Eleven years ago, the debate on EU accession was at fever pitch, with the membership touted simultaneously as the only salvation for the island’s economy and as the death knell for its vulnerable society and businesses. Ten years after accession, it is obvious that neither of the two extremes materialised – or ever would – but how has it turned out? Given the benefit of hindsight after 10 years, we asked a selection of people how they viewed the impact of EU membership. Was it better than they forecasted – or worse?
Richard Cachia Caruana
Malta’s chief negotiator for accession
At the risk of sounding conceited, the impact has been pretty much as forecast.
Firstly, Malta’s accession to the European Union was primarily dictated by a political vision – that of anchoring Malta within a free and democratic Europe.
This vision was buttressed by a clear understanding that Malta’s economy had outgrown its own limited internal market and that further growth was only possible if we ventured further outside our borders. We needed a hinterland where our economy could expand.
Free and unfettered access to the world’s largest market therefore played a key role in the decision to seek EU membership and the last 10 years have shown that this access has become a major source of economic growth and job creation.
A cursory glance at our economy immediately reveals new sectors that were impossible or even unimaginable before EU membership. These include investment funds and their management in the financial services sector, the remote gamingsector, the wider ICT and software industry, the aviation sector as well as the production of medical devices and generic pharmaceuticals.
These sectors have created many new and better-paid jobs than those lost due to restructuring in the textile and ship-repair industries. Ten years on, our economy is healthier because it has diversified; it is also generating more and better jobs since we have moved from high-volume, low-income products and services to low-volume but high-income products and services.
While the effects of the global recession are not yet over, we have already experienced enough upheaval to know that Malta would have fared far worse had we attempted to deal with the crisis in isolation. The common response to address the economic crisis was without doubt more effective than what one EU member state – however large in EU terms – could have achieved on its own. A notable example of this is the Fiscal Compact Treaty signed in 2012 which commits almost all member states to fiscally responsible policies. This approach to addressing fiscal challenges will ensure that future generations of Maltese citizens will not be burdened by an uncontrollable national debt and will be able to benefit from more decisive measures to promote sustainable growth.
Secondly, access to EU funds is an obvious way in which Malta’s infrastructure, businesses and private citizens have benefitted over the past 10 years. As a beneficiary of EU funding – to the tune of some €1.3 billion (over €3,250 per capita) between 2004 and 2013 – Malta has been able to invest in areas that are fundamental to the development of the country’s economy. At the beginning of 2013 we were also able to ensure the same level of funding for the 2014-2020 period.
EU cohesion funding comes in two blocks – Structural Funds and the Cohesion Fund. Malta has, to date, used the Structural Funds to co-finance a number of strategic investments, which include the extension of vocational schools and the university, the improvement of the energy network, investment in innovation, research infrastructure and industrial estates, aid schemes for small- and medium -sized enterprises, training and employment schemes as well as the construction of waste water treatment plants and the restoration of significant parts of Malta’s vast historical heritage, such as the fortifications that run for kilometres across the country.
The other funding component, the Cohesion Fund, has been used to upgrade the road and maritime network, as well as for investments in the environmental sector, including air quality and urban waste.
Funds were also allocated to finance investment in the agriculture and fisheries sectors as well as in the areas of justice and home affairs, including the security of external borders. An example of the latter is the two new patrol aircraft which were purchased by the Armed Forces of Malta and 75 per cent co-funded by the EU’s External Border Fund.
Indeed, one of the positive side-effects of the major challenge that we have faced with illegal and irregular immigration is that our Armed Forces have been able to benefit from more than €100 million in EU grants and have built or rebuilt their maritime and aviation capacities.
A cursory glance at our economy immediately reveals new sectors that were impossible or even unimaginable before EU membership
Additionally, Malta’s energy policy – including energy security – has developed considerably since Malta’s accession to the EU. From an energy isolated member state powered by a single source of fuel (oil), Malta embarked on an energy plan that is steering it towards lesser dependence on oil imports, greater sustainability and, in the long term, more affordability.
Through the European Economic Recovery Plan, Malta secured EU funding to co-finance a sub-sea electricity interconnector linking Malta to the European electricity grid.
Complementing this project was a planned pipeline between Malta and Italy for the importation of natural gas. Both these projects were part of a greater EU goal – established with major input from Malta at the highest levels – of ensuring that by 2015, as far as possible, no EU member state remains isolated from the EU’s gas and electricity networks.
