Malta 'performing well'

This week is a very important one for Malta. The European Parliament is set to approve the biggest ever financial grant to be given to the country - €805 million for the period 2007-2013. The largest chunk of these funds, €728 million, is being allocated under the cohesion policy to fund projects of a socio-economic dimension, particularly to improve the infrastructure.

Technical preparations on how the funds will be spent have been ongoing for the past year. The head of regional policy in the European Commission, Commissioner Danuta Hubner, will start a short visit to Malta today to see the progress made so far. She was interviewed just a few hours before she starts her meetings in Valletta.

What is the aim of your visit to Malta? What will you be trying to achieve?
I was invited by Prime Minister Gonzi to visit Malta during a meeting held in Brussels last year and I accepted that invitation with great pleasure. The main scope is to understand, first hand, the needs of the islands in terms of cohesion policy, the government's political orientation towards economic and social development and cohesion policy for the island, and to verify the impact of cohesion funding in Malta to date.

You are responsible for the lion's share of the next EU Budget - Cohesion Funds. How much has been allocated and is it enough?
Cohesion policy was allocated around €308 billion, some 36 per cent of the EU budget. This represents a decrease of around 10 per cent compared to the initial Commission proposal. Although I cannot be satisfied by the outcome, I must recognise that in the context of very difficult budgetary negotiations, cohesion policy suffered among the least cuts. This demonstrates the crucial role this policy plays in supporting competitiveness, growth and jobs in the member states and regions of the Union.

Sometimes people don't understand why the EU splashes out these funds and particularly why the new member states are getting much more than the others. Is it just a matter of helping the poor or is there an overall economic objective?
The overall objective of European cohesion policy is to ensure the equal development of Europe's regions in a sustainable way. Socio-economic disparities need to be tackled in order to enable the European Internal Market to function well and to give the opportunities to European citizens, businesses and regions to better their socio-economic standing. It is very important that all regions in the Community make a maximum contribution to welfare by using fully their development opportunities. Criteria for the allocation of funds are the same for the new and the old member states.

What is Malta's share of these funds and how does it fare on a per capita basis when compared to the other member states?
Malta receives among the highest per capita aid under cohesion policy equivalent to more than twice the average per capita aid of the EU27 and still more than the average per capita aid of the new member states (around six per cent more).

Malta has already started receiving EU funds during the current budget cycle. However, tangible projects are still not that visible and thus people are not really enthusiastic about the EU. Why does it take so long and is this situation similar in the other new member states?

Malta's Single Programming document was adopted in June 2004, whilst expenditure was eligible as of January 1, 2004. It is up to the Maltese authorities to set the process in motion by publishing calls for tender and the setting up of the necessary implementing structures and project selection method. From the Commission's side, we are bound to ensure that funds are spent according to our rules and regulations that also stipulate the use of one year's financial commitment within two years in order to ensure that progress is achieved and recorded.

In most cases, and this is true not only for the new Member States, most projects involve infrastructure works for which various development, planning and environmental permits are necessary. This takes a bit of time. This is also the case in Malta. However, practically all Structural Fund resources are now allocated to specific projects, some have already been completed, some are under construction and others will commence shortly.

Furthermore, the process may be delayed due to appeals regarding the selection of the most appropriate projects for Community financial support, which the project selecting committees established and the various other bodies involved need to reassess the project application and give further justification for the course taken. This eats up valuable time and obviously affects the visibility of the projects and programmes itself.

I am confident that their impact will be more visible shortly. Malta is certainly not doing less well than other new member states. Malta has gone through a learning process in a positive manner.

In your view, what will these funds mean for Malta...is it true that this investment will change the face of our islands?
Hopefully the face of the island will not change as it is one of the most valuable characteristics of Malta. What the funds intend to do is stimulate a level of socio-economic development that will enable Maltese citizens, businesses and social partners to actively take advantage of EU membership. This may take the form of enhanced training opportunities which are not physically visible, but have an immense impact on the skills capacity of locals and employability of the labour force or through a strengthening of the competitiveness of local entrepreneurs. Others may take the form of infrastructural developments that will help improve accessibility and environmental conditions that will augment the overall socio-economic attractiveness of the islands.

How important is it for the EU that member states give attention to all their different regions and not just to the central areas?
It is crucial rather than merely important. Cohesion policy is about the consistent and equal development of the various regions in Europe. While it is important to have economic centres of excellence driving Europe's economy, it does not do us any good to have a two or even three speed Europe. All have to be pulling in the same direction at a similar pace, otherwise we risk undermining the social model of the EU society. Furthermore, in order to achieve the targets set by the Lisbon Strategy we need to promote progress in all parts of the EU, including its farthermost corners! The way to arrive at this is to ensure that those common objectives are also set and agreed between the local partnerships in order to select the most appropriate projects that are most relevant for the development of the local community.

Are you satisfied with the way Malta is managing its funds so far? Does it have good structures and what else needs to be done?
I have seen the structures set up and the physical and financial progress to date and I can assure you that Malta is performing well. And I am pleased to say that. Of course, the learning curve at the beginning was steep and certain decisions taken at the beginning may not have been the most appropriate in terms of the administrative capacity of the Maltese administration, but to date many measures have been put in place to assure the appropriate and efficient use of the resources.

There is no doubt that for the remaining part of the current programming period and the beginning of the next there will be certain overlap and there will be the need for enhanced structures, especially in terms of human resources. However, I am confident that with the appropriate political will and typical Maltese determination Malta will meet the challenges ahead as it has always done.

Why does it take so long for EU funds to start actually being turned into tangible projects? Will you be trying to change the system to make it less bureaucratic?
As I have had the opportunity to say before, it is up to the member state to decide the actual implementing structures on the ground. Of course EU regulations set out certain criteria that may be seen as burdensome for a small administration like Malta, but we have made an effort to simplify the whole system.

The new structural fund regulation currently being discussed has been drafted in such a manner that puts more emphasis on subsidiarity and on partnership between the Commission and the Member State, and the central authorities and actors on the ground. This should ensure that bureaucratic processes and bottlenecks are avoided as much as possible during the next period.

In addition there will be financial resources allocated towards technical assistance and to increasing administrative capacity that should enable the Maltese partnership and implementing bodies to prepare, improve and strengthen the quality of the management and control system in place.

Do you think that with the present system it will be possible for the new member states to start spending the new funds by the beginning of 2007? Isn't this a bit over optimistic?
We know the objective is ambitious, but we are just as determined to ensure it is doable!

The Commission is already working with the member states to define the main parameters of the future National Strategic Reference Framework which will form the basis of Community financing in the respective member state, and for some countries we have already achieved good progress.

Also in Malta's case, my services are working closely with the Maltese authorities to streamline all possible issues that can be settled in the absence of a formal regulation. We know that a first draft of the NSRF has been published and the authorities are assessing the comments received during the public consultation period. We too are assessing this draft and we will work together with the Maltese authorities to ensure that the final text adopted will address Malta's key needs, while embracing the EU's overall objectives as outlined in the Community's Strategic Guidelines and the Lisbon strategy.

It is therefore imperative that negotiations on 2007-2013 operational programmes be finalised by the end of 2006, in order for Member States to be able to start spending the funds as early as possible during the next programming period. This is certainly our common objective for Malta.

In addition I remind you that even though the new period starts and expenditure is eligible from January 1, 2007, expenditure on the current programme will continue until December 31, 2008.