Opportunities from the economic crisis

The European economy is passing through difficult times, but, as is the case with calm after storms, there are opportunities for recovery. Yet, clear political decisions are required for this to take place. Examples of such decisions include the need to help economies facing problems, and the need for tax on financial transactions.

In such a context, helping Greece is important not only to avoid collapse of its economy, but also to help bring about stability in the Eurozone. Lack of stability can lead to a lack of investment, with negative repercussions.

At the same time, the EU should ensure that member states, especially those within the Eurozone, conform to fiscal discipline whilst aiming for social, environmental and economic sustainability.

An alternative to this would be the dismantling of the Eurozone and the re-introduction of national currencies, as is being proposed by some Eurosceptics. This would effectively mean that certain economic achievements would disappear. I’m sure that businessmen, tourists and plain consumers remember the complexity of economic transactions in a context of so many different currencies.

The re-introduction of national currencies would also mean that artificial and short-termist economic policies such as currency devaluation would risk given priority over more sustainable policies such as those which encourage value-added investment.

Resorting to national currencies would result in a false sovereignty, where national egoisims and ruthless competition would prevail over having partners co-operating together with clear parameters, rights and duties.

Ultimately, this would weaken the EU, to the advantage of other global forces such as the USA, Cina and Russia. Is this what Eurosceptics aspire for, when the EU, with all its defects and internal differences – is characterized by the most progressive social, environmental and economic policies than those of other global forces?

The economic crisis shows us that if anything, we need more, and not less European integration. Solidarity within the EU should be strengthened not only as it brings more stability, but, even more so, because it helps bring about more equality and leveling out between different regions. An example in this regard is the EU-wide policy of cohesion and structural funds. According to EU figures, between 2004 and 2010, Malta, as a less developed region, obtained €354 million more worth of EU funds than it paid. Such progressive fiscal policy should be supported in a global context.  

More EU integration would also bring about more discipline in Government budgeting. This would help avoid situations where individual Governments act irresponsibly in their financial and economic policies.

Above all, more EU integration would help member states move closer towards more equal rights and duties amongst citizens, workers, businesses and consumers within the EU.

Some argue that more EU integration is detrimental to small member states like Malta, as this would not permit us to have policies such as low tax rates for sectors such as financial investment and gaming. Yet one should keep in mind that such investment is volatile and can pack up and leave as soon as other countries decide to follow suit and lower their tax rates, too.

Whilst one should not shoot oneself in the foot and discourage investment, it would be better focus on more sustainable forms of investment, such as that which has high value-added and is more labour-intensive, as is the case with investment in green jobs, for example in alternative energy, waste management, IT and sustainable agriculture.

Last but not least, I augur that the Maltese Government supports the proposal of the European Commission for tax on financial transactions. Such a tax, which is supported by various parties on an EU level – including the Greens  –  would help generate revenue that can be used to help recover the European economy. It is estimated that such a tax can generate up to €55 billion a year.

Time has come for banks and financial institutions to carry part of the burden of the economic crisis, especially when they received help from public funds when they needed it. If workers and employers are financing socio-economic stability through their taxes, it is only fair that banks and financial institutions do the same.

Michael Briguglio is Chairperson and Spokesperson for Economy and Finance, Alternattiva Demokratika – The Green Party