The Lisbon Treaty which was proposed to replace the failed European Union constitution has been signed by the 27 leaders of the union on Thursday in Portugal's capital.

According to Portuguese Prime Minister Jose Socrates, who held a speech before the signing took place, the new treaty will take the European project one step further and strengthen the union.

"This is not a treaty for the past. This is a treaty for the future, a treaty that will make Europe more modern, more efficient and more democratic," said the prim minister of Portugal, country which is currently holding the presidency of the EU.

Jose Manuel Barroso, the European Commission President, described the event by saying:

"From an old continent, a new Europe is born."

According to the leaders that participated at the Lisbon meeting, the new treaty is intented to change the EU in order to serve its citizens better and address world issues.

The new treaty takes the place of the failed constitution which wasn’t ratified after being rejected by French and Dutch voters in referendums held two years ago.

The new version of the constitution is no longer called a constitution, it has no anthem or flag mentioned in it and it’s much shorter and contains several opt outs for the countries that oppose further EU integration.

The system by which European Union leaders and nations rotate holding the presidency every six months will be replaced by the office of a president of the EU. The president will serve for a term of two and a half years.

The Lisbon Treaty will also change the way decisions are reached. When deciding, the focus will be placed more on the majority vote instead of by unanimous agreement. The foreign policy functions will be changed as well. They will be passed to a single new representative.

“Europe was blocked, not knowing how to move forward, and we found the solution,” said José Sócrates.

The ceremony took place in the Jerónimos Monastery and the signing was accompanied by the choir who sang Beethoven’s “Ode to Joy.” The first one to put his signature on the treaty was the Belgian Prime Minister Guy Verhofstadt.

The treaty will take effect after the 27 country members in the European Union will ratify it. This process should be concluded by 2009. Only Ireland will hold a referendum to ratify the treaty, thus the adoption of the new treaty is very probable.

EU leaders are to meet again in Brussels on Friday for a traditional end-of-year summit.