Malta draws 'red lines'

Malta yesterday officially objected to the European Commission's proposals regarding funds to be allocated under the next EU budget for regional aid, drawing "red lines" and declaring it will not approve the budget if it is not considered an Objective 1 region.

Foreign Affairs Minister Michael Frendo told a meeting of EU Foreign Ministers in Brussels that Malta would not be able to accept the financial perspectives proposals if it is no longer considered as a full convergence (Objective 1) region.

This move followed last week's publication of statistics by the European Commission showing that Malta's GDP between 2000 and 2002 stood at 75.9 per cent of the EU average. Objective 1 status entitles EU member states and regions to qualify for the most generous funds within the EU. To be eligible for such aid, they must have a GDP not higher than 75 per cent of the EU GDP average.

Malta argues that if one calculates the GDP taking into consideration more recent statistics it will still be entitled to Objective 1 status.

Dr Frendo told the ministerial meeting that the "latest figures for Malta of GDP in Purchasing Power Parity indicate that taking the period 2001 to 2003, Malta's relative GDP was 74.8 per cent of the EU-25".

He pointed out that Malta was very concerned with the "distribution key" in connection with the cohesion fund as its workings effectively penalise the island for its extremely high population density. This "distribution key" has a slant in favour of below-average density but does not take into account a situation of extra high, above average density as in the case of Malta with a population density 11.6 times higher than the EU average.

In the case of the financial perspectives for 2007-2013, Dr Frendo said he appreciated the difficulties the Presidency and the Commission faced in putting into practice in an integrated and agreed programme the principles of solidarity and economic growth throughout every part of its territory.

However this difficulty should not deter the EU from keeping the solidarity objective in mind when formulating such a programme "because this lies at the heart of our political vision on Europe".

The minister added that the cohesion policy allows countries to embark on investments in infrastructure that would be impossible to implement based on national resources alone. The cohesion policy therefore links with the Lisbon Strategy in being vital to increase competitiveness and enable a country to guarantee sustainable higher standards of living.

The Commission and the EU Presidency would like to see an agreement on the next EU budget being reached by this June under Luxembourg's Presidency.

Asked by The Times what will be Malta's position if at the end of the day it would still not qualify as an Objective 1 region, Dr Frendo said: "We have made it clear that in those circumstances we will oppose".

The EU budget can only be agreed by unanimity and a no vote by Malta would stall talks on the financial package.

Earlier on, Regional Policy Commissioner Danuta Hubner said that following the discussion in the Council it seems that the proposal for the next generation of cohesion policy programmes is supported by a majority of member states. She considered that to be a significant step towards an agreement by June 2005.

However, sources close to the Council told The Times that Malta was not the only member state to object as others too were not happy with the situation.

The discussions over the issue will now be held at the highest level. Prime Minister Lawrence Gonzi is already scheduled to travel to Brussels in mid-February for meetings with Commission President José Manuel Barroso and with Ms Hubner over this issue.