Malta may experience an €80 million cut in the amount of EU cohesion funds it receives after 2020. However, according to EU Budget Commissioner Günther Oettinger, the island could still qualify for additional funds through other programmes.
In an interview with the Times of Malta during a short visit to the island in preparation for the next round of EU budget talks focusing on the 2021-2027 framework, the EU Budget Commissioner did not mince his words.
“Brexit is also a financial problem, as it will leave the EU budget with a €12 to €13 billion hole which will have to be filled up somehow,” Mr Oettinger said.
“Money has to come from somewhere, and so Member States will have to contribute more.”
“Also, we need to prepare Europe for the future and so we need to be more flexible. No one really knows what is going to happen in 10 years’ time, and so we need to anticipate the needs we may have,” he said.
In this context, according to the commissioner, the EU will surely need to invest more in research, security, defence and migration.
Initial discussions are currently ongoing in Brussels and other EU fora on what the next form and shape of the seven-year EU budget covering 2021 to 2027 will be.
Last month, the Commission made the first step by publishing a document putting various options on the table in front of Member States.
The document does not really augur well for Malta, as it indicates a significant cut in the amount of EU funds for which Malta will be eligible.
READ: Malta faces a hefty cut in EU funding
In two of the three different scenarios presented, cohesion funds will be limited to countries whose standard of living and general regional economic activity remains very low when compared to the EU average. In both eventualities, Malta’s funds would be radically slashed.
The third scenario contemplates a situation where cohesion funds would be maintained for all Member States and regions. However, even if this option were to be adopted, Malta would still stand to lose as it would have to contribute more to the EU budget due to the UK’s departure.
According to Mr Oettinger, it is the third scenario which the Commission prefers. However, no decision has been taken yet, as the EU executive is expected to make its position clearer next May when it officially launches its proposal.
Through its negotiations in 2012 by then prime minster Lawrence Gonzi Malta managed to get €1.2 billion in EU funds, €800 of which was for cohesion policy to be spent from 2014 to 2020. It seems that this will not be the case again.
My impression from the talks I had with Dr Muscat is that Malta is ready to pay a little bit more in contributions to the EU budget
While Malta has progressed significantly since 2012, there will probably be less funds for cohesion programmes – which are the highest contributors to Malta’s EU funds.
Admitting that Malta, as was the case for other Member States, had high expectations, Mr Oettinger said Prime Minster Joseph Muscat had already indicated that the island was ready to contribute more to the EU budget.
“My impression from the talks I had with Dr Muscat is that Malta is ready to pay a little bit more in contributions to the EU budget as long as on the expenditure side it will be able to tap into more funds and programmes,” he said.
“Malta wishes for a fair deal,” he insisted. Asked to spell out what a fair deal would be for Malta and if this would mean a repeat of another €1.2 billion in funds, the commissioner’s reply came as expected – diplomatic.
“It depends on how much the global budget will be,” he said.
“If we agree that Member States will increase their contributions from the current levels – and this will have to be among the first decisions – then Malta might expect to keep most of its funds, even though they may be allocated through other programmes and not necessarily from cohesion,” he said.
“However, if Member States decide not to increase their contributions, then everyone, and not only Malta, will have a cut.”
Mr Oettinger indicated that the Commission already had a clear path on where it wanted to arrive.
According to the Budget Commissioner, Brussels is targeting an increase in contributions from Member States, from the current one per cent of gross national income to 1.1x per cent – x can vary from one to nine depending on how ambitious EU leaders are.
At the same time, while saving funds through a cut of between five to 10 per cent on its biggest spenders – the Common Agriculture Policy and Cohesion programmes – other funds will also be trimmed.
The commissioner made it clear that the only programmes which should be spared a spending review were Erasmus Plus, dedicated to the mobility of students, and Horizon, dedicated to research.
It is still early days for a final decision on how the next EU budget – technically known as the Multiannual Financial Framework – will conclude.
Normally, negotiations tend to keep going until the 11th hour, when various ‘EU compromises’ would be reached in tête-à-tête meetings between leaders.
However, it is the decisions taken at this stage which form the parameters in which the EU Member States can haggle and horse-trade.
The German commissioner – known for his no-nonsense approach – is confident that the right seeds are being sown for a brighter EU future.