Cameron’s EU referendum may leave Malta orphaned of important political ally

UK Prime Minister David Cameron's pledge to hold an in-out referendum on Britain's membership of the European Union by 2017 received overwhelming support from the Conservative 1,922 backbench committee and was praised by Tory pro-Europeans, Eurosceptics and opponents of the EU.

A move which could trigger alarm among fellow Member States - not least from Malta - Cameron cited public disillusionment with the EU being "at an all-time high" and Britons "resenting interference in national life by unnecessary rules and regulations".

Nonetheless, consensus remains that most countries would prefer the UK to stay in.

Prof. Roderick Pace, Director of the Institute for European Studies at the University of Malta, shared the same sentiment, expressing his preference for the UK to be a strong and engaging partner in the heart of EU affairs, or rather "a dependable Member State instead of an isolated, disgruntled one... which is how it has behaved for most of the time since joining the EEC in 1973".

Pace didn't mince his words when he came to describe Cameron's speech: "I found it contradictory and intellectually poor, and doesn't even come within a millimeter near the equally Eurosceptic Bruges Speech delivered by Lady Thatcher in 1988.

"Cameron is actually now gambling his own political career but he needs to substantiate the many criticisms made of the EU and how Britain is going to help the EU overcome them."

Pace argued that Cameron's depiction of the public disillusionment with the EU was not very accurate: "Like most politicians his paintbrush is a bit too wide and rough for the job, but he has an agenda to push on how not to lose to his more extreme opponents at home."

Public opinion polls show that trust in the EU remains low, though it is higher than trust in national governments. Support for the euro is around 53% and opposition to it 40%.

With Cameron claiming citizens were now resenting the interference in national life, Pace insisted that the UK Prime Minister must come down to specifics and state what it is that his countrymen find "resentful" if a meaningful dialogue was to be held.

"For years, intrusions in national life have come from all corners of the globe and they have changed our habits and ways of thinking cheerfully. Just look at the customers at our local sushi restaurants... hardly a reason to hate the Japanese!"

Although it is too early to say that the UK will definitely be leaving, as it all depends on the UK domestic politics, a tricky situtation could emerge on how the EU referendum relates to the other referendum on Scottish autonomy which could see Scotland in the EU and the rest of Britain out of it.

"But I must admit this is all speculative. In the event that UK citizens do vote to eventually leave the EU, then the Lisbon Treaty provides the legal provision, an exit clause, for this to happen," Pace said, explaining that the process could take a couple of years as the UK slowly releases itself from its EU obligations and takes on responsibility of the new relationship.

Pace expects access to the single market to continue on the basis of an agreement that would have to be signed. The UK would also have to agree to contribute to the EU budget just as Norway and Iceland do: "It would be most unfair for the country to take advantage of the internal market without contributing to its development."

But how would a UK out of the EU impact Malta? Both Pace and Mark Harwood, lecturer at the Institute for European Studies, agree that Malta would indeed lose a crucial political ally.

"I believe that the impact would be huge," Harwood said. "We have very few friends in Europe... Italy and the UK are the main two."

Harwood said that the EU was not a notable EU player and the situation was worsened with economic crisis. Unlike France, Germany and UK, Italy has not been factored in any major decisions and is unable to influence several vital decisions.

On the relationship with the UK, Harwood argued that Malta had several policy concerns which it shared with the British, including the financial services, maritime policy and the reforming of the Common Agricultural Policy.

"Many of the low level Council meetings are actually attended by the British on our behalf and most of our links are with British organisations. If all these British entities left the decision-making process within the EU, I believe we would be less likely to achieve anything in the European Council," he said.

Pace reassured that the financial effect of a UK out would not be significant to Malta, particularly if there is an increase in the EU's own resources which the UK is blocking.

"However, politically Malta will lose a country with which its own history and relations are so much intertwined... but as Italy's Prime Minister Senator Mario Monti has remarked, no country will be kept in the EU against its will," he said.

By mid-2012, UK's contribution to the EU hit a record £19.2 billion and is the second highest contributor after Germany.

Pace and Harwood both agree that that is quite an impressive figure when one looks at it superfically.

"It is the net contributions which count," Harwood said. "With the British rebate, the UK actually contributes less than France and Italy. This doesn't mean that its contribution is not significant, but the EU has always depended primarilty on German contributions."

By way of exmaple, in 2011 official EU figures showed that the UK contributed €11.27 billion after a rebate of €3.56 billion, and the UK retained a quarter of €3.4 billion it collected in customs revenue.

That year, the UK received €6.57 billion in EU funding.

"One reliable estimate puts the UK's 2011 net contribution at €7.26 billon. Germany, France and Italy contribute more than the UK both in absolute terms and as a percentage of the EU budget, which amounts to only around 1% of the combined gross national income of the member states," he said.

According to Pace, Britain, on a per capita basis, ranked in the eleventh place in 2010, seventh or sixth in 2011. Its contribution to the EU budget is about 0.87% of its national budget.

Pace reassures that the impact of a UK out of the EU will certainly not be "catastrophic".

"Besides, if a post-exit arrangement is worked out that maintains her access to the single market, then the UK will most likely have to pay into the EU budget for the privilege, just as the EFTA countries do now because they are part of the European Economic Area (EEA)," he said.

Pace goes a step further to argue what would be the impact of the UK if it leaves the European Union: "Some estimates put the UK's benefit from the single market alone at between ₤30 and ₤90 billion a year - not a sum to be sniffed at."

Professor Roderick Pace is Director of the Institute for European Studies at the University of Malta and Jean Monnet Chair. The views expressed here are his own and do not necessarily reflect the official policy or position of the Institute.