In terms of renewable energy and energy efficiency, we are experiencing a cultural shift towards greener buildings and a high increase in the installation of solar technology both in residences as well in business and industry.
Infrastructural projects connecting Malta to the gas and electricity networks of the EU, a renewable energy binding target and requirements for energy efficiency measures are long-term energy policies which will lead to Malta having a more diversified mix of sources and supplies that will allow for more secure, sustainable and affordable energy. Without these investments and these policies we would have to resign ourselves to remaining hostage to the international price of oil for an indefinite future.
Thirdly, EU citizenship and integration is perhaps the least visible and intangible consequence of EU membership, yet by no means the least important. EU citizenship has effectively removed at one fell stroke the limitations associated with a small, densely populated island.
Joining the eurozone on January 1, 2008, was a major aspect of this integration process as was joining the Schengen borderless area at the end of 2007. These two events, taken together, mean that our citizens can now travel to most EU countries without having to carry their passports and without having to change currencies. This is particularly important for an island nation such as ours and these two developments underscore our commitment to be right in the heart of Europe.
Just as important is the fact that the EU has become a key component of the common social dialogue in Malta as is testified in the media every day. This is welcome evidence that Maltese citizens feel a sense of belonging within the European project and that they can identify with the EU.
The Eurobarometer has also found that the Maltese believe – by a ratio of more than two to one – that EU membership has been of benefit to their country.
Joanna Drake
Former head of the EU Representative Office in Malta
We always felt European but there is no doubt that membership imbued us with an extra dose – especially when it comes to empowerment. This is a feeling that has manifested itself not only in our way of life but also in our outlook. We no longer feel like a small island but have been elevated to a higher platform.
We have seen an enhancement in many senses not only in terms of our rights, but also of our obligations. Expectations have risen: We expect so much more from our government, our institutions, our courts, our employers, our trade unions...
The EU has also opened doors. Parents will immediately point to the opportunities for their children to study, work and travel, but businesses can also see opportunities beyond our horizons. And those outside Malta have been more aware of what the island has to offer, resulting in more investment, more tourists and new sectors like i-gaming and financial services.
We have also become much more aware of the impact that EU decisions can have on our lives, in everything from banking and roaming charges to airlines and discipline in government finances.
But in parallel we have learned that we are part of that decision-making and that we can and do have a say.
Are we building enough on our skills and are we being creative enough?
There is a lot more that we can do, areas where we are not really actively engaged. Are we doing enough to live up to the expectations of our SMEs? Are we building enough on our skills and are we being creative enough?
We are so good at networking but there is no doubt that small countries cannot internationalise as easily as larger ones which have so many more resources to deploy. This is why we need to focus on service innovation and clustering.
When we look at society, why is female participation still lagging – not only in the workplace but also in society, politics, leadership and company governance?
In the run-up to accession, the funds we would receive were a key issue but even though our absorption rate was very good, did we really get value for money? Take our roads for example. We spent millions of euro from the Structural Funds but there are still potholes everywhere. We could do so much better. We need to really evaluate what we should be getting for our citizens, our infrastructure, our countryside, etc.
Looking ahead, I also think Malta needs to find a policy area where it can make its mark. There will be some areas, like immigration, where we will undoubtedly continue to make our voice heard, but there are other strategic areas where our voice can stand out to a greater extent. Sustainability and the environment, or perhaps energy?
This latter issue will be huge and we should be right at the centre of the debate.
Gordon Cordina
Economist
So much about life and economics is about raising one’s potentials. Growth can only happen when you raise the bar, aiming for higher achievements. But it does not stop there, of course.
It requires sacrifice and hard work. This was what one could expect out of EU membership... the question was never quite whether membership was suitable for Malta: it was more whether we wanted to go for it or otherwise.
The rest is, of course, history which from the economic perspective featured growth, job creation, development into new sectors and improved structures of governance ranging from macro-economic management to skills creation to environmental improvement, access to EU funds, and to technology and training programmes.
[EU membership] has meant – and continues to require – hard work and sacrifice
It also meant – and continues to require – hard work and sacrifice from people involved in business, public administration and other critical areas of society, perhaps to a greater extent than our counterparts in larger countries. But I’m glad that Malta overall made a success out of its membership experience, although I think that there are areas where it could have done better. For instance, we may have focused too much on easy pickings from new sectors of activity, and not done enough to improve the competitiveness of those which remain the bread and butter of our economy.
I look forward to future opportunities with a clear focus on areas of genuine competitive advantage for Malta, offering a combination of lifestyle, European standards and ethics as an ideal place for business, recreation and creativity within a geo-politically strategic region.
I hope we are wise enough to continue to use our EU membership to the best effect.
Ian Casolani
Federation of Real Estate Agents
Malta’s EU accession in 2004 was a very important watershed in so far as Malta establishing itself as a reputable domicile for foreign investment. The idea that we enshrined our reputation in various sectors through the EU regulatory framework made it possible for us to be on the map that counts.
This has helped Malta become the more cosmopolitan European destination it is today
In other words, it was the natural progression for us as a nation to establish Malta as a jurisdiction which has the proper financial and legislative structures in place to ensure a serene and business-friendly environment.
Indeed, there is no denying that the property market underwent a massive change, first and foremost through the alignment of our legislation with that of one the leading economic blocs in the world. Investments such as those from the i-gaming, financial services, pharmaceuticals and several others all partly owe their presence in Malta to Malta being part of the EU.
Undoubtedly, the local property market gained from the presence of these investors on our islands, not only in so far as the selling of property, but also the ripple effect it had on the letting of commercial premises as well as residential letting for all non-residents relocating here. All in all, this has helped Malta become the more cosmopolitan European destination it is today.
From an infrastructural perspective, it is clear that a number of capital projects were made possible through EU funding. The enhanced road network, embellishment projects and sewage water treatment plants are just some examples that brought Malta in line with other destinations, thus making it possible for us to compete with other countries in so far as relocation and property is concerned.
Tony Zarb
General Workers’ Union
Certainly, membership of the EU was a significant and a courageous decision that the Maltese took in 2004. However, it is undeniable that since then, Malta had to struggle uphill and even go down the slopes that EU membership brought with it.
On its part, the GWU has been active in European affairs through its affiliation in the European Trade Union Confederation (ETUC) long before Malta’s accession, considering that it was in 1973 a founding member of the said ETUC.
In this context, the GWU was and still is working actively for Europe to have a social soul and truly be a Europe for the people and not the opposite.
EU membership has not yet served to change the mentality of the Maltese, particulary where civil rights and liberties are concerned
There is also no doubt that since membership, Malta benefitted from various European funds, especially to continue strengthening its infrastructure. It is also benefitting from a vast market of well over 500 million people. On the whole, however, EU membership has not yet served to change the mentality of the Maltese particularly where civil rights and liberties are concerned.
Moreover, workers were promised that EU membership was to make them among the best in Europe; a promise which was not delivered.
However, today we have a government that has declared it wants to make our country one of the best in Europe, and the GWU will be working hard in that direction so the Maltese workers will reach the same levels and standards as the best in Europe.
David G. Curmi
Malta Chamber of Commerce, Enterprise and Industry
The Malta Chamber believes that the impact of EU membership was certainly beneficial to Malta as was in fact originally anticipated.
There is no doubt that the major milestone which has translated into the most important benefit for Malta was the adoption of the single currency. In addition to reducing transaction costs and exchange rate risks, the euro presented further benefits to businesses by encouraging investment and bringing more certainty to business planning.
Another major milestone was joining the Schengen Area. The signing of the Schengen agreement harmonised the conditions of entry and of the rules on visas for short stays, while it made enhanced police cooperation and stronger judicial cooperation possible. This promotes trade and integration between the other signatories and Malta, while encouraging tourism.
EU membership has brought about a reduction in regulatory burdens and a better chance of access to finance for business.
There are still many benefits to be reaped
It has also resulted in more employment and educational opportunities, a cleaner and healthier environment, a more favourable business climate, being part of a huge economic and political bloc, having an enhanced identity and greater clout on the international scene, and taking part in the decision-making process within the EU. There was also the benefit of Malta becoming eligible for participation in numerous EU programmes.
EU membership has also been instrumental in attracting foreign investment and helping Malta establish itself as a strategic hub for several sectors.
The Malta Chamber stepped up its presence in EU policymaking circles and recognised the need to have strong affiliations with European organisations, namely by becoming a member of Eurochambres and Businesseurope.
Although Malta has greatly benefitted from its decade of EU membership, there are still many more benefits to be reaped. For example, to date we have seen that tendering opportunities have not been exploited to their full potential by Maltese businesses.
The Malta Chamber encourages businesses to become better acquainted with such opportunities by organising regular information seminars directly or with the support of the Malta Business Bureau.