In a speech before parliament, Schröder said the EU's enlargement was a "historic mission" that would ensure peace and security for Europe. "Finally the painful separation of Europe which has lasted for decades will be overcome," he said.

He offered the new EU members -- the majority of which are formerly communist countries from Eastern Europe -- a hearty welcome back into the "European family." But Schröder also addressed the fears many Germans have about enlargement, saying he understood many people were worried about losing their jobs to lower wage competition in the new countries.

"The federal government takes seriously the concern that enlargement has increased pressure on the labor market," he said, justifying the employment restrictions Germany has implemented for new EU citizens.

He also admitted globalization might cause some German companies to move jobs abroad, but added that such shifts could help strength their core business at home. "That can also lead to more employment in our own country," Schröder said. "Together we have to make clear that the opportunities outweigh the risks."

Schröder said that Germany, which for many years made up the eastern border of the EU, stood to gain much from enlargement by being once again at the heart of Europe. He pointed out that economic integration between old and new members was already underway and that Germany exported nearly as much to its eastern neighbors as it did to the United States.

"The enlargement will not make us poorer, but rather richer," he said. However, he also renewed calls for harmonizing EU taxes, saying there could be no one-sided tax competition at the expense of those countries that are net contributors to the EU budget.

Tax worries

Both Schröder's government and Germany's conservative opposition are worried that once the EU expands, companies will be tempted to move production facilities to eastern European countries with rock-bottom labor costs and taxes. Such a migration would undermine Germany's tax base while moving jobs abroad.

Saying nobody wanted to take away the right of the new members to encourage foreign investment, Schröder called for an EU-designated corridor to avoid destructive tax dumping. "The future of our country cannot lie in joining a merciless competition of low wages and tax rates," he said.

Angela Merkel, the leader of the conservative opposition, also hailed the EU's expansion, but said that the government had not prepared Germany for the event. She said Berlin needed to learn from other EU members which had already implemented successful economic reforms.

"We have to occupy ourselves with our weakness," she said, noting Germany's poor growth and high unemployment. "If we don't, we won't be successful in Europe."

Schröder also addressed the ongoing debate surrounding the draft EU constitution, saying he would push for negotiations to be wrapped up before the end of the Irish EU presidency in June. Negotiations over the charter collapsed in December when Spain and Poland rejected a proposed new voting system they felt would limit their power.

He said he was pleased the new Spanish government had changed its opposition to the constitution's proposed changes in voting rights and acceptance of deciding EU matters on with the so-called "double majority" principle. "I hope that Poland is now prepared to do so as well," he said.

Row over Turkey

Schröder also attacked the conservative opposition for using "naked populism" in opposing the EU bid of Turkey. He said it would "enormously increase security" for Europe if the Muslim country became a part of the bloc. EU leaders are scheduled to decide by December whether to approve Turkey's candidacy bid, which would clear the way for membership negotiations over the next several years.

"If the Commission this autumn recommends taking up accession talks because Turkey has satisfied the political criteria, then I will emphatically support this course," Schröder said. His comments come one day after French President Jacques Chirac said he did not support Turkey's bid to join the European Union in the near future.

Merkel on Friday said accepting Turkey would overwhelm the EU's ability to integrate the country into Europe. "It has nothing to do with naked populism, it's about responsibility to Europe," Merkel said. "I'm tired of making empty promises to Turkey."