EU Commission confirms 'problems' for Malta

The level of funding that Malta will receive under the EU budget for 2007-2013 hinges on the timing of the budget decision to be taken by members states, unless a solution is found during discussions between the Commission and member states over Malta's GDP figures.

Malta risks losing millions of euros in funding because, according to the latest published GDP data for 2000-2002, it is not considered to be an Objective 1 region.

A spokesperson for the Commission confirmed that this effectively means that, if the situation remains the same, Malta will be allocated only two-thirds of the funding given to Objective 1 regions.

The Maltese government has declared publicly that this situation is not acceptable and it will oppose the budget if it is not remedied. It argues that if the 2001-2003 figures are taken into consideration the country would be eligible to Objective 1 funding.

Ana Paula Laissy, the spokesman of Regional Development Commissioner Danuta Hubner, told The Times that Malta's eligibility will depend on when the final agreement between member states is reached.

"The final decision on eligibility will be made on the basis of the average GDP for the last three available years," she said. If the decision is taken this year the data used will be that between 2000 and 2002 and if the decision is taken next year, the 2001-2003 data will be used.

Earlier on this week, Ms Hubner said the Commission was pushing for an agreement by June of this year. However member states have the final say and the EU budget will have to be agreed unanimously.

The Commission's spokesman was asked to state how the Commission was looking at Malta's situation due to the fact that its position changes, according to which statistics are considered, from one category to another in just one year. She replied: "With the existing data (2000, 2001 and 2002), Malta's GDP is 75.91 per cent of the EU-25 average. Thus it would fall into the phasing out strand of the new convergence objective since its GDP exceeds the 75 per cent threshold of the EU-25 average but remains below 75 per cent of the EU-15 average".

This meant, she said, that Malta would not be eligible to Objective 1 funding between 2007 and 2013.

Ms Laissy explained that there are two different categories within the new convergence objective. One is for regions with GDP under 75 per cent of the EU-25 average, known as Objective 1 regions. The other category involves regions with GDP above 75 per cent of the EU-25 average but below 75 per cent of the EU-15 (old member states) average known as the "phasing out category".

Ms Laissy said that "due to the need to concentrate the limited resources on the poorest regions, the Commission is proposing to allocate resources to the latter group of regions (phasing out category) on a decreasing basis as from 2007 to 2013". She said that these regions would on average receive around two-thirds of the allocation per capita of those regions where per capita GDP remains below 75 per cent of the EU-25 average.

According to 2001-3 data, which still needs to be confirmed, Malta's average GDP is lower than 75 per cent. On the other hand, the issue will be different for Slovenia and Greece which will have the contrary effect if the decision is taken in 2006.

The spokesman said that the Commission was well aware of Malta's position and concerns. However, "the final eligibility decision has not been made yet". She added that "on the occasion, the same rules will be applied to all member states".

The Times also asked the Commission to give the reason why the statistical data for 2003 was not yet finalised but a spokesman declined to answer, saying only that the "regional 2003 GDP data in PPS will only be available at the beginning of 2006".

On this issue, sources close to the Commission told The Times last week that the real reason is that some member states have not yet passed the recent regional statistical information to the EU.