Prime Minister Lawrence Gonzi, together with the other 24 finance ministers of the European Union, yesterday discussed the latest EU budget proposals put forward by the Luxembourg Presidency. However, no agreement was reached.
Following an informal meeting in Luxembourg discussing primarily the next financial perspectives of the EU, covering the period 2007-2013, Dr Gonzi told The Sunday Times that a solution is still far away as divergences between the net contributors and the other member states are still substantial.
Asked whether, following yesterday's discussion, he felt that a compromise would be possible by the end of the Luxembourg Presidency, next month, Dr Gonzi said that, although he was still optimistic, it will be quite difficult.
The EU's paymasters - Austria, Britain, France, Germany, the Netherlands and Sweden - are still insisting that the next budget should be capped at 1 per cent of EU gross national income, while the Commission says a rise to 1.14 per cent is needed to pay for its policies. Malta is supporting the Commission's proposals.
The Luxembourg Presidency is hoping that a deal would be struck at a heads of state summit in mid-June. Following the meeting, Luxembourg's Prime Minister Jean Claude Juncker said sarcastically: "I'm happy to be able to announce to you an agreement, in the sense that it is clear that we don't agree." He said that he expects the situation to remain stalled until the very last minute.
Mr Juncker said he did not know whether he would be able to square the circle of conflicting demands in time, but he was certain that no agreement would be achieved in Britain's six months in the EU chair, starting in July.
Although Malta is assured that it will be getting the best funding possible during the next seven-year budget period, Objective 1, the current discussion over how much each country should contribute to the EU coffers is still very important as the allocation to Malta will depend on the total EU budget. The bigger the EU budget, the bigger Malta's share will be.
EU law requires unanimity on the budget and failure to agree in June could delay a deal until late 2006, after Britain's presidency and a German general election in September 2006.
During the meeting, EU finance ministers also agreed on a voluntary levy on airline tickets to fund extra development aid. However Malta is not expected to participate in this initiative. During an intervention on the subject, Dr Gonzi reiterated Malta's opposition to any kind of additional burden on the airline industry. He said that countries like Malta, which depended on tourism, will suffer economically if they had to impose a similar levy.
At the end of the meeting, Mr Juncker made it clear that this initiative will be a voluntary contribution. He said the European Commission will present a proposal for ministers to consider at their next meeting on June 7.
Dr Gonzi was accompanied during the meeting by Malta's EU Permanent Representative Richard Cachia Caruana and the governor of the Central Bank, Michael Bonello. The Prime Minister returned to Malta yesterday evening.