When it really all seemed that we would have no agreement in sight on the EU budget for the period 2007-2013, the last EU summit produced an agreement that seemed to please most members.
We still require approval from the European Parliament, which technically has the right to veto the budget. However, it is highly unlikely that this will happen (although, sometimes, I do have a suspicion that I may have to eat my words).
The EU budget is a thorny issue anytime but this year was even more so, as the various interests seemed to get intertwined.
Moreover, probably, since the United Kingdom was holding the EU presidency and that country is a key protagonist in pushing for reforms in EU spending, the issue was bound to become even more controversial. In any case, agreement was finally reached last week.
The UK is giving up part of the rebate that it receives from its contributions. This was a rebate that had been negotiated by Margaret Thatcher more than 20 years ago. This obviously satisfies the other large contributors, namely Germany, Austria, France, the Netherlands and Sweden.
The UK was willing to give up this rebate if there was also agreement about capping expenditure and about a review of the Common Agricultural Policy. Although there is nothing clearly defined on these two issues in the eventual agreement that was hammered out, there are enough references that would suggest that, next time round, these will become the major bones of contention.
One of the fears that had been expressed when the first budget proposals were put forward was that the new member states would receive much less money than they had been expected. This was seen as a hindrance to their continued economic growth. The final agreement does give these new states more than had been originally proposed but for some countries they will still receive less than expected.
For Malta there is no doubt that the results have been very good. The total amount of funds to be received from the EU for the seven-year period shall be in excess of €800 million, while the contribution to the EU budget and the UK rebate should total €350 million. The net financial inflows should total €455 million, that is €65 million per year.
This would mean a net contribution to our gross national income of 1.5 per cent per year. When one includes the element of co-funding (that is funds provided from our budget to complement the EU funds) that is required so that Malta may be able to access these funds, the total investment injection into the economy from public funds and from EU funds is expected to be close to €1 billion.
These funds do not include funds that may be earmarked for special initiatives such as addressing the problem of illegal immigration.
The earlier proposal submitted by the UK had also been favourable to Malta and as such we were never an obstacle to reaching agreement. The final agreement safeguarded our position thoroughly.
Moreover, one should not forget that Malta also maintained its so-called Objective 1 status. Such a status allows us to provide incentives to employment creation activities, among other things. Thus the benefits being enjoyed currently by several manufacturing firms can be kept for this seven-year period.
The task ahead for the Maltese government is to identify the priority areas and, more specifically, the projects that it would like to finance over the coming years. Such funds on their own shall not create employment but they can help to strengthen the economy.
Although one is aware that funds can only be used for infrastructural projects and not to finance current expenditure like salaries in the public sector, it is also understood that, if used wisely, these funds can contribute to sustaining the competitiveness of firms operating in Malta.
I have no doubt that there will be those who shall be cynical (it is their fundamental right!) about the government's achievements to secure once more such a high element of funding from the EU.
It is always worth asking them if they would be willing to throw such funds away and get out of the EU.
On the other hand, government ministers feel that this is an important achievement for our country.
I believe that this news was excellent news and does provide a happy ending to the year, a year that has not been easy on the economic front for a number of reasons.
It does provide the required spur to keep on moving with the transformation process that has been started and to avoid succumbing to the temptation of going for quick fix solutions.