Apologies for the hackneyed title that I have used this week, but this is after all the merry season. On the other hand the subject is quite serious and needs a deeper understanding. It is in reference to the eurozone. However, let us put things into perspective.

The European Union regularly comes under strain (and at times the strain can be very strong) as member states do not agree on some measure or other that is meant to harmonise governance. There are always states who ask for an ever closer union and others who believe that what we have today is already much more than had been bargained for at the time of entry. One of the most recent examples has been the so called European Constitution, that had in fact been rejected by some member states. It had to be toned down significantly to make it acceptable to these members.

Over the years we have had opt-outs of various sorts from certain directives on the part of certain countries. For example the United Kingdom does not apply the whole of the EU Social Charter. Malta also managed to achieve some exemptions when negotiating membership terms, such as the zero rate of VAT on food items. This has led to politicians across Europe to speak of a two-speed Europe. There was to be a group of countries that were willing to have a stronger union, who would have been at the core of the EU, and others who wanted a looser union and would have been on the periphery.

In effect this is what happened when the euro was adopted in 1999. Not all EU member states joined the monetary union and adopted the common currency. Those that did join, surrendered authority over elements of their monetary policy to the European Central Bank. Moreover, they had to abide by rules, to which non-eurozone members did not. The developments in Greece, Ireland, Spain and Portugal of the last months, showed that not all eurozone members could abide by the rules of the eurozone, especially in respect of the level of fiscal deficit. Worse still, some are blaming these rules as being the real impediment to countries to getting back on their feet after the international recession.

This led economists to speak once more of a two speed Europe, not so much in terms of the level of willingness of member states to have a closer union, but more in terms of their ability to live up to the obligations that the monetary union has brought about. This inability to live up to these obligations is being considered by many as being a threat to the euro itself. It has also brought back to the forefront the argument as to whether it is possible to have a monetary union without a political union.

This latter point is an important issue, as the EU is still an unfinished union. There is one market for people, capital, goods and services. We have common rules about several things. With a number of countries it is practically borderless. Yet we still have twenty seven governments each leading a state in its own right. We also have evident economic inequalities that make it exceedingly difficult to apply common rules.

So although there may be a willingness to create a single Europe, can the current economic structure of the 27 member states put together sustain it without a political union? Or could it be that the sense of togetherness is bringing out old prejudices between nations that we had long thought had been eliminated?

This brings me to the issue of the premier division, referred to in the title of this week’s contribution. Bloomberg Businessweek, in an article of last week’s edition, referred to the position of the euro and the difficulties the currency is facing as well as the difficulties that some members of the common currency are facing. Quoting Simon Johnson, the former chief economist of the International Monetary Fund and currently a professor at Massa- chusetts Institute of Technology, it said that if the eurozone were to break up, it could make sense for a group of nations to regroup themselves in a more defensible set up. Malta was actually included in the list of stronger nations in the eurozone, together with Germany, Austria, The Netherlands, Finland, Slovakia, Slovenia and Luxembourg.

Being a member of the premier division is indeed a huge success for the country and says a lot about government’s economic management. On the other hand, past success is no guarantee of future success. If we stop for a moment from being proud of ourselves, can we think what the consequences for Malta could be if the eurozone were to break up and what the consequences could be for the whole of the European Union? Such a break-up would certainly not be a good thing for Malta.