Prime Minister Lawrence Gonzi was all smiles yesterday as Malta secured a net EU budget package of €455 million (around Lm194 million) over a seven-year period.
After more than 17 hours of intense negotiations in Brussels, which ended at 3 a.m. yesterday, Malta managed to retain the same terms negotiated under the Luxembourg presidency with a few additional sweeteners.
Of the €805 million it will receive from the EU, Malta has to contribute €312 million to the EU budget and another €38 million to the UK rebate for the period 2007-13 - leaving it with a net amount of €455 million.
After arriving in Malta yesterday following a sleepless night, the prime minister said: "This is a substantial achievement. The arguments we put forward have worked."
Under the British presidency, EU leaders agreed on a seven-year spending plan for the 25-nation bloc - a hard-won deal seen as key to shaping the future of an enlarged EU and to restoring faith in its unity.
The blueprint offered by British Prime Minister Tony Blair slashes the UK's budget rebate by €10.5 billion over seven years - which will in turn be rerouted to boost economic development in the EU's 10 new member states.
In return, the EU countries - crucially France - agreed to a spending review in 2008-09 that could lead to new cuts in the bloc's agricultural subsidies.
Indicative estimates show that Malta stands to benefit from €728 in Cohesion and Structural funds and €72 million in agriculture funds. As these estimates are given at 2004 prices, the amounts received will be increased annually in line with economic indicators.
The funds allocated do not include other sources of EU revenue normally earmarked for areas like education and justice and home affairs.
The money can be used for different kinds of projects and initiatives - from improvements to the road network to solid waste management and health infrastructure. Dr Gonzi did not say, however, which areas would be his government's priority.
He did say though that Malta had every intention to start using the EU money as early as January 1, 2007.
The prime minister highlighted other positive developments for Malta, such as an adjustment to both the Structural and Cohesion Funds formula that would enable member states to absorb funds over a longer period.
The EU has also increased its co-financing rate for projects from 75 per cent to 85 per cent - which will boost Malta's budgetary cash flow.
Dr Gonzi said the cash injection - roughly four times as big as the last Italian financial protocol - would go a long way to ensure Malta's infrastructure reaches EU standards in the coming years.
Describing the EU deal as an important and very positive moment for the bloc, Dr Gonzi said that Malta built a strong case to secure Objective 1 funding. In meetings with the Luxembourg and the British presidencies, Malta underlined the problem of its population density - 15 times the EU average.
Asked whether Malta had any "friends" in the EU, after it was accused by the international media of being the only supporter of the UK's initial budget proposal, Dr Gonzi replied: "This is not a matter of us being UK allies. We had only said that Britain's initial package provided a sound basis for agreement - and we were proven right."
British High Commissioner Vincent Fean told The Sunday Times he was delighted that the outcome was to Malta's liking and meets the needs of the new EU states to plan ahead.
"The UK has consistently been a champion of enlargement and it was therefore important to put our mouth where our money is," Sir Vincent said.
He revealed that Dr Gonzi and Mr Blair held a phone conversation over the budget estimates last Wednesday - which provided the two prime ministers with an excellent opportunity to compare notes.
Foreign Minister Michael Frendo also expressed his satisfaction that Malta and Italy's insistence on the problem of illegal migration had paid off. Among other initiatives, the member states agreed that the EU should collaborate closely with North African countries to stem human trafficking and that a detailed report on the matter is to be drawn up in 2006.
Summit's conclusions at a glance
¤ Overall spending: €862.3 billion.
¤ Review of all EU spending, including the Common Agricultural Policy and the British rebate, and to draw up a report in 2008/9.
¤ UK rebate down €10.5 billion from a total of €50-55 billion.
¤ Aid to EU newcomers: €157 billion (€7 billion more than the UK initially proposed).
¤ Farm and rural development aid: €292 billion.
¤ New member states exempt from 60 per cent Lisbon Agenda earmarking.
¤ National budget co-financing down by 10 per cent.
¤ Member states may absorb EU funds over longer period.
¤ Funds allocated to Malta: €805 million.
¤ Reductions in net contributions of the Netherlands, Austria and Germany.
¤ Closer co-operation on illegal immigration.
¤ Macedonia granted candidate status.