The leader of the UK Liberal Democrats in the European Parliament, Diana Wallis, said she was not sure whether the so-called partnership proposal really existed as an option for Malta.

Asked for her comments following her participation in a conference organised by the Malta External Trade Corporation on the implications of non-EU membership, Ms Wallis said:

"The only partnerships we can look at are those that exist currently within the European Economic Area and European Free Trade Area. These involve getting something of the EU in terms of access to the internal market. But there is the downside: you have to pay the EU a contribution.

"You also have to take on board all the legislation without having any say or input over what is taking place in Europe. You have to weigh up whether that is the position you want to be in or whether to participate fully and really have influence - and you can achieve this even as a small country."

The conference was opened by Metco chairman Anthony Diacono and the EU's chief negotiator for Malta Arhi Palosuo.

Addressing the participating businessmen, Ms Wallis, who has published a book called "Forgotten Enlargement: The EU's relations with Norway, Iceland and Switzerland", said that life outside the EU would be tough especially after the next enlargement which will include most central and eastern European countries.

"If you look at the countries that are outside like Iceland and Norway, they are very prosperous economies: if they are finding life outside the EU difficult, can you imagine what it would be like for Malta?"

She said that her close acquaintance with Switzerland, Iceland and Norway made her harbour serious doubts about the sustainability of their relationship with the EU.

She said the EEA had been developed in the 1980s as a prelude or a staging post for membership. The fact that only Norway, Iceland and Liechtenstein had remained in the EEA was an indication of the best option.

She also stressed that the concept of the EEA was not up for re-negotiation.

"You either have to take it as it is or leave it. The EEA is not a free lunch. You have to pay to support the social cohesion of the EU and also to be part of the internal market."

She said there was a strong reaction from EEA members after the Union announced an increase in their contributions.

"For instance, in Norway, opinion polls are now showing a very convincing majority of people that want the government to resubmit the membership application. It is a fact that the Norwegians are now also witnessing cheaper goods and lower prices in Sweden."

Ms Wallis stressed that a country could not be half in and half out of the EU.

"For instance, Switzerland, Norway and Iceland have been left out of the Convention on the Future of Europe. They would love to influence the outcome but they cannot.

"On the other side, the Maltese, as they are in the process of becoming a member of the EU, are able to participate and take part in this historical development. I can assure you that life on the outside is rather difficult."

She said that Norway and Iceland had already taken on board more than 80 per cent of EU rules and regulations: "A Pole or a Cypriot or a Maltese will have more say over much of the law passed in Iceland and Norway than the voters in either of those two states."

She stressed the importance of sitting around the table where decisions are taken: "It is much easier to argue among family members. You can only shout if you are part of the family."

Ms Wallis appealed for the Maltese to reflect before taking the decision next month: "It is clearly a very serious decision. Do you want to stay outside whatever the implications of that are or do you want to join the family... It is a decision for the people of Malta."

Ms Wallis said that Malta as a member of the EU could have a very important role.

"Malta can be the link to North Africa and Arab states. You have a very unique position and this is a remarkable opportunity. My only question is: will you embrace it?"

Leading entrepreneur Louis Farrugia expressed his belief that there was a high cost to not being part of the integrated market within the EU.

He said that Malta would experience slower economic growth over the coming years than it would experience if it joined the EU next year. He said that if Malta joined the EU, the liberalisation process would continue and there would be new foreign direct investment and new higher value jobs in the country.

Mr Farrugia expressed concern that inefficiencies in the country would continue to prevail if Malta did not incorporate the liberalisation provisions that had been negotiated.

"Will the dismantling of the state-owned monopolies stop? Will the liberalisation of vital sectors such as the telecommunications sector continue?"

Mr Farrugia said that not joining the EU would mean there would be no pressure on the government to implement much needed policies which could be unpopular with the electorate on a short-term basis but healthy for the country and the people in the long term.

He stressed that staying out of the EU would have adverse implications on the country's competitiveness, "especially as the other nine acceding countries will be taking the full dose of liberalisation and attracting new foreign direct investment and higher economic growth".

Mr Farrugia also mentioned that as members of the eurozone, the government would have no option but to curb its budget deficit. There was an evident slump in the budget deficit between 1995 and 1998 that had a significant effect on economic growth: "Are we able to curtail the deficit without the EU?"

He emphasised that the EU membership process had already proved to be a catalyst for change. For instance, Mr Farrugia said, the liberalisation of the telecommunications sector would never have happened. The same applied to the removal of levies.

Marius Vahl, a research fellow of the Centre for European Policy Studies in Brussels, stressed that the problems with having a relationship short of membership - such as the European Economic Area - were fundamentally political.

"In reality the EU is a policy maker. If you are part of EEA you are a policy taker. It is a one-way traffic - as simple as that."

Mr Vahl said that Norway, Switzerland and Iceland had to take on board all the obligations of membership. "But in return they have no influence on what is taking place in Europe."

Norman Aquilina, managing director of Law Quintano and Co Ltd, stressed that standing alone was a hazardous game.

He said that the real option to membership was the revisiting of the association agreement that Malta had signed back in the 1970s.

Lino Brigulio, head of department of economics at the University of Malta, said the promoters of the so-called partnership option were sending conflicting messages.

On one side, he said, the partnership option was a pro-EU concept. At the same time, the promoters of this concept were building an anti-EU campaign such as arguing that the Irish people were ending up sleeping in cardboard boxes because of the EU or that the German farmers had a bad deal.

With the so-called partnership option, Prof. Brigulio said, the decisions that affected the country would still be taken in Brussels. The only difference would be that the Maltese would not have a say in this decision-making process.

Prof. Brigulio also said that with everything remaining equal, EU membership would increase foreign direct investment in the country.

"As an EU member we will be economically better off."