Prada economics

Last Saturday, during a public discussion with Prime Minister Lawrence Gonzi, the question of how to mobilise the project funds available to Malta from the EU was raised. There is consensus that these funds must be used in the most effective way, taking the national interest into full account.

The point applies no matter what one may think about them... whether they are a lot or not enough, whether they can by themselves balance the economic burdens that EU membership also entails, whether they have been apportioned correctly or not between different expenditure categories, whether they will continue to engender among the population a feeling of dependence on the outside world, and so on. To maximise the beneficial impact that EU funds should have on our economy it is important to understand how they are administered from the Brussels end and what the capacity is from our side to deploy and absorb them effectively.

These are not academic considerations. It is useless to have millions of euros available if then the rules that govern their administration impede a country from getting easy access to them. Both old and more recent members of the Union have in the past been somewhat unsuccessful in utilising the funds to which they were entitled, sometimes by huge margins. Even France, at times, managed to absorb close to only 40 per cent of what it could have gotten in any given year. By contrast, Ireland was over the years the most agile at cornering funds and drumming them fast into projects that made sense. True, funds which are allocated for a given year and which remain undisbursed are not "lost": they can be accessed in future periods, within a grace period of two to three years.

The administration of project funds from international institutions like the EU as well as funds premised under bilateral cooperation between states is a complex task. It requires the identification of projects by the receiving government, presumably subject to strategic priorities established in national economic management; the agreement of the "donor" body to suggested priorities and projects; the detailed description of the project ideas jointly agreed upon; and then the implementation of the ideas, according to laborious tendering, scheduling and auditing procedures. All this takes much time and elaborate preparations.

This is why I cannot understand how the Gonzi administration is prospecting for the coming year, 2007, to spend amounts on priority projects through EU funds in the region of Lm6 million for tourism, and in education of Lm8.5 million. At some stage, these funds will hopefully be spent. But to project that it will all happen next year is quite unrealistic. Much more time will be needed. For instance last year, in 2005, the government had projected the availability of EU project funds of over Lm19.9 million from pre-accession resources, from the transition facility, by way of re-imbursement of travel expenses, and from structural funds. In fact, only some Lm2.7 million were actually received.

What we need is a realistic assessment of how and when project funds available will actually come to be spent, thereby having a direct impact on the island's economic system. On that basis, a technical strategy should be laid out to place the selected projects in a timeframe set for implementation in real time, not on paper.

Unfortunately, many people still seem to believe that with Malta in the EU things will go swimmingly on their own steam. For them, it is like becoming part of a world famous brand, Prada say... (and forget about product Malta touted as a wedding cake...) Once you are identified with Prada, the feeling is, you go places. That naïve approach actually gets us nowhere.

To be fair, Prime Minister Gonzi last Saturday accepted that Malta needs to get its act right when tapping EU funds. Things will not fall down ready made for us from heaven, as is too often blatantly trumpeted by PN propaganda. We must develop the administrative tools by which to bring projects on stream at the right moment. It does not follow from this that all we have to do is copy what other EU member states have done. What they attempted and achieved was in response to their own situation.

Malta has specific characteristics, defined by our size and geographic position, among other factors. We therefore need to hone a style adapted to our circumstances, that maximises value for the available euros in project funds.

To be sure, there is already quite a long experience in how to filter into the economy funds available from international cooperation. The financial agreements reached with the British in the 1960s and 1970s are probably not so relevant today.

By contrast, the experience achieved in managing the financial protocols with Italy, as well as the cooperation funds coming from Brussels over the last 30years or so, provides good benchmarks. We should evaluate that experience to devise a medium-term strategy that will ensure future funds are used when they are needed and in the way they are needed.

Assuming that the EU brand will, all by itself, get things done for us with minimum effort will not work. Reliance on Prada economics would just be another pipedream.