The sunny side of a thundercloud

Labour MP Leo Brincat claims that Government has a very good reason to gloss over the details of the recent EU package deal

Weeks prior to the conclusion of the EU membership negotiations, the Prime Minister was quoted as saying that one should not get bogged down with the details of the would-be accord as well as that the financial component is not the only consideration one should keep in mind when assessing the conclusions of Malta's negotiations.

With the benefit of hindsight, I can very well understand what urged him on to take such a stance on at least two different public occasions.

Circumstances might change but they have not changed that much since October 5, 1997 when Dr Fenech Adami had stated that Malta will benefit to the tune of Lm80 million per annum from its very first years of membership within the EU, going on to ask the then Labour government why it was prepared to forfeit such a substantial amount when it was "claiming" that public finances were in dire straits.

On February 13, 1998 he had gone on to claim that Malta was losing Lm30 million per annum in structural funds alone. On September 1, 1998 Dr Fenech Adami repackaged his workings by claiming that we will be entitled to Lm50 million per annum by right (bi dritt) should we join the European Union.

What many have been asking recently was whether Dr Fenech Adami was so ill-informed about the financial package and the various chapters negotiated both at the time of his return from Copenhagen when addressing the press at the airport, as well as during his TV press conference of December 19, or whether he had been deliberately avoiding the fine details not to see the package lose any of its tints and gloss.

I very much suspect that he was simply uninformed as otherwise there would have been hardly any point for both the DOI and MIC to put the record straight less than 24 hours after his lacklustre TV performance of the 19th.

What I found most deceitful was the manner in which the MIC chose to change tack over the VAT on food and medicinals issue by resorting to arguments which sound more like catch-penny propaganda outbursts than the informative reasoning one expects from such a supposedly neutral organisation.

When VAT on food and medicine was still something Government had been resisting strongly, to the extent that it wanted to maintain the exempt status of these items indefinitely, MIC had argued this way in one of their Frequently Asked Questions answered by Dr Simon Busuttil.

When asked on Malta's negotiating position in this regard, MIC's head stated that Malta is resisting this move and is not favourable to the introduction of tax on these items, because of its impact on the cost of living and the consequent negative social repercussions.

Commenting on the same issue in the last ten days prior to the conclusion of the negotiations, Dr Busuttil used a completely different tone and language.

He first stated that Malta's stand had been necessitated both by genuine concerns over some obligations of membership but also by the intense domestic pressure created by the deep political division over membership. In other words, even if it wanted to relent, he claimed that the Maltese government can hardly do so because of the popular backlash at home.

This is propagandist, partisan reasoning, and not the language one would expect from such a body.

When it came to VAT on food and medicine Dr Busuttil chose to eat humble pie by ignoring his earlier comments on the impact on the cost of living. He did so by stating that beyond the political sensitivity, in practice, the impact of the introduction of such a VAT extension should not be more than negligible and in some cases, such as food that is subject to levies, there should be no impact at all.

Until recently the Minister of Finance used to boast that through membership of the European Central Bank we will have the same rights as the big countries in the EU, by sitting around the same table.

It now transpires that the ECB has agreed to a three-speed voting model whereby states will have to subject themselves to a rotation system whereby the five biggest countries in terms of GDP and population will have a decisive say in the decision-making process, while other states will gain a vote on the ECB's governing council but at a frequency determined by their relative size.

According to bank officials quoted by the Financial Times - "basically, larger countries will hold their voting rights for longer periods than smaller ones".

In effect, the frequency of rotation for smaller states would be faster than for larger ones.

One reason why we have been critical as a Labour Party of Government's over-reliance on project-linked aid is that according to most independent commentators, foremost among them Thomas Fuller of the International Herald Tribune, a lot of the aid promised in the budget will never get spent.

If anybody has made a bargain from this enlargement it has been the EU itself. Not only will the newcomers get a fraction of what many of the existing and far richer EU members receive for the purposes of infrastructure building, farm aid and other assistance, but even in the case of Poland - which seems to have fared best out of the negotiating countries - it will only get half as much aid as Spain did even though both countries have approximately the same population and even though Poland is much poorer.

No wonder the head of the European Commission budget office, Michele Schreyer, claimed that enlargement has worked out to be a whole lot cheaper than initially envisaged.

Through project-based aid Malta will not only be paid on the basis of approved projects that are implemented in Malta, if and when they are carried out, but if we get caught in the bureaucratic tangle - as is often the case, even with other member countries - then we will risk losing money to which we will be entitled.

It is important to bear in mind that EU funding does not cover the total costs of a particular project and the amount provided by the EU may vary from project to project. As MIC was compelled to admit, the highest level of EU contribution is usually paid under the Cohesion Fund where the EU contribution may reach 85 per cent of total costs. Under other funds, the contribution is normally lower.

Given these ifs and buts, one can very well understand why the Prime Minister apart from being ill-informed about the whole package seems so keen on having us pay such scant attention to the details of the said package.

In local political jargon the word package - il-pakkett - has always had devious and ambivalent connotations.

The recent deal struck with the EU shows that we are true to form.