Is Gozo better off in or out of the EU?

Has anything worthwhile been achieved for Gozo in the membership negotiations with the EU? Government says "yes", the Opposition say "no" and ordinary citizens are left stunned in the middle by this crossfire of opposing and contradictory statements.

People in certain quarters may have inflated expectations that if a special status is negotiated for Gozo, then the island of Calypso will acquire the right to receive direct aid from the EU's resources as well as the right to manage them by itself.

That is not the way the EU works. Whoever blew this balloon to Portomaso Tower proportions knew exactly that it was bound to pop with lots of din. Having inflated it, they went on to prick it - and as expected - "bang".

So what has Gozo reaped from the membership negotiations? First of all recognition of its special status and permanent drawbacks, which entitle it to special treatment.

As a NUTS 3 Region, separate statistics will have to be compiled for Gozo. "Thank you very much," you may say. But that is exactly where one has to begin from. How can a 'special' case for Gozo be made convincingly in the absence of the raw data required to prove the point?

The special status of Gozo now recognised, coupled with the fact that its GDP is around 71 per cent that of Malta, is already a big step in the right direction. It has thus been proved that Gozo requires aid to catch up with Malta and the two together require aid to catch up with the rest of the EU member states.

Establishing the factual situation was always a problem. The haze surrounding Gozo's economic state of affairs has now begun to lift.

As the features of Gozo's economic landscape have begun to appear, it already seems clear that for example slapping very high ferry passenger fares to balance Gozo Channel's books, as was done by the last Labour Government, may not have been the optimal way to help the island overcome its permanent drawbacks.

Hopefully the recognition of Gozo's special regional status will make mistaken diagnosis of its ills and wrong prescriptions based on such misjudgments, less likely to happen in the future.

Gozo's economic and political leaders should be happy with this 'great leap forward'.

How will funds be managed?

The amount of aid that Malta and Gozo will obtain from the EU on membership will be specified in an agreement between Government and the EU. That is the current system used in the EU.

The recognition of Gozo's special status will help the national Government negotiate a better deal on these funds. Furthermore it will not be possible to divert funds specifically allocated to Gozo for other reasons - such as projects in Malta.

Given that Gozo's special needs have now been recognised, certain projects normally not considered for EU funding, could be favourably considered. Were Malta to develop so fast as a result of EU membership as to disqualify itself from further aid, the case of Gozo's eligibility for EU aid will still have to be assessed separately. That safeguard is what most Gozitans have always wanted. Now they have it.

EU funds do not consist in blank cheque handouts. They are tied to projects. This applies to all EU funding everywhere, in member and non-member states alike.

What needs to be clarified at this stage is how Gozo will relate to the national authority which has been set up to manage these funds for the Maltese Islands.

It has been proposed that a special committee be set up for Gozo. In all probability this would be charged with drawing up the projects and with implementing them once they are approved at all stages.

This is the test that Gozitans will have to pass, together. Armed with the statistical facts of Gozitan life, hitherto unavailable in much reliable detail, they have to come up with viable projects, convince the national authorities and the EU that these are what Gozo needs and that they fall within the special agreement on Gozo being negotiated by the government. The committee will then have to manage and implement them properly once they are approved.

It is quite clear that as a result of the membership agreement with the EU, Gozitan leaders will be brought into the mainstream of development planning and its implementation on their island. Now that promises to be another giant step forward in the island's political development.

Which leads to another question: in the face of these developments will Gozitans be better or worse off than they are now as a result of EU membership? We think that an affirmative reply to this question is the only reasonable one. Yes, they will be better off.

Hence we feel that there is little else left to add to the matter than to fully agree with John Magro's statement (president of the Gozo Business Chamber), as reported in the local press, that the agreement with the EU is not "insignificant" but neither is it a "final victory".

The "final victory" will hopefully come when Gozitan representatives and Government working hand-in-hand begin to make the most mileage out of the opportunities presented by EU membership.

What if Malta stays out of the EU?

The problem of Gozo's special regional status will become irrelevant if Malta does not join the EU. There will be no special agreement with the EU covering Gozo's special needs, little or no funds to apply for and much less to manage or implement.

Of course in a non-membership scenario some kind of regional governance could be concocted for Gozo. But this governing institution, a regional Council or Committee - whatever it may be - will have to make do with much less money as well as political responsibilities.

