EU budget: Malta hopes to keep its €680 million

A last-minute compromise proposal of a further cut to the EU budget, made by European Council President Herman Van Rompuy last night, should not harm Malta’s prospects of receiving €680 million in new funding, according to Malta’s Prime Minister.

As the summit of EU leaders entered the small hours, it was still unclear whether they would manage to strike a deal over the bloc’s budget for the next seven years.

With some nations demanding more austerity, the amount on the table before the summit had already been cut back to €973 billion from the European Commission’s initial demand of €1.025 trillion.

In an effort to hammer out a deal, the latest compromise text submitted by Mr Van Rompuy has proposed pushing it further down to €912 billion.

However, Lawrence Gonzi, who is leading Malta’s EU budget negotiating team for the second time since becoming Prime Minister, said last night that he was “cautiously optimistic” Malta would manage to obtain a good agreement for itself once again.

“Although it is still too early, there is growing optimism that we will manage to strike a deal.”

Asked whether Malta would succeed in hanging on to the package it had negotiated three months ago, Dr Gonzi said the country would “continue to fight its corner and possibly try to better what has been achieved so far”.

Under EU rules, Malta is only eligible to about €480 million in structural and cohesion funds. However, it managed to acquire a further €200 million through a special concession negotiated in November.

The additional money, bringing the total up to €680 million, was granted as compensation for the fact that Malta was going to be the only member state, previously eligible to the highest amount of EU funding, to exit this category after just one financial cycle. Seven years ago Malta received €855m.

This category consists of member states with a GDP of less than 75 per cent of the EU average. As its economy grew, Malta surpassed that threshold making its negotiating position more difficult this time round.

Member states have been split on whether the EU budget should grow or shrink. The net contributors, among them the UK and the Netherlands, have been insisting on lower expenditure to reflect the unpopular austerity measures they have had to take back home in order to address the economic crisis. Other countries have been pushing for the cuts to be limited, with beneficiaries such as Malta arguing it would help them continue to close the economic gap with the rich member states.

To reach a final agreement, all 27 member states must sign up. For the first time since the new EU Treaty came into force, the budget also needs the consent of the European Parliament.