Update 2 | Malta to keep €200 million top-up from EU, but risking energy funds

Updated at 10:25am

Prime Minister Lawrence Gonzi may have to stick to a €680 million financial package, which includes the €200 million top-up offered last November by European Council president Herman Van Rompuy, but appears resolute to to ensure enough funds from Europe to finance the island's energy ambitions.

According to the headline figures in the latest EU budget proposal, the overall total level of the budget has been capped at €960 billion, down from the €972 billion or 1.01% of EU's Gross National Income (GNI), under the November proposal of Van Rompuy.

Competitiveness for growth and jobs appears to be one of the biggest victims of the changes. The total level of commitments is now put at €125.7 billion, down from €152.5 billion in the previous proposal.

In particular, the 'Connecting Europe Facility' (CFE) - where Malta is pushing for substantial funds to secure financing for its planned gas pipeline - has been slashed from €41.2 billion to €29.3 billion. The budget for energy has been slashed from €7.12 billion to €5.12 billion.

The overall transport sector budget has also been slashed from €26.9 billion to €23.1 billion.

On Cohesion funds, the level of commitments is to recieve a marginal increase, from €320.1 million in the old proposal, to €324 million. Resources for the "Investment for growth and Jobs" remain substantially unchanged at €312.7 million.

In this figure, the sub-division is as follows:

• A total of €163 billion for less developed regions, up from €161.4 billion;
• €31.5 billion for transition regions, up from €31.3 billion;
• €50.3 billion for more developed regions, marginally dropped from €50.8 billion;
• €66.3 billion for member countries supported by the Cohesion Fund, up from virtually unchanged from €66 billion.
• €1,387 billion for the outermost regions remains intact.

New paragraphs have appeared, favouring various regions in some member countries. Malta and Cyprus are to continue to receive €200 million and €150 million respectively.

Additional new provisions are inserted to reflect "recent developments in their economy". ​Belgium receives €100 million divided equally between Limburg and Lieg.

The European Union and its institutions are set to reduce staff by 5% over the next five years until 2017, while significant pension scheme changes for the administration are to be introduced, including a so called 'solidarity levy' at a level of 6%.

A cautious Prime Minister Lawrence Gonzi was to stand his ground, insisting that Malta must not lose out on European funds, which are desperately needed to finance a multitude of important projects, mostly due to its geographical reality, as an island state, in need to develop its energy sector.

The EU's chief budget negotiator, Van Rompuy, proposed further modest cuts to the bloc's long-term spending plan earlier on Thursday in a bid to try to bridge deep divisions among member states on how the funds should be spent.

Van Rompuy, who chairs EU summits, delayed the start of negotiations by more than five hours yesterday and initially withheld his budget plan because he felt governments remained too far apart to strike a deal.

The budget, which covers spending for 2014-2020, tackles everything from agricultural subsidies to scientific research, roads and infrastructure, foreign aid and development assistance and is fought over bitterly, often along national lines.

According to Gonzi, who addressed the Maltese media shortly before entering the negotiations late yesterday evening, "one must realistically prepare for the worst," as Malta is still not happy with the €680 million, which includes the €200 million offered last November.

The budget allocated to Malta would be the funds the newly elected government next month would have to work with, and within a scenario where Malta would also host the EU Presidency in 2017.

Malta will need the funds to finance the gas pipeline, and other energy related projects as it would be strengthening itself to attract more investment, create jobs, and further develop all sectors, including health and education.

Last November's offer before the collapse of the talks in Brussels, stood at €680 million, which was far more better than the initial pittance of €400 million. "But even €680 million is not enough, and we will stand our ground," Gonzi said.

Gonzi is accompanied in Brussels by Richard Cachia Caruana, his former permanent representative at the EU who was forced to resign following a parliamentary vote in June last year.

Cachia Caruana is said to be accompanying the Prime Minister in his capacity as an 'advisor' during the summit. His successor, Marlene Bonnici is also present, and engaged in a series of meetings with other delegations as the negotiations continue.