Outside membership, Malta will have to negotiate a financial aid package with the EU in a Euro-Mediterranean Partnership context. Together with the EU, it will have to draw up what is called a National Indicative Programme (NIP) comprising projects for which EU funding would be required. These projects would have to be approved by the EU.

Such a package will take some time to negotiate and there is the possibility that if membership is rejected the trickle of financial aid that flows in Malta's direction from the EU will be stopped until such negotiations are completed.

In such a scenario, Gozo will surely feature in some corner of the NIP but not as of right. By contrast, in a membership scenario, the special agreement which is currently being negotiated with the EU on Gozo, and which will result in a separate agreement attached to the main Treaty of accession, will give Gozo the right to feature in the funds allocated for Maltese islands.

So Gozo's niche is already being constructed. How about that? Would you call that a small achievement? A self-delusion? No Sir!

And what about the quantum or the amount of aid going Gozo's way? Consider the following example: the EU has signed a NIP with Egypt covering the period 2002-2004. For the three years the EU has allocated m351 million, of which m31 million consist of interest rate subsidies, which will go back in the EU's pockets.

This aid amounts to around m100 million a year or Lm40 million per annum.

The agreement is doubtlessly beneficial to Egypt and we will not dispute that fact. But, if Egypt with a total population of 65 million people obtained m351 million for three years, how much less would Malta with a population of 0.38 million have been entitled to?

If we had to post a figure for Malta, just off the cuff, of around m30 million over three years, that would amount to a paltry Lm12 million or Lm4 million a year. And that is being generous. We think Malta would get much less. How much of this pittance would have gone Gozo's way? Anyone's guess: Lm1 million perhaps? Lm1.5 million... or more likely Lm0.5 million?

What if Malta joins the EU?

Now look at the reverse side of the coin. Begin with some comparisons. For the period 2000-2006, the EU allocated m213,000 million for the development of its own backward regions but only m5,350 million for all the Mediterranean countries together.

This means that the EU allocates 40 times as much more funds to its own backward regions as it does to the more populous and ten times poorer Mediterranean non-member countries.

Of the funds which the EU allocates to its own backward regions, m135,900 million have been earmarked for the poorest regions, the so called "Objective One" regions. Malta and Gozo together have been classified as "Objective One" regions.

Now ask yourselves the simple question: would Malta and Gozo stand to benefit more from a small cake which has to be shared with a larger crowd or from a cake 40 times bigger than the small one which has to be shared among a more restricted group?

These are the simple questions that Gozitans and Maltese have to try to answer for themselves.

The experience of backward regions in the EU shows that aid from the structural funds has narrowed the developmental gap between them and the more advanced economic regions.

We think that if the Maltese and Gozitans are more united among themselves, if they shelve their differences and reap the opportunities that present themselves, they can do very well for themselves in the EU and shorten their road to development.

There are no easy solutions and no problem-free choices before us. But the glaring differences between membership and non-membership are all too clear. That is why we argue that "yes", Gozo has done extremely well in these negotiations. The future bodes well within the EU. Just do not under-estimate that essential point.

In brief

¤ What has Gozo reaped from the membership negotiations? First of all the recognition of its special status and permanent drawbacks entitling it to special treatment.

¤ As a NUTS 3 Region, separate statistics will have to be compiled for Gozo. A 'special' case for Gozo can only be made convincingly when the raw data required to prove the point is available.

¤ Since Gozo's special needs have now been officially recognised, certain projects normally not considered for EU funding, could be favourably considered. Were Malta to develop so fast as a result of EU membership as to disqualify itself from further aid, the case of Gozo's eligibility for EU aid will still have to be assessed separately. That safeguard is what most Gozitans have always wanted. Now they have it.

¤ In a non-membership scenario, Malta will have to negotiate a financial aid package with the EU in a Euro-Mediterranean Partnership context. Together with the EU, it will have to draw up what is called a National Indicative Programme (NIP) comprising projects for which EU funding would be required. These projects would have to be approved by the EU.

¤ If Egypt with a total population of 65 million obtained m351 million for three years, how much less would Malta with a population of 0.38 million have been entitled to?

¤ The EU allocates 40 times as much more funds to its own backward regions as it does to the more populous and ten times poorer Mediterranean non-member countries.

¤ Faced with these facts, are Malta and Gozo likely to be better off in an EU membership or a non-membership scenario?