Aaron Farrugia, Parliamentary Secretary for EU Funds
It has been widely reported that we are currently in the midst ofnegotiations on the next EU budget. We do not know yet what the finalsettlement will be and I will not be providing a running commentary on these negotiations.
However, it is indisputable that as the fastest growing economy in the eurozone, Malta’s position is changing. Demand for funds are increasing in areas like migration, defence and security and the overall pool of funds will shrink by the UK’s Brexit by some €13 billion.
I welcome the European Commission’s proposal to widen the eligibility of transition regions, which means that Malta is expected to continue benefitting from transition status, which will help sustain and consolidate the record economic growth we are seeing. As I said in Parliament last week, it is a win-win situation for Malta and for the EU: if we keep doing well, the single market will benefit too from the spillover effect.
It is important to recognise also that Erasmus+ and innovation funds are likely to be key priorities for the next EU budget; Malta needs to adjust its sails to ensure we are well placed to capitalise on these opportunities likely to arise.
It is clear that for member states to get more value in the next MFF post 2020, leverage is crucial. Across the EU, it is likely that the traditional mix of European Structural and Investment Funds (ESIFs) and government own funds to finance pro-jects will not be enough to sustain the growth momentum, especially as most governments remain fiscally constrained.
Even though my government’s position is that financial instruments should complement grants, we recognise that the use of financial instruments will assume greater importance in the next EU budget.
EU funds will continue to play an important role in building our modern economy
In the future, the role of development banks in the blending of project finance sources assumes greater importance. I am pleased that we are now working to address the market failure and funding gap through the establishment of the Malta Development Bank.
The Malta Development Bank is still in its infancy, trying to gather resources to start operating. We are working closely with the bank on initiatives involving EU funds as it has an important role to play here too.
Malta has resources to support the necessary investments in SME projects and infrastructure development.
However, we have so far lacked the mechanism to convert such abundant resources (particularly private sector savings) into financing of projects, which require financings beyond what traditional banking sources areable to give.
I am hopeful that the Malta Development Bank will in future be able to fill this funding gap.
Regardless of the final budget settlement, Malta will adopt a proactive and creative approach to exploit new opportunities available to us so that we continue to derive maximum value from every euro of investment in Malta.
As the Prime Minister said recently, there can be no sustainable growth if investment is slowed down or paused and EU funds will continue to play an important role in building our modern economy.
David Stellini, Opposition spokesman on European Affairs and Brexit
Malta is not Luxembourg. For although Malta is roughly the same size of Luxembourg and the Maltese population is slightly smaller, Malta is located in the furthermost part of the EU’s single market and it does not even form part of mainland Europe.
The Grand Duchy of Luxembourg is a landlocked country, bordered by Belgium to the west and north, Germany to the east and France to the south.
Malta on the other hand is a peripheral tiny island with no natural resources to speak of, except for human resources.
Do you think that Malta benefits from the EU single market as much as Luxembourg does? I think Malta benefits much less and I even think that Gozo benefits even less than Malta because of its double insularity.
Luxembourg benefits from trade crossing its territory from Belgium to France, from France to Germany and from central and eastern European countries to the western ones, broadly speaking. Malta on the other hand is only next to Italy and with a sea that divides it from the rest of Europe.
So, I do not believe for a second that Malta deserves less European funds than before. Malta is permanently at a disadvantage due to its geographical position. As to Gozo, at the very least, the government should seek a special allocation due to its double insularity.
What this means is that the government can, if it wants to, argue for special financial allocations to compensate for Malta’s geographic disadvantages, being an island member state on the fringes of Europe with no road connections to continental Europe and having no natural resources to speak of.
Post-Brexit Britain will need, more than ever before, an interlocutor with the Arab world and Malta fits the bill perfectly
All of Malta’s challenges were recognised by the last agreement reachedby former prime minister Lawrence Gonzi and Malta’s then ambassador Richard Cachia Caruana in February 2013.
If, at some point, the Maltese government realises that it is losing the arguments, as a last resort, it could argue for an appropriate ‘safety net’ in order to ensure that Malta will not be worse off when compared to the previous period 2014-2020. Under the last budgetary agreement reached in February 2013, a minimum level of support was guaranteed when compared to the 2007-2013 budgetary period.
Furthermore, the government could try to obtain specific transition arrangements or ‘phasing out’ for those EU countries losing their eligibility for the Cohesion Fund and the Structural Funds by the next budgetary period (2020-2027).
Malta can also act as a hub in the Mediterranean. Having said all this, I think Malta will be able to participate in EU programmes related to research and innovation, exchange of workers and students and migration. All of these EU programmes will see a massive increase in funding.
Malta, being at the centre of the Mediterranean and part of the EU and the Commonwealth, can do great things with EU funds.
Post-Brexit Britain will need, more than ever before, an interlocutor with the Arab world and Malta fits the bill perfectly with its extensive experience of commerce and diplomacy with Arab countries.
Malta can also become a hub of education and training by using EU funds. It is yet to be seen exactly how the EU intends to use the massive increase in migration funds. It is important that the Maltese government keeps a keen eye on them in order to make sure that Maltese businesses and NGOs can tap into these funds as well, post-2020.
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