Six years of EU membership

Of six years of EU membership, perhaps the past year was the most difficult as we grappled with the full impact of the worst recession that hit Europe and the entire world in the past century.

This was the first recession that our country experienced since we joined the Union in 2004 and it would be good to examine the extent to which our membership contributed to soften the blow.

For there is no question that Malta managed to escape the harshest impact. And a number of EU factors had something to do with it.

First, the euro shielded us from any impact on the value of our currency. In contrast, non-eurozone countries, such as Iceland, saw their currency collapse and with it the value of the money in people's pockets. We had none of that and, therefore, our daily standard of living was in large part saved from the worst.

We have also benefitted from lower inflation and lower interest rates that come with being part of the currency club.

But, significantly, the euro also helped us stay focused on the strings of our public purse.

In 2009, Malta was just one of two EU countries that - despite the recession - managed to scale back its public deficit - down to 3.8 per cent. That is still above the three per cent threshold but far better than most other EU countries. This was an enormous achievement that seems to have escaped most media commentators here.

And, of course, it did not just take the euro to help us scale back our deficit.

It also took a government that was bold enough to resist the seduction of popularity that has by now completely intoxicated the opposition. Instead, it stayed the course with a reform programme that required tough decisions. It is these policies - made necessary by the fiscal discipline that is implied by the euro - that have helped our country steer away from the precipice that is faced by Greece.

I am relieved that both the Premier and the Finance Minister continue to insist on the importance of putting our financial house in order and that their target remains a balanced Budget (originally pencilled in for this year).

Secondly, quite apart from the euro, EU membership has also rendered inevitable a series of reforms in a number of state-owned companies (the ship-repair sector in the lead) and other sectors, such as public transport, that had traditionally relied heavily on taxpayers' money.

The money saved from cutting on these subsidies can hopefully be retained or used better. These sectors had staunchly resisted reform for decades and it took the discipline of EU membership (and, in all fairness, a determined government) to get things done. But, as happened in all other liberalised sectors, these reforms too will bear their fruit.

Thirdly, EU funding targeting the employment of new workers and more investment has provided a much-needed relief that has helped us keep the lid on the pressure of rising unemployment. These funds have enabled reluctant employers to go ahead and employ or to undertake new investments.

Elsewhere, EU funding for major infrastructural projects has served to oil the economy although my view is that progress on this front remains too slow.

Finally, Malta's belonging to the EU market has continued to nourish its international attraction as a place to do business with appreciable investment continuing to flow in high value-added areas such as financial services, ICT, gaming and even aircraft maintenance. Being part of this market is arguably the best public relations boon that our investment promoters could ever have hoped for.

All's well that ends well?

Almost, were it not for some negatives, some of which were inevitable and others which could have been avoided. For instance, the government's reform programme, laudable as it may be, came at a huge political price. In last June's European Parliament election, the government saw its support plummet by a full 10 percentage points, electing just two MEPs out of six. Perhaps that was inevitable.

But the handling of other issues was not. The government itself admitted that it could have handled the hike in water and electricity tariffs better. And Malta's dwindling ranking in Transparency International's anti-corruption league gives me cause for concern. The government cannot afford to allow negative perceptions on corruption to get the better of its otherwise competent performance.

Elsewhere, on the vexed hunting question, the government's good intentions appear to have back-fired, fomenting ill-feeling among hunters and environmentalists alike.

But on the sensitive issue of immigration, the government is increasingly winning over the silent majority with a firm policy that is coupled with a human face, especially in its rejection of xenophobia.

The sixth year of EU membership was tough indeed but, on balance, it has certainly helped us remain on our feet to fight another day.

Dr Busuttil is a Nationalist member of the European Parliament.

www.simonbusuttil.eu