On banking union, Malta is ‘cautiously optimistic’

As European Union leaders confirmed they want an agreement by the end of the year on a way to resolve failed banks at European rather than a national level, Prime Minister Joseph Muscat has described Malta's position on a banking union as "cautiously optimistic".

Malta, he said, agreed on general points. But with a number of elections taking place in the coming months, including Germany, no substantial development is expected to take place until September.

During this morning's session, the Council discussed the social dimension of the Economic and Monetary Union, with increased pressure from various quarters to for more centralisation.

This would however impact the member states' sovereignty, with Muscat calling for "a common sense approach".

"As members of the eurozone we have to be aware of a certain degree of centralisation. On the other hand, eurozone members cannot be placed in a strait jacket," Muscat said.

The Prime Minister said Malta would never accept a situation where it had to accept directions by others: "A basic democratic principle is for the electorate to elect its government to take decisions. We are open to scrutiny and recommendations but not for our budget to be dictated by others... a sentiment also shared by many member states."

The Council of Heads of State and Government today also welcomed Croatian Prime Minister Zoran Milanovic, the 28^th member state of the European Union. Next Sunday, Joseph Muscat is expected to be in Zaghreb, Croatia, as the EU formally welcomes the country as its member.

Malta will however restrict the freedom of movement to Croatia for two years. As with previous accessions, the Treaty of Accession allows member states to apply transitional restrictions on the access to their labour markets.

"The policy is one of great prudence... reality is that a small country like us cannot just open its doors wide open," Muscat said.

The highlight of the June summit was youth unemployment, were Muscat insisted "a contradiction" existed in Europe's argument. The contradiction, he said, arose from the fact that while the EU wanted to decrease the rate of youth unemployment, yet it was pushing for an increase in retirement age.

He reiterated that with the Commission singling out the judicial system as posing a risk to financial stability, "it confirms this was not simply a public perception".

"When considering that before the issue was not even on the Commission's radar, it proves that the concerns of the Maltese were founded," he said.

The Prime Minister called for solutions to be found to tackle the backlog afflicting the justice. The solution, he said, did not lie in simply increasing work stuff and rooms but also looking at issues such as procedures and the implementation of an IT infrastructure.

At one point he suggested that the government wanted to carry out a study to assess how much money was lost as people found themselves struck in traffic. Workers, for example, spent 1.5 million leave hours in court.