and at peace". An EU at 25 is bound to alter the dynamics of the transatlantic relationship. But this should never be used as a reason for Europe to distance itself from the US. We Europeans always need to remember that we can achieve far more for our own security and prosperity through our alliance with the US.

There is no contradiction between being pro-American and pro-European. I do not share the view of Romano Prodi, the President of the European Commission, that Britain's relationship with the US somehow gets in the way of playing a full part in Europe. I reject the idea that relations with the US and EU involve a zero sum - that an individual has to prove his "pro-European" credentials by being anti-American.

The truth is that all European nations have ties of family, friendship and culture with the US, which are often as close as those we enjoy with each other.

And within Europe, we have learned in recent decades the value of working closely with one another: of maximising our agreement and minimising our differences.

We should conduct our relations with the US on the same basis. Our fundamental interests are the same. We have everything to gain from continuing a robust, confident partnership in the future.

Ladies and Gentlemen,

Europe does need better explaining to Americans, and America needs better explaining to Europe.

Sometimes we will do things differently. Yet, to be successful, we have to do the important things together.

The Atlantic Alliance has endured because it is founded not just on interests, but on values. And while the world may change, the fundamental values which have bound us together for half a century have not changed.

Our unshakeable faith in democracy and the rule of law is the foundation not only of our freedom, but also of our security and prosperity. There will be debate, and there will be differences of approach. Yet neither will undermine an enduring alliance of enduring values."