Malta’s EU funding status not a foregone conclusion – Gonzi

The government has not given up on surrendering its Least Developed State status and expects new calculations, based on 2010 data, Prime Minister Lawrence Gonzi said.

The Prime Minister reported that Malta was not satisfied with the proposed level of EU funding for the 2014-2020 period, which stands at €489 million.

"During the meetings held last week in Brussels, Malta made it clear that from the very beginning that the proposal to receive €489 million under the cohesion policy fund was unacceptable for the Maltese government," Gonzi said.

Gonzi explained that Malta was set to become the first country to benefit from the Least Developed status, formally known as Objective 1 status, for only one EU budget seven-year period.

"Moreover, we insisted that Malta is a one region island which imposes further particular limitations. We therefore imposed the 2009 clause included in the Lisbon Treaty upon our insistence which makes specific reference to the needs of island states," the Prime Minister said.

He added that Malta argued that although Malta made huge strides forward in terms of its economic development, this should not impede the country from benefitting from transitional funds and lose millions in funds. The Prime Minister noted that this could have a devastating effect on the country's economy.

"Council President Van Rompuy understood this and in the bilateral meetings we had, he proposed a €200 million top-up in structural and cohesion funds," Gonzi said.

Gonzi explained that the government believes that out of the€200 million, up to €122 million are transitional least developed status funds and €78 are related to the island state status.

Furthermore, Gonzi explained that once no agreement was reached on the EU budget, the figures for the calculation of least developed status may have to be reworked, using 2010 data.

Gonzi said the cut-off date for the calculation of least developed status had been 2009 however tals will now enter into the new year and it is expected that the new cut-off date used will be 2010.

"For this reason we should not rush to any conclusion. The situation is flexible and we will insist that malta should benefit from transitory measures since we cannot risk suffering from an economic shock due to a sharp drop in EU funding," the Prime Minister said.

The least developed states status is granted to member states whose whose per capita gross domestic product (GDP) is less than 75% of the EU average. More than one third of the EU's current budget is devoted to this policy, which aims to remove economic, social and territorial disparities across the EU.

Replying to a number of questions posed by Opposition leader Joseph Muscat, Gonzi said that although the €200 million top-up is not guaranteed, this was not expected to be reduced.

The Prime Minister noted that in the 2006 - 2013 budget period, Malta had benefitted from almost €1 billion. He added that the EU 75% average was affected following the adhesion of Romania and Bulgaria, which revised the average downwards to Malta's detriment

" As things stand Malta is above the 75% average calculated over the 2009 statistics but nothing is concluded and we are waiting for the average to be worked out on the 2010 data," he said.  

In reply to former Labour foreign affairs minister George Vella, Gonzi said that his administration was insisting that Gozo should continue to benefit from least developed status funds and explained that the issue was raised six months ago and was being discussed.

In his questions, Vella asked the Prime Minsiter to explain the presence of Richard Cachia Caruana at the summit talks, following the latter's resignation after receiving a vote of no-confidence by Parliament.

Gonzi retorted that former EU ambassador, Richard Cachia Caruana had been involved in the EU budget talks from the start and Malta owed a lot to Cachia Caruana.

"Mr Cachia Caruana had been involved in the first budget negotiations seven years ago and was instrumental in obtaining almost €1 billion in funds," Gonzi said.

 He added that Malta made use of his experience, expertise and respectability the national interest demanded that his experience should not be lost.

"I therefore asked him to stay on as consultant although Mr Cachia Caruana had requested to be relieved of this duty after the Parliamentary vote, but he stayed on without remuneration other than to cover his costs. The country should be grateful for his services," Gonzi said.

Replying to a number of questions raised by former Labour prime minister and prospective MEP Alfred Sant, Gonzi said he was hopeful that Malta's net balance would be better than at the start of the summit.

Gonzi said he could understand that net contributor member states wanted to see their funds put to good use but argued that when such funds were put to good use and the economies of the other countries grew, the contributor countries would benefit too.