Malta is adopting a ‘wait-and-see’ approach to the eurozone crisis and is reluctant to commit itself to any of the proposals being put forward by member states.
The evolving situation of the eurozone is expected to dominate the EU’s agenda for the rest of the year.
Following an urgent meeting, Germany and France tried to stifle speculation currently surrounding the EU’s single currency’s future, and made it clear they want more integration.
This has gone down well with the European Commission and the European Central Bank though France and Germany’s “bulldozer” approach has irritated other member states, particularly the smaller ones.
Although rules are already in place for eurozone members, including deficit and debt targets, their implementation varies between member states, creating instability and disparities among the economies of the sameeconomic area.
Recently, the EU started discussing further measures to introduce added financial discipline among its members.
France and Germany have now made it clear they want the implementation of new, tough measures, including the introduction of a common corporate tax, constitutional limits on debt and borrowing caps in all member states, more integration of fiscal and economic policy, with the possibility of having a super EU Finance Ministry and a different style of financial leadership at EU level.
The proposal is to have the President of the European Council, Herman Van Rompuy, given a major role and acting as a eurozone ‘supremo’ chairing twice-yearly summits.
Although these proposals were welcomed by European Commission President Jose Manuel Barroso, many member states are sceptical about their implementation,mostly as they may impinge on their sovereignty.
Malta – the smallest economy in the euro area – is steering away from the controversy by adopting anon-committal stance.
Some of the proposals made by Germany and France, particularly those related to the creation of a common corporate tax across, run contrary to Malta’s national economic interests while the creation of an EU Finance Ministry might water down the Maltese government’s control over the island’s economic and fiscal policy.
Asked to comment on the latest developments and the proposals made, a spokesman for the Finance Ministry said:
“Malta has already been supportive of any measures that would enhance the economic governance of the EU and the euro area. New governance systems have already been put into place and others are expected to come on stream in the near future.”
He said the insertion of a limit on borrowing into national constitutions needed to be evaluated carefully within the context of each country’s economic and fiscal realities first, before taking a definite policy stance.
Some member states have already put limits in their constitution on how much their governments can borrow and have imposed caps over their public debts as a percentage of GDP. Lately, Spain and Italy said they would be following this course of action. Malta has so far only objected to the imposition of new taxes by Brussels.
“Malta believes taxation is a matter for national fiscal policy,” the ministry spokesman said.
While observing that so far there is no official proposal for a common corporate tax, even though Germany and France said they want it in place by 2013, he insisted that “if and when such a proposal is made, Malta will not fail to take a position.
“Malta believes that a financial transactions tax would be harmful to its economy unless it is implemented universally,” he insisted.
The woes of the eurozone will be first discussed this week with the president of the European Central Bank during an extraordinary meeting of the Economic and Monetary Affairs Committee of the European Parliament. EU Finance Ministers are then expected to meet informally in Poland in mid-